According to the company’s half-year report, Capita spent up to £1.1m so far this year in professional fees in relation to Connaught.
Last year, the Financial Conduct Authority (FCA) announced that it had decided to formally review the activities of Capita and Blue Gate in their role as operators of the fund, after withdrawing from negotiations aimed at securing compensation for investors.
Capita Financial Managers was the fund’s authorised corporate director (ACD) until 2009 when it was replaced by Blue Gate.
Connaught case
The Connaught funds, called the Income Series 1, 2 and 3, were originally launched as a Guaranteed Low Risk Income Fund in 2008. It went into administration in April 2012 after bridging lender Tuita collapsed.
The FCA has been criticised for its handling of the scandal, apologising earlier this year for its poor treatment of the whistleblower whose warnings about the fund were not heeded by its predecessor, the Financial Services Authority (FSA).
George Patellis, chief executive of Tiuta, went to the FSA about his concerns some 18 months before the fund was suspended as it was revealed to have invested in fictitious secured loans.
However, his initial concerns were not addressed by the regulator before the fund collapsed.
Last week, the FCA’s new chief executive, Andrew Bailey, who previously ran the Prudential Regulation Authority (PRA), insisted the regulator was taking its ongoing investigation into the fraud “very seriously”.
“This is a very serious issue and I can assure you we take it as such,” Bailey told the FCA’s annual public meeting.
“But I can assure you we will use whatever powers are most appropriate and can be used in the wake of where the investigation goes. The use of powers will receive very serious consideration.”
Strabens Hall
In June, international IFA firm Strabens Hall revealed it had staved off the threat of potential bankruptcy after securing a settlement with its professional indemnity (PI) insurer to “satisfactorily resolve” £1.05m of liabilities to eight customers who had invested in the ill-fated Connaught funds.
