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IFAs gain more ammo in battle against Arch Cru redress scheme
by Jun Merrett on Dec 03, 2012 at 10:51
Advisers, MPs and lawyers have argued that the Financial Services Authority’s (FSA) damning verdict on Capita Financial Managers’ failings in the Arch Cru scandal will give them more ammunition to fight the regulator’s efforts to force IFAs to compensate clients invested in the funds.
Last week the FSA censured Capita for failings in its role as Arch Cru authorised corporate director, saying it did not properly monitor fund manager Arch Financial Products and the liquidity risks affecting the funds, or ensure the funds were properly priced.
However, it stopped short of imposing a £4 million fine on Capita, pointing to the costs the FTSE 100-listed group had already incurred because of Arch Cru.
The costs included its £32 million contribution towards a £54 million redress scheme for investors, separate to the FSA’s planned adviser-funded scheme.
The regulator added it had taken account of the fact that Capita Financial Managers would not have been able to make that payment without the support of its parent.
That news came while fresh doubt was cast over the regulator’s proposed £110 million Arch Cru redress scheme, which will be funded by advisers who sold the funds.
Adding weight to redress scheme protest
Reports last week said the FSA had delayed its policy statement on the scheme due to an overwhelming response to its consultation.
The FSA board has appeared divided over the proposals, with minutes of its April meeting showing members had concerns over its impact just days before the consultation was announced.
Conservative MP Alun Cairns (pictured), who chairs the Arch Cru All Party Parliamentary Groups, said the FSA’s verdict on Capita added further weight to advisers’ protests against the £110 million scheme.
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