Yesterday’s (November 23) behind-closed-doors meeting between MPs and the FSA changed little about the £54m package offered by the regulator to investors, in spite of calls from politicians to make Capita, HSBC and BNY Mellon foot the whole bill for investor losses.
Regardless of your view of politicians in general, the passionate debate secured by Labour backbencher Tom Greatrex on October 19 was enough to restore some faith in our democracy. It was characterised by MPs from all parties drawn together and condemning the way investors - their constituents - had been treated.
Many of those speaking at the debate actively objected to the idea of blaming advisers, citing the allegedly misleading information published by Arch Cru and Capita - how were advisers supposed to know the information was not up to scratch?
But yesterday, Margaret Cole, head of the FSA’s conduct business unit, poured cold water on the “it wasn’t me, guv” argument.
The regulator did not want a protracted legal battle with Capita, and so was content to hammer out the £54m fund in exchange for the three contributing parties being able to wash their hands of the whole debacle.
At the same time, both the FSA and the Financial Ombudsman Service have made it painstakingly clear that advisers are ultimately responsible for any investment they make. There is no point arguing that the funds were in the IMA Cautious Managed sector, or regulated by the FSA, or mismanaged by Capita. The fact remains that not enough due diligence was done by IFAs.
Tuesday’s (November 22) ruling seals the fate of the 900 adviser firms who sold Arch Cru. In much the same way that the FSCS is pursuing those who sold Keydata products in order to recoup compensation, the FSA looks set to turn up the heat on Arch Cru sellers.
If you sold Arch Cru, it’s time to stop passing the buck and prepare to pay up.
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