The Financial Services Compensation Scheme (FSCS) has admitted to mistakes over its compensation payments for Arch Cru investors.
Following the suspension of the Arch Cru funds by Capita Financial Managers in 2009, the FSCS began paying out compensation for the funds which were wound up.
Initially this compensation was on an interim basis but from 2012 consumers were paid under the Financial Conduct Authority’s (FCA) consumer redress scheme.
A customer enquiry about how the compensation was calculated under this scheme made last year led the FSCS to find a number of errors in how redress was being worked out.
Following a review the FSCS found 1,075 individuals were found to have been underpaid a total of just over £800,000. The ‘vast majority’ of these consumers have been paid back now.
While 992 consumers have been overpaid their compensation by the FSCS. This was because when the original calculation was made fund charges by Arch Cru was not accounted for at the point when the calculation was made.
The FSCS is seeking to claim back £700,000 from these individuals who were overpaid.
In a statement, the FSCS chief executive Mark Neale admitted that mistakes had been made over the redress scheme.
‘I should also acknowledge errors made by FSCS in handling Arch Cru claims,’ he said.
The FSCS added improvements have been made to the process of calculating losses.