Investors in the troubled Arch Cru schemes look set to receive a refund of some of their original investment, as the FSA announces a voluntary £54m package.
The package is being funded by Capita Financial Management, BNY Mellon and HSBC Bank, who all played a role in the Arch Cru investment products.
Investors will have the option to accept the offer in full and final settlement of any claims against the three institutions.
The FSA has estimated that the offers represent around 70% of the published net asset value of the Arch Cru funds when dealing was suspended on 13th March 2009. Capita will be contacting investors with more details before the end of August.
This offer is probably as good as it will get for Arch Cru investors.
It puts an end to a long wait and uncertainty for investors in the failed schemes. Whilst many questions about Arch Cru remain unresolved, accepting 70% of the suspended fund price is likely to represent a more attractive deal than a further long wait and potentially difficult legal battle to recover more; assuming that more ever becomes available.
News of this settlement does not absolve advisers of their role in the sale of Arch Cru funds. The FSA says it is still considering the role of other parties, including advisers, in relation to these funds.
We expect to see investors continue with their complaints against their investment advisers over the suitability of the advice delivered, with IFA firms, professional indemnity insurers and ultimately the Financial Services Compensation Scheme (FSCS) picking up the tab.
As a firm which completed due diligence on the Arch Cru funds before making the decision not to recommend them to our clients, we continue to watch as interested observers to see if the eventual cost of compensating investors in their funds will fall on the sector as a whole and more specifically on our clients through the cost of the FSCS.
Photo credit: Flickr/Rick McCharles
