Watchdog says Arch Cru fund to pay out £31m in compensation

Marion Dakers
INVESTORS in the failed CF Arch Cru funds will be paid more than £31m in compensation from a regulator-backed scheme.

The Financial Conduct Authority said yesterday that the financial advisers that recommended the Arch Cru funds to their clients based on unsuitable advice are in line for a £31.47m compensation bill.

“The vast majority of firms have co-operated with us, helping ensure that this compensation scheme has progressed as smoothly as possible. We’re now seeing compensation flow to those investors who were mis-sold,” said Clive Adamson, director of supervision at the FCA.

The two Arch Cru open-ended funds, set up in 2005 and worth £363m, were suspended by Capita Financial Managers, the authorised corporate director, in 2009.

The Financial Services Authority, the predecessor to the FCA, found that advisers were telling clients to invest in these funds as low-risk products, even though they invested in non-mainstream assets including private equity.

The cost of compensating Arch Cru investors was blamed by Willow Financial Management when it fell into administration in October.

Capita has written to 7,124 investors in the funds with offers of compensation, and just under half of those opted into the scheme by the 31 December deadline.

Several hundred investors are pursuing compensation through the courts in a group lawsuit.