IFA redress could increase as Arch value falls again
Adviser Arch Cru costs could rise further as Capita reveals another fall in assets backing failed funds.
The value of the Arch Cru funds has fallen again, meaning more money could be required from the controversial IFA-funded redress scheme.
In a letter to Arch Cru clients dated June 27, authorised corporate director Capita said the funds’ net asset value at the end of February had fallen by 2 per cent when compared with the end of September.
The figure includes the £54m payment scheme part-funded by Capita, which the FSA arranged last April.
The FSA is consulting on a £110m redress scheme, funded by IFAs who sold Arch Cru, to add to the payouts from Capita and the winding up of the funds’ assets. The regulator said just 12 per cent of IFA sales of Arch Cru had been appropriate.
Aifa has called the redress scheme “inappropriate” and “damaging”, as the cost of funding it could push huge numbers of IFA firms into bankruptcy - heaping further costs onto the FSCS.
The redress scheme consultation ends on July 31.
Arch Cru investors have so far received payouts of £32m from the winding up of the failed funds, which were suspended in March 2009. Capita said it expected to issue a sixth payout in July, although it did not confirm the amount it was expected to distribute.
The cells which backed Arch Cru funds are being wound up by Guernsey-based Spearpoint, which in December 2011 acting as director of the cells filed a £150m claim against Arch Financial Products. Arch has strongly denied all claims.