Today (7 May) the All Party Parliamentary Group looking into the Connaught Funds collapse, led by campaigning conservative MP Alun Cairns, will hold its first debate in Westminster Hall, with economic secretary to the Treasury Andrea Leadsom set to answer questions.
The action group for investors that lost more than £100m in the funds has set out the questions that it believes Ms Leadsom, who only took over in the role a matter of weeks ago from new culture secretary Sajid Javid, will face.
In particular, it is hoping MPs will raise questions over the knowledge Capita Financial Managers, as authorised director of the fund, had of the senior figures behind the fund and of the alleged breaches of its original investment memorandum.
It is also seeking to demand information on what the regulator knew of the problems with the fund and whether it is intending to take action against Capita.
Capita was also authorised corporate director of the failed Arch Cru funds, for its role in which it has been censured by the Financial Conduct Authority. It escaped a fine after it stumped up £30m as part of a £54m package of redress of investors.
Connaught’s Income Fund Series 1 was suspended to new inflows and investment redemptions in March 2012, after the investment manager discovered that assets used to secure loans in the fund may no longer provide sufficient collateral.
The vehicle, which is an unregulated collective investment scheme, handed capital to a partner firm called Tiuta, which then offered it out as short-term and bridging loans secured against property. The loans were offered at a target loan-to-value rate of 75 per cent.
In May 2011, the FSA warned investors in Connaught’s Series 1 and 2 funds to speak to their financial advisers as while the funds were advertised as low risk and this “could be misleading to investors”.
