Last week, the chief executive of the FSCS, Mark Neale, said it was time to “acknowledge errors” made in the way customers were compensated after being mis-sold investments in the CF Arch Cru Investment and Diversified funds.
Mistakes in how compensation payments were calculated saw more than 1,000 investors collectively underpaid around £800,000 ($1.1m, €902,665), the FSCS revealed.
It also overpaid others by more than £700,000 and admitted it was likely some over-payments would be “irrecoverable” given the time that has passed.
In the wake of the admission, Neale said: “FSCS’s processes for calculating loss in relation to CF Arch Cru claims have been reviewed and updated.
“In addition, the material impact of the issues identified with the CRS calculator has resulted in improvements being made to the way any claim calculator is designed, built and maintained.”
Made good
A £54m compensation deal was revealed in 2011 for Arch Cru investors following the closure of the two funds. It has been paid out over the past five years following the initial wind-up of the funds in 2009.
Last year, Capita Financial Managers said the final closure of the two funds would not be until December 2018.
The funds were mis-sold as low or medium-risk products to investors despite the fact they invested in higher-risk private equity, private finance and commodities.
Following the revelation that compensation had been miscalculated, Neale said: “Once these mistakes came to light earlier this year [2017] as a result of a customer’s complaint we urgently established the cause of the error and reviewed our controls to reduce the risk of a recurrence.
“We have also made good the under-payments to the customers affected and are seeking re-payment of overpayments (where reasonable to do so).”
However, he admitted that “inevitably, considering the time since settlement, some over-payments will be irrecoverable”.
