Fos today (22 November) published a provisional decision relating to a couple that had complained about the advice they were given by their IFA in relation to an £8,000 investment into the CF Arch Cru Investment Portfolio.
The complaint was found in favour of the clients and the IFA has been ordered to repay redress, with many speculating that the decision to publish the decision will prompt more to complain, or to pursue a legal case against their IFA.
Gareth Fatchett, director at Regulatory Legal, which has set up a steering group that is pushing for a judicial review into the Arch Cru redress package, said: “The Fos is effectively inviting people to complain by publishing this. The Fos position sets out the regulatory view on the risk of the CF Arch Cru funds.
“It is very unusual for Fos to publish in this way. I suspect the timing is no coincidence as both the FSA and Capita come under pressure to explain themselves.”
Last month Manchester-based law firm Pannone confirmed that it will be suing “hundreds if not potentially thousands of IFAs” who advised investors on the Arch Cru funds.
Kit Sorrell, partner at the firm, said that it will be targeting IFAs that are still trading, though it will also “not be precluding” those that have gone bust.
He told FTAdviser: “We have got a number of investor clients and we will be suing the IFAs for negligence. We have a dedicated financial services negligence team who will be dealing with this.”
The decision published today relates to a couple that invested £4,000 each in an Arch Cru fund in early 2008, all of which was placed in stocks and shares Isa. In March 2009, dealings in the Arch Cru fund were suspended.
A complaint from the couple was rejected by the IFA on the basis that problems with the fund were “the responsibility of the fund’s managers”. The case was referred to Fos and it was initially upheld by an adjudicator, but was later appealed by the IFA.
The provisional decision, written by Ombudsman Tony Boorman, again found in favour of the clients and questioned the research conducted by the firm, referencing the “modest” size of the business.
It also highlights that the fund was more than 28.4 allocated to private equity, despite being listed as a cautious managed fund.
