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View the article online at http://citywire.co.uk/wealth-manager/article/a730364

FCA Arch Cru redress scheme to pay out £31m

by Jun Merrett on Jan 27, 2014 at 10:55

FCA Arch Cru redress scheme to pay out £31m

The Financial Conduct Authority (FCA) has announced advisers will pay out £31 million through its Arch Cru consumer redress scheme.

Over £8.26 million has so far been received by consumers. Total redress due under the scheme is calculated to be £31.5 million. In December 2012, it was estimated that the compensation package would deliver between £30 million and £40 million for affected investors.

The compensation has begun to be paid by advisers to their clients who invested in the CF Arch Cru Investment and Diversified funds as a result of unsuitable advice.

The money paid out under the scheme is in addition to any redress investors may have received under the funds authorised corporate directors Capita Financial Manager’s compensation package.

The FCA found 85.4% of the 3,414 sales reviewed by firms were unsuitable which the it said was consistent with the results of a review undertaken before the consumer redress scheme was set up.

Clive Adamson, director of supervision at the FCA, said the vast majority of firms had co-operated with the regulator on the scheme.

‘We’re now seeing compensation flow to those investors who were mis-sold,’ he said. ‘We will continue to monitor progress to ensure consumers affected by Arch Cru receive redress as quickly as possible.’

The FCA said the Arch Cru funds were high-risk products that typically invested in non-mainstream assets such as private equity and private finance. However the regulator found the funds were being unsuitably sold to some investors as low or medium risk products.

In December 2012 the FCA predicted that up to 30% of clients invested in Arch Cru would sign up to receive compensation. In July 2012, 353 firms with a total of 7,124 clients informed the FCA they had clients who qualified under the scheme, of which 47.8%, or 3,405 investors, opted in.

Firms had until 9 December 2013 to review the advice for their clients and submit their assessments to the FCA for redress to be calculated where appropriate.

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