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Law firm takes final shot at stopping £110m Cru redress scheme

by Jun Merrett on Nov 23, 2012 at 13:01

Law firm takes final shot at stopping £110m Cru redress scheme

Law firm Foot Anstey has made a last-ditch attempt to fight the Financial Services Authority’s (FSA) £110 million Arch Cru redress scheme, following revelations the regulator is pursuing the scandal-hit funds’ former managers.

The firm is representing advisers with client money in Cru who could face crippling bills under the FSA’s compensation plans.

It has written to the regulator, which was set to discuss the scheme at its board meeting, arguing that news of cases against Arch Financial Products and its bosses Robin Farrell and Robert Addison meant implementing the scheme would be ‘fundamentally unfair’.

‘Before any liability is imposed on any party, the facts must be gathered and analysed to ensure the imposition of liability is fair and proportionate,’ said Foot Anstey partner Alan Hughes.

‘Given the constantly evolving picture on the Arch Cru funds, that cannot and should not be done now.’

6 comments so far. Why not have your say?

Julian Stevens

Nov 23, 2012 at 14:17

And is the FSA likely to take the slightest bit of notice? If it's free to wave two fingers at the TSC, it'll have no hesitation about doing the same to a firm of lawyers which, it will decide, is merely trying to get its clients of the hook of what the FSA perceives to be their rightful come-uppance.

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DP's IFA

Nov 23, 2012 at 14:49

The FSA will not be able to enforce this due to their mistake in accepting the £54M from Capita without knowing the exact extent of the shortfall & taking no account of potential future falls in asset values. They have now realised their mistake and actually started to look at alternatives. At the end of the day it's Political power that will sort it out & all should visit their MP to get on Board with the committee headed by Alun Jones.

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Alan Smith

Nov 23, 2012 at 15:35

MP committee is headed by Alun Cairns and Tom Greatrex

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DP's IFA

Nov 23, 2012 at 15:49

Oops sorry! Even met him as well. Good Guy & wants best & fair outcome for all.

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Simon Kershaw

Nov 25, 2012 at 14:41

My response to this CP was possibly the most vociferous of my professional life. Like many IFAs i have long felt that FSA consultation papers were ignored and used by them as whitewash i.e. "we have consulted on this and will carry on anyway".

I actually believe that the response to this CP by advisers may have actually hit home.

I live in hope.

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Dathan Steele

Nov 26, 2012 at 07:03

@ Simon

I personally think that even the FSA will realise that the attempt to gloss over their incompetence in this matter has failed. In my book EVERYONE is to blame here: Arch, Maguire, Capita, BoNY, HSBC, FSA, AND the advisers who were suckered into this disaster.

However, Capita were the ACD, and FSA the regulator. The primary blame lies with them. Advisers are also to blame, but as an industry we are all aware that advisers have always been the weak link in the chain. Salesmen in fancy suits promising the earth have long been able to streamroller advisers into products which they don't understand. Hopefully the Arch Cru disaster will actually make advisers think about what they are selling to their clients, and look under the hood (or use out sourced research facilities).

What needs to happen now is that this is sorted by making everyone involved pay to put the client back to where they would have been if they had been in a suitable investment. In all the discussions on here we all appear to have forgotten that our duty of care to our clients is of primary concern here.

What Arch Cru also demonstrates is that the Oeic structures are nowhere near as robust as the AUT ones, where the trustee structure lays a lot more responsibility onto the individuals concerned. Coincidence that most of the DIFs out there are Oeics?

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