FSCS starts paying out Arch Cru compensation
More on UK Regulation
- Sesame hit with £1.6m over pay-for-play inducements
- ‘Bringing drawdown to the masses’ now key challenge: report
- Financial services is being slowly choked to death
In focus: Arch Cru
The Financial Services Compensation Scheme has confirmed to FTAdviser that it has started paying out claims for mis-sold Arch Cru funds.
A spokesperson told FTAdviser that payments began at the end of July. As of June 2012, the FSCS has received about 820 claims against 27 different IFAs connected to CF Arch Cru.
Claims against MF Global, CF Arch Cru and Pritchards mean the investments intermediation sub-class faces a “higher risk” of an interim levy in 2012/2013, according to the FSCS’s August outlook report.
The life and pensions and general insurance sub-classes also face higher risk of interim levy because of increased investment compensation payouts and increased PPI payouts respectively.
The spokesperson for law firm Regulatory Legal stressed there is a “stark” disparity between what is paid out depending on whether claims are against live firms and fallen firms, with the latter being paid out by the FSCS and the former dependent on the Financial Services Authority’s consumer redress scheme.
The spokesperson said: “Subject to a successful determination one will receive redress in the near future, the other is subject to a wait whilst the FSA sort themselves out.
“The payouts reflect what the FSCS said they will do and the start of compensation is coming through. If advised by a dead firm, you will get paid extra redress and you are in a way better position than those that were advised by a live firm.
“They are receiving 40 per cent of their original investment, to a maximum of £50,000 which is the maximum the FSCS can pay out.”
The spokesman added: “We can confirm that we have received positive results on FSCS applications. This additional redress will be a great help for these investors.”