FSA's £54m Arch Cru deal to face judicial review

Finally, at least someone is doing something why should these organisations be able to walk rough shod over all of the innocent investors. We all put our trust in the FSA and the FOS assuming justice will be served lets hope that Joe Egertons actions will be able to force clarity on this whole dreadful situation.As investors we have waited long enough for a fair offer what we have been offered is disgraceful we all invested after reading the literature which portrayed a cautious investment what we got was something very different.

I should correct one point. I am not a former adviser - the claim is being brought by a representative adviser and Justice in Financial Services (www.justiceinfinance.org) is organising support. Debbie is quite right that investors are being disgracefully treated - when a similar sized group of funds ran into trouble in 1996, IMRO the then regulator made sure every investor was fully compensated in less than a year and then set about severely punishing the senior executives and compliance officers that were on watch.

The industry should be worried about two things. First,by letting the Depositaries and Approved Fund manager off the hook, the integrity of the whole fund management industry is in jeopardy. Second, over £100M will end up being claimed from the FSCS.

Has the claim been formally issued? Where can I get a copy?

@Joe Egerton

apologies, have corrected the story

Dear Daniel - no need to apologise - but thank you.

Dear Roger - let me have your contact details by using the online form on www.justiceinfinance'org and I will let you have a copy.

Joe Egerton

joe@justiceinfinance.org

Are judicial reviews the new black?

@ric

Far from being the new black I would imagine. Otherwise I find it hard to believe investors would have been treated so badly if there was the remotest chance of the details of the arch cru fund 'mismanagement' coming to light. Whilst I suspect this matter is a long off being resolved I am so relieved that Joe Egerton, Chris Clark, Jeff Prestridge have done such great work in recent months. It all seemed to come off the back of an article by Daniel Grote a few months ago - thanks to all concerned and the MPs who have pushed this in parliament. Fingers crossed!

Would any of this have been forthcoming without the intervention of the FSA? Was this intervention a direct result of the actions of RL?

Who allowed Arch Cru to do what it did? Who recommended the funds?

I keep thinking back to the 'bad old days' before regulation, is it just me or can anyone else wonder what regulation as we know it has done for society?

Joe Egerton, I'm sure you mean well.

@ Evan Owen

Correct me if I'm wrong here. You have abandoned the role of IFA in favour of "claims handler" and that you have been somewhat vitriolic in your condemnation of those advisers who conducted appropriate due diligence into these funds but have nevertheless been caught out along with their clients; a situation which wouldn't have happened had these funds done what was said on the tin.

The ability to conduct detailed forensic investigations which, in your role as ambulance chaser (sorry, claims handler) is no doubt a pre-requisite, is called into question when you can display such a feeble grasp of the work of Joe Egerton and the praise-worthy role he is playing in raising the profile of this investigation from the shadows, where the FSA and Capita would prefer it remains, and into the limelight.

It's a shame that years of battling the Leviathan have resulted in you now making cheap shots at what is, in fact, a grave situation with repercussions for all IFAs, including those who are even holier than thou!

Yes you are wrong DG, whatever your real name is.

@ Evan Owen

Phew, that's such a relief!!

Doesn't answer the hopeless lack of understanding regarding Joe Egerton's important role though - a person who's actually doing something, with my (and others) financial support, as opposed to simply sitting on the fence yelling at anyone who'll listen to their nonsense.

I quote from above... "Would any of this have been forthcoming without the intervention of the FSA? Was this intervention a direct result of the actions of RL?"

Ha, ha....I rest my case.

Give me a call DG, if you have the courage.

It is natural that Evan should support his fellow claims handling firm RL.

In answer to Evan's question who allowed Arch Cru to do what it did? That would be the people that were supposed to police it the regulator and the Authorised Corporate Director of course!

I recall seeing a comment from Evan in the Telegraph encouraging people to contact him to 'vent their spleen', presumably this was a form of advertisement for his claims handling, or perhaps he is running courses in anger management. Subsequently he stated that he had never thought about what the funds invested in - so much for due dilligence!

I think DG fully understands the situation.

Anthony

RL is a law firm that 'also handles claims', I don't support them although I do know Gareth Fatchett.

I was asking a question, simples.

If you sold Arch Cru I really don't know what to say, other than take more care in future.

By the way, I don't make any money out of handling claims, I became authorised so that I could advise clients referred to me by IFAs. The things I have seen the retail market do to consumers, IFAs included, would make your hair curl, assuming you are not of the same ilk.

I'm thinking of dropping MoJ authorisation and concentrating on other less stressful things.

Evan please read the Hugh Aldous report you will understand then.

Think I'll ask the FSA first and then find this report.

Is the FSA due to make further annoucements regarding other parties?

@ Anthony Bounder - thank you for your comments

@ Evan Owen

Getting bored of this self-righteous thread......

"I was asking a question, simples." Pointless questions, methinks.

"Yes you are wrong DG....." In what respect?

You've confirmed your current status (claims handler, handler of claims?), lack of understanding of Arch Cru, default position of blaming the IFA for not looking under the bonnet (or similar euphemism).

There's plenty of evidence (see Anthony Bounder's reference to Hugh Aldous' report, or try www.clarkmarketing.co.uk/uploads/Pindar%20guilty!.pdf from Joe Egerton, to name but two) which merits further investigation before such blanket disapproval is justified by you and your ilk.

I dare not think what would happen to our industry if any of the many other funds in the retail market could not be taken, to a sensible degree, at face value especially having been pre-approved/regulated by the FSA/IMA, etc.

It's a dud argument saying due diligence, or lack thereof, is the reason for this debacle - it's way beyond that as every knowledgeable party to this scandal is aware - and I emphasise knowledgeable, Evan.

Finally, an apology to Joe Egerton wouldn't go amiss.

PS. "Is the FSA due to make further announcements regarding other parties?"

Yes, apparently. But as stated in paragraph 2.3.3 of the Q&A (http://www.capitafinancial.co.uk/1519.htm) no financial penalty will be imposed on Capita. Paras 1.2.3 and 4.6.3 underscore the FSA's absolution of Capita et al. Seems like the job's done then, doesn't it?

"Think I'll ask the FSA first and then find this [Aldous] report" Eh?

Surely you should know more about this matter before spouting off at 9.09am this morning and, indeed, on other occasions!

Best of luck then.

@DG

Well said. After the recent progress, I am sure none of us with a vested interest want to slip back into the unhelpful & ill informed comments of earlier days.

Anyone who thinks that the FSA has handled CF Arch cru well should read IMRO's release on the MGAM/Peter Young scandal of 1996/7 at http://www.fsa.gov.uk/pubs/additional/imro001-99.pdf. IMRO organised a settlement in which Deutsche Bank, the equivalent to Capita plc, and MGAM, the equivalent to Capita Financial Managers, saw every investor fully compensated in well under a year.

And IMRO ensured that the heads of the compliance officers and senior executives on watch rolled.

Nobody suggested that IFAs should have to pay for a fund manager running amok. Nobody suggested that the FSCS (then called ICS) should have to raise a levy. This was an example of an effective regulator doing the job we all need regulators to do.

One cannot help asking: did Dan Waters and Hector Sants fall out over Sants destroying Dan Waters' great achievement in humbling the greatest bank in Europe? Dan left the FSA before this shameful and squalid surrender was publicised.

Coull Money v FSA

A brave act indeed, as stated by RL, and one to be highly praised and supported. This came about through the assistance of Joe Egerton and the fighting fund he has orgainised together with a (currently) small band of IFAs who require urgent and substantial financial support via www.justiceinfinance.org - see Joe's earlier entry in this thread.

Also, recognition should go to Regulatory Legal if they, as stated, do go ahead and lend the financial support that they have garnered from many individuals who have sought a parallel (investor) Judicial Review.

Is this the worm turning....finally? These blogs are filled, every day, with comments about the injustice served upon our community by an unchecked regulator. Dig deep IFAs, you can afford it and the battle lines have never been more clearly drawn. This might, at long last, be the opportunity to show the FSA they need to act more fairly (Treat THEIR "Customers/Us" with a little more Fairness) otherwise they will be brought to book. And, of course, it will ultimately be our clients who benefit - something WE will have achieved but not the Regulator who's job it is supposed to be to look after their best interests.

Grateful though I am to DG for his support I am bemused at the reference to RL. I recall receiving letters from RL threatening me with legal action and I have also seen an email from RL highly critical of Coull Money. I cannot reacall anything supportive at all. There seems, as Private Eye observes, 'some mistake here'.

The facts are simple.

RL has already collected in between £800K and £1.2m (assuming that RL has the support from advisers and investors that it claims). That money was initially collected to run a campaign to make Capita pay up.

I understand that long before Justice in Financial Services became involved RL had been asked to organise a PR and political campaign and had not done so. From the success that JFS has had in the last two months with MPs, we now know that if RL had engaged a competent PR firm and run a campaign in early 2010 Hoban would not have risked endorsing the FSA-Capita stitch up. If he had, he would have been tarred and feathered in New Palace Yard

Although RL received a very large number of signed FOS complaint forms it decided not to file them with FOS. It did not file them even after the FSA announced the deal on 21st June. If RL had filed the complaint forms it had collected in then FOS would have still been able to adjudicate a large number of complaints against Capita on the basis of fair and reasonable awards and not been stuck with the limited sum under the FSA-Capita stitch up. The prospect of FOS making substantially more generous awards than those permitted under the Capita-FSA stitch up would have wrecked the nefarious scheme Herbert Smith cooked up to ditch investors. RL's failure to refer complaint forms it had received contributed to the present disaster.

JFS organised advice for a number of IFAs from Mr Anthony Speaight QC after RL announced that it was not planning to issue immediate JR proceedings. We have seen the advice that RL had from Counsel - that a JR claim must be made promptly. That was also the advice that Mr Speaight gave and he urged that a letter be sent at once to the FSA to clarify the dates on which the FSA acted. That letter went and the FSA's response left no doubt that a Claim Form had to be filed by 20th September to avoid being caught by the 3 month long stop for JR of a scheme that was announced on 21 June 2011.

If it had not been for JFS and the courage of the IFAs involved - especially Coull Money - the FSA and Capita could have argued that any challenge was out of time. RL would simply have been too late.

In fact RL has not been giving much attention to a JR - RL's main effort has been to encourage investors to bring claims with the FSCS - or rather to sign up to a deal whereby RL will bring claims for investors and take 10% of whatever the FSCS pays.

We regard this as flawed. Apart from there being no certainty that FSCS will be able to pay claims (FSCS can only pay when there is a legal liability and our argument is that the legal liability is with Capita, not IFAs), running a campaign to get the FSCS to pay makes RL a collaborator with the FSA and Capita in enabling the stitch up to succeed.

I have no idea what DG means my suggesting that RL is going to support JFS. Grateful though I am for DG's comment, I hope that nobody thinks that money that goes to RL will in any way support JFS.

@ Joe

Hope I haven't jumped the gun in praise for RL!

An email received this morning from RL states as follows (6th para):

All,

Justice in Financial Service - Judicial Review - Coull Money v Financial Services Authority - CO8993/2011

You may have read that Coull Money Limited has issued a judicial review in relation to the CF Arch Cru funds.

This claim by an IFA firm is welcome and certainly a brave act for a regulated firm to take.

That said, the claimant is not an investor and will have a different set of issues to an actual investor.

We have finished our seminars now and feel it is highly probable that an investor judicial review will proceed. If this is the case two challenges to the FSA / Capita will be underway. We would expect similar challenges to be consolidated by the court.

We are going to suggest that part of our fighting fund be utilised to assist the Coull Money Limited judicial review application. It would be detrimental to everyone if the costs of their claim could not be met by the small IFA group which is supporting it.

Clearly, the costs of the FSA and the counterparties would be potentially substantial if any action is defeated. The investor group has the significant advantage of having a large number of claimants to absorb any such event.

We are receiving a copy of the judicial review proceedings from the Administrative Court shortly. An analysis will be sent to you all as part of our analysis of an investor based challenge.

Regulatory Legal Solicitors

As I shall soon be explaining to Advisers this is unsolicited and unwanted. R Legal is in a position of conflict with our supporters so could not pass money to us under SRA rule 3. This is simply an attempt by the appalling Fatchett to divert funds to his firm when it is almost certainly too late for him to issue JR proceedings

@ Joe

My sincere apologies.

Whilst I think the IFA community (quite rightly) has severe reservations about RL's practices and motives it did seem, from the statement " We are going to suggest that part of our fighting fund be utilised to assist the Coull Money Limited judicial review application", that this was both positive and indeed feasible.

Clearly not.......which probably simply proves the case for the above reservations, I think.

It's a shame investors' best interests can't be at the forefront of this issue and not how much can be trousered by the legal profession from this debacle.

RL is all about Gareth and his one man grudge against proper lawyers and the fact that the bulk of his training was via the John Grisham library. If someone can show me a success story for clients as opposed to PR stunts for RL. I know several people who have used them for regulatory matters and there will was not one positive story out of it.

We get battered from every corner for costs and fees and probably become gullible at the prospect fo there being someone on our side. A lawyer will only be that whilst the clock is ticking.

Ask the miners.

Huh! Made me laugh anyway. Thank god a sense of humours still free!

The major issues everyone needs to address are:

First. if the Coull Money application succeeds then investors can ask FOS to determine the compensation taht they should be paid for Capita's breaches of COLL and negligence. I repeat that in a similar case IMRO insisted on 100% compensation.

Second the RL campaign to get investors to sign up with it to make claims of FSCS is objectionable in that RL is demanding 10% for a service that the FSA has told MPs is free.

It will only work at all if FSCS finds that there is a legal liability on the part of IFAs, and so far it has not done so. If the FSA-Capita stitch up really does protect Capita from all claims it will have to prevent IFAs hit by investor claims seeking a contribution from Capita, which may well mean that investors accepting money from Capita will have to waive their rights f action against IFAs as well as against Capita.

Because RL is running this campaign it cannot also work with advisers - there is a clear conflict of interest.

May in suggest that as a first stage, Mr Fatchett publishes accounts of what eh has received and what he has spent? If he is telling thr truth and really has signed up 2700 invetsors he cannot have received less than £800,000 from investors and advisers together and may have received £1.2 million.

Until he publishes accounts there must be a big quesionmark over what he has done with all this money - he should not need a penny more to finance anything he has talked about.