Capita agrees to review deadline for Arch Cru redress
More on UK Regulation
- Transitional banking conduct rules set out
- Five key themes from this week’s news
- Arch Cru decision exposed ‘regulatory arbitrage’
In focus: Arch Cru
A parliamentary group that is seeking an improvement settlement offer for Arch Cru investors has announced it has received assurances from the funds’ authorised corporate director Capita that it will review the deadline for acceptance of its redress package, currently set at the end of this year.
On Monday (9 July), the all-party parliamentary group, led by conservative MP Alun Cairns, held its final meeting prior to parliament’s summer recess.
A statement issued by the group said that, in light of the potential for a negotiated settlement and the announcement by the Financial Services Authority that will set up a section 404 redress scheme, the current deadline is considered “too tight”.
The statement added that it had asked the firm to consider an extension to the deadline and that it had agreed “to look at this”.
The group added that it had met with representatives from the FSA, who said the regulator had “accepted that they have a part to play in a negotiated settlement with other interested parties”.
According to the parliamentary group, the new Guernsey commerce and employment minister gave assurances that the island’s regulator is happy to support a settlement, “subject to the conclusions of their internal investigation, which is due to be published in September”.
The group also said that some of the insurer’s of the Guernsey cell companies “seem to be prepared to listen and, although we shouldn’t read too much into this at this stage, this could be the start of a shift in attitude”.
Separately, a lawyer has given legal backing to the FSA’s section 404 redress scheme proposals, following a request from the regulator to investigate the legality of its plans to recover up to £100m from advisers that recommended the Arch Cru funds.
As reported by FTAdviser in April, the section 404 consumer redress scheme will require all IFAs that recommended CF Arch Cru products to review their advice and offer compensation.
Charles Flint QC of Blackstone Chambers, was asked by the regulator to ascertain that the redress consultation does fall under section 404 of the Financial Services and Markets Act.
His report highlighted that the only firms which are required to establish and operate a consumer redress scheme are those firms which gave a personal recommendation to invest in Arch Cru funds.
His report also said that a financial adviser will owe a duty at common law to act within the skill and care of a reasonably competent financial adviser.
The report says: “The draft scheme complies with the requirements of section 404.”