Six-year time limit could thwart Arch Cru claims
The Financial Authority Scheme’s consultation into a £100m Arch Cru redress consumer scheme will be a “long process”, with investors not likely to receive payments until September 2013, law firm Pannone has said.
The firm also said that a six-year time limit for bringing a legal claim, running from the date of the investment, could prevent some investors from being able to pursue a legal claim as many investors committed funds in 2006 and 2007.
On Monday (30 April) the Financial Services Authority announced that it has launched a three-month consultation on establishing a consumer redress scheme for Arch Cru investors, which could deliver more than £100m compensation to those deemed to have been mis-sold the funds.
If the regulator decides to implement this scheme, following the three-month consultation period, it could be August 2013 “at the earliest” before the investors know whether or not they are going to be offered any payment under the scheme, Julia Norris, senior associate at Pannone told FTAdviser.
Firstly, if the regulator moves forward with the scheme, “formal rules” will take effect by 1 January 2013, she said, adding that IFAs will “then have 4 weeks to tell their investors whether or not they fall within the scheme”.
She said: “IFAs will then have 24 weeks to advise their client whether redress is payable. This takes us to August 2013.
“If accepted, that redress would be payable within 28 days, ie by September 2013. It is going to be some time before the investors know whether or not the scheme applies to them, whether or not the IFA has self-determined the advice given was incorrect and what amount it may then offer to pay.
“The investor also has to wait to find out whether the IFA is going to be in a position, at that later stage, to make a payment of those amounts.”
She said: “It will be some time before the self-determination of the IFA’s liability is concluded and investors will likely have to wait until August 2013 before they find out whether or not they fall within the scheme, whether the IFA has determined its own advice to be suitable, what compensation it considers ought to be paid... and, importantly, whether the IFA has the means to make payment of that sum.
“The result of this is likely to be a high number of insolvent IFA practices leaving investors with little if any redress.”