Compliance firm offers help to Arch Cru advisers
Despite FSA’s warning that PI insurers will not pay out, Arch Cru advisers must notify insurer and check policy wording, compliance firm claims.
Compliance firm Thistle Initiatives is offering Arch Cru advisers an initial one hour consultation free of charge to help them navigate through the implications of the regulator’s Arch Cru redress scheme, warning that advisers should not stick their head in the sand.
Last month, the Financial Services Authority concluded that there was evidence of widespread mis-selling by adviser firms who failed to assess the Arch Cru funds as being high risk and has launched a Section 404 scheme offering consumers the option to ‘opt-in’ and have advisers review their Arch Cru files.
The redress scheme means advisers will have to write to all of their clients who invested in the Arch Cru funds and ask if they would like to ‘opt-in’ to have their case reviewed. Consumers have until 22 July 2013 to decide whether to opt in to the scheme.
In a mailshot sent to advisers, Thistle warned that advisers will have one month from 1 April 2013 in which to contact their clients and the FSA will monitor their progress in implementing the scheme.
It also highlighted that the wording of the adviser letters to clients has been mandated by the FSA, in its new “CONRED” sourcebook, to ensure they are clear and straightforward. Investors will then have to fill in a short form to confirm they want their case reviewed.
Advisers will be required to let customers who opt-in know the outcome of their case by 9 December 2013. The amount of redress will be calculated by reference to what would have been a suitable investment for the individual investor.
The final amount of redress paid will reflect the current value of the Arch Cru funds and will deduct the amount an investor is eligible to claim from the separate £54m payment scheme, which runs until 31 December 2013.
Thistle also said that investors should notify their professional indemnity insurers, although the FSA did make it clear in its consultation paper that it doubts whether insurers will cover this. Still, Thistle said advisers should refer to the wording of their own PII policies and check with their insurers if in doubt.
The mailshot concluded that: “Firms must consider the cases of all relevant consumers who have opted in to the scheme and contact the consumers with the outcome of the review by 9 December 2013. If a firm makes a redress offer and the consumer accepts, the firm must pay redress within 28 days of receiving the consumer’s response.”