The Financial Services Compensation Scheme has said it is now ready to assess claims in relation to Arck LLP investment schemes, after establishing that failed financial advisers are liable for losses resulting from bad advice to invest in Arck related investment schemes.
The compensation scheme is also satisfied that HD Administrators LLP is liable for losses in relation to Arck investment schemes held in the HD self-invested personal pension, due to its responsibility as the Sipp operator. HD Administrators has already been placed in liquidation.
In a statement to consumers, the FSCS said claims will start to be investigated and compensation will be made available to all those that are valid.
It added that this is likely to take around six months and will include customers with claims against failed financial advisers who were previously told there was not enough evidence to prove the adviser was liable for losses.
The latest update follows on from an April delay on whether the FSCS would be able to make full payouts, as it was continuing to investigate the liability of IFAs and HD Administrators.
Claims in relation to investments in Arck were on hold, pending the outcome of a joint investigation by the Serious Fraud Office and Nottinghamshire Police against two former partners of Arck. However, partners Kathryn Joy Clark and Richard Aston Clay, pleaded guilty to three fraud charges at the end of last year.
In February 2014, the FSCS reported that it had received a number of claims against advisers relating to advice to invest in various unregulated financial products promoted between 2006 and 2012 Ms Clark and Mr Clay.
It is estimated that about £50m was invested in these products by individual investors and, in some cases, IFAs themselves. At the time, the FSCS blamed the delay on the fraud allegations that the SFO were investigating.
In March 2012, the then Financial Services Authority issued a supervisory notice on HD Administrators.
The FSA said at the time that Ms Clark appears to have received, circulated or been involved in the provision of forged bank statements purporting to relate to the Arck General Client account at Yorkshire Bank to Arck investors.
In addition, Ms King could not adequately explain to the FSA how a Sipp operated and “did not understand her regulatory responsibilities”, the FSA said.
In response to enquiries made of Arck by investors as to the funds it held, Mr Clay sent an email dated 29 July 2011 to an IFA acting on behalf of investors attaching a bank statement purportedly showing the balance of the Arck General Client account at Yorkshire Bank to be £12,269 as at 1 July 2011.
At this date the real balance was in fact £25.87, according to the FSA.
peter.walker@ft.com
