LETTING & ESTATE AGENT

£31m in compensation to be paid out following FCA’s redress scheme

£31m in compensation to be paid out following FCA’s redress scheme
Compensation has begun to be paid by financial advisers to people who invested in the CF Arch cru Investment and Diversified funds (Arch cru) as a result of unsuitable advice. Over £8.26m has so far been received by consumers. 
 
Total redress due under the scheme is calculated to be £31.47m. In December 2012, it was estimated that the compensation package would deliver between £30m-£40m for affected investors. The money paid out under the scheme, which was overseen by the Financial Conduct Authority (FCA), is in addition to any redress investors may have received under a separate process administered by Capita Financial Managers. 
 
Under the consumer redress scheme 3,414 sales have been reviewed by firms and 85.4% of these have been found to be unsuitable. This is consistent with the results of a review undertaken by the FCA before the consumer redress scheme was set-up. 
 
Arch cru funds were high-risk products that typically invested in non-mainstream assets such as private equity and private finance. Advisers should only have recommended the funds to investors who fully understood - and were willing to accept - the risks.
 
However, the regulator found the funds were unsuitably sold to some investors as low or medium risk products. The FCA, and its predecessor, stepped in to ensure affected investors received redress, in line with its objective to secure an appropriate degree of protection for consumers.
 
Clive Adamson, director of supervision at the FCA, said: “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. We will continue to monitor progress to ensure consumers affected by Arch cru receive redress as quickly as possible.”