Institutions got away ‘lightly’ in Arch Cru redress, Aifa
Aifa policy director argues advisers are being tapped for too much of the FSCS redress bill.
Advisers are being disproportionately penalised for their role in the Arch Cru debacle, while larger institutions are set to get off “quite lightly”.
Chris Hannant, policy director for the Association of Independent Financial Advisers, argued in an interview with FTAdviser that the Arch Cru redress scheme does not accurately reflect the balance of responsibility for the scandal.
The Financial Services Authority is in the process of consultation after gathering evidence of “widespread mis-selling” of Arch Cru funds, with a view to launch a redress scheme delivering up to £100m compensation to investors.
Mr Hannant said: “There’s certainly a case in the context of the redress scheme about fairness and where the responsibility lies.
“HSBC, BNY Mellon, Capita were all involved. They have paid some compensation but not much in the context of what’s being sought.”
He added that he thought they were getting off “quite lightly”.
The proposed compensation would be in addition to the £54m payment scheme already announced involving Capita Financial Managers, BNY Mellon and HSBC.
Mr Hannant said: “They backed this as being low risk. To what extent should an adviser be able to rely on large institutions like that to be doing their job appropriately? And when the compensation bill arrives it seems to be disproportionately on the adviser at present.”
In early 2012, FTAdviser revealed Aifa was considering an arbitration scheme to exempt smaller IFA firms from Financial Services Compensation Scheme recoveries.
A spokesperson for Capita said: “Capita Financial Managers has, alongside BNY Mellon Trust & Depositary (UK) and HSBC Bank, already agreed to voluntarily contribute towards the establishment of a £54 million payment scheme.
“The FSA has said that considers that this agreement is a fair and reasonable outcome, which is in the best interests of investors. The role of IFAs is a matter for the FSA which has conducted its own investigation into their conduct.”