FINANCIAL advisers must contact thousands of people who bought into two Guernsey funds to see if they are eligible for compensation after Britain’s markets watchdog wielded new powers yesterday in its crackdown on mis-selling.
The Financial Services Authority (FSA) said yesterday up to 800 advisers who recommended the two CF Arch cru funds would have to ask customers if they want their cases reviewed for possible mis-selling, after the funds lost an estimated £140.5m for investors.
Although the sums are not huge compared with other mis-selling scandals, the FSA’s tactics signal a tougher approach.
“The FSA has concluded that there was widespread mis-selling by firms who failed to assess the funds as high risk despite the fact that the funds were typically invested in non-mainstream assets such as private equity, private finance and commodities,” it said.
Advisers will have until the end of April to contact clients sold the funds, with two reminder letters if there is no reply.
The FSA estimates it will cost advisers £600,000 to £2.7m in total. A firm offering redress must pay the money within 28 days of receiving a claim from a consumer that is determined as being payable.
City A.M. Reporter