Arch Cru Fund Investors
With the demise and mismanagement of the Capita Arch Cru Fund, I’ve set this post up to allow investors a place where views can be shared, updates can be posted and a general place for those affected to gather together. These funds, marketed as “Cautious Managed” have turned out to be anything but Cautious and certainly not Managed particularly well!
If anyone has information or can link to information which is current and up to date, we’ll make sure it is brought to as many people attention as possible.
Simoney Girard
Has anyone entered the new year with any resolution to this situation? Are you still being charged? I would like to hear from you if so – please email me at simoney . girard @ ft . com
Elliea
Hi,
I have been looking through the posts on this website to try and find some advice for my mother who has invested in this awful CF Arch Cru Plan.
Neither of us really understand anything about investments and she was advised by an IFA to invest almost everything she had. I am absolutely furious that she has been left in this situation but do not know how to help. I have also applied to join your Facebook group as it would be useful for me to try and keep up to speed with whats happening. From what I can gather she is being drip fed very small amounts of money as I imagine others are, but where do we take it from here?
I don’t know how much longer she can cope without the money and the stress of it all isn’t doing her any good either. Please can anyone advise me on what steps to take in order for me to help.
Should we be making a complaint to the financial Ombudsman, if so what should the complaint detail?
I would appreciate any advice.
Thank you in advance.
admin
The best thing I suggest you do is get in touch with Regulatory Legal. They are doing a class action type thing against Capita and would be a good thing for you to check out. There may be a few others that are going down that path as well – making a complaint on your own is going to be very difficult and companies like Capita know how to make it very difficult for ordinary investors to achieve any success through normal means.
Who you complain about could be one of many – your IFA for poor advice, Capita for poor management, CRU, and a few others here and there. Whilst they are all culpable, Capita are the most at fault – it is they who the cheques are written too and it is they who are at the centre of the balls up.
ann
I took the route of complaining to the ombudsman about the advice given to me by my IFA. Whilst there are other courses of redress I do feel that this route takes a more personal approach rather than joining a joint action. The process does take time but I have now had my case upheld by the Ombudsman. Unfortunately the business has still failed to respond to the Ombudsmans directive and it is likely that my next course of action is to go to a solicitor for this to be enforced by law. The whole process does take time and will now require some additonal expense,however now armed with the fact that the Ombudsman agrees with my complaint I now feel confident to fight this to the end! I am happy to share the knowledge I have gained with anyone who wants to take this approach.
Jessy
Hello Ann,
We have been told we should have the Ombudsman final decision within the month.
Can you tell me your complaint has been upheld by the FSA adjudicator and then rejected by your IFA so then sent to the Ombudsman for a final decision, or if your IFA has just ignored you altogether?
I understood that once the Ombudsman has made his final decision the IFA has to comply with it – i.e. either he or his insurance company must pay up.
ann
Hi Jessy ,yes it was disputed through the adjudication process but the adjudicator upheld our complaint. It was then passed to the ombudsman for a final binding decision which he also upheld. I like you thought it was the end of the saga but then found out that whilst the decision is binding the ombudsman do not have the legal powers to enforce this. If the IFA still refuses to conform then the only course of action is to go to a solicitor to take the IFA to court if necessary. On speaking to a solicitor he did say that whilst he cannot guarantee the right outcome for me the fact that the Ombudsman had upheld the complaint would stand me in s very good position to win and in this case any costs would go to the IFA. The ombudsman has contacted me again today having spoken to the Company concerned and I have been told they they have agreed to pay up next week, although until I have the money nothing is certain. Fingers crossed and good luck .
Jessy
Ann, if you’ve suffered just a fraction of the stress I and other investors have suffered over the past two years, I am sure you feel a massive sense of relief. Many congratulations! Would be good to hear when you get your cheque. My email address is jes55@talktalk.net.
Clare
Two years on and no real progress. Hard to believe isn’t it. Just a quick question – what happens if , for example, the RL action is successful. Do only members of that group get compensated or is it across the board? My IFA has joined ACCG, but I am worried that if he is backing the wrong horse I will lose out yet again. May seem like a silly question, but I am new to the world of investment and don’t mind admitting I haven’t a clue.
Carole
Ann – I do hope by now you have received the proceeds of your claim from your IFA. We also have a complaint in hand – most of my husband’s pension pot having been invested in Arch Cru on the recommendation of our IFA. It would be very helpful to know what the grounds were for the Ombudsman ruling in your favour.The earlier ruling we know of was based on the judgement that the client’s low to medium attitude to risk did not match the Arch Cru 55% exposure to private equity. Arch Cru was too risky for the client. What did the Ombudsman say in your case? Carole
ann
Hi Carole, well as yet still no money. The ombudsman ruled that they had to refund all the money less any money we have had paid back from Capita. In order to do this I now have to transfer my policy over to the financial advisor so that they can get back any payments that Capita pay back in future. Un fortunately they have only just advised that so Im waiting for the paperwork to come from Capita to do this. Hopefully this will be the last of the many hurdles I have encountered. With regard to the decision this was based on our risk factor and that it didnt match the risk of the product. This was money invested by me as power of Attorney for my mother who was seriously ill in a nursing home. Clearly in these circumstances the money needed to be safe. The ombudsman states that it was very complex and speculative fund and that there was no evidence to suggest that that I would have understood the risk due to the specialised nature of the products. The ruturns that were documented which were higher than normal also indicated that this was speculative investments with possibility of significant or total loss. He said the advisor should have realised that this risk didnt meet my needs for my mother. The ruling is quite long and more detailed but that is the gist of it. If you want to email me direct im happy to answer any further questions you may have colinanngrier@hotmail.co.uk good luck
Eric Armstrong
“Capita for poor management”
If ‘admin’ doesn’t know the difference between the third party administrator providing governance (Capita) and fund ‘management’ (Arch Financial), then it looks like a case of the blind leading the blind. The issue here is advisers who were duped, and appalling advice offered by people who should have known better. Attacking Capita is a sensible strategy as they have the deepest pockets, but to say it is their ‘fault’ is non sensical.
admin
Eric, There are multiple root causes, and there are several areas where communications have broken down, particularly between advisor and customer. But all these mistakes fall under Capita’s watch. The cheques for investment were paid to Capita and the contract is between the investor and them, no-one else. Every aspect of the fund is ultimately their responsibility and is entirely sensible to assume it is their fault (though there are others to also blame) and the most pragmatic to pursue this in terms of getting a result.
Tim
One thing people can do is go to their MP. If you do searches you can find out the MPs who have already asked questions in Parliament. I emailed a couple of them and was told the more MPs involved the better in terms of pressure. My MP has written to the Financial Services Authority and has been in touch with other MPs who have asked questions.
admin
I agree with Tim, this is what everyone’s MPs are there for.
keith hamilton
I have just received report from FOS Adjudicator (took abou 6 months!) advising that about 70% of my investment should be returned to me but this is now being challenged by the IFA concerned. It will now go to an ombudsman at the end of this month. Another IFA told me it is likely to back up the Adjudicator`s decision.
Should I just just accept what they rule even if it seems low?
Many thanks for any suggestions.
Keith
ann
I thought you may like to know that I finally received a full settlement of my claim including interest as specified by the Ombudsman. I feel this is a real victory that justice has been done. I only hope more people are able to get the same outcome to any claim they have in progress through whatever complaint route they have chosen to take. Good luck
john skuse
we are in exactly the same situation as alot of others we have been very patient and took the advise of our ifa but having seen what others have put we now think maybe he is at fault. We asked for low risk so we could have back at least our capital but now we have lost so far 90% of our investmentWe know nothing about investment and relied totally on our IFA Please can somebody advise what route to take next.
Richard
I arranged my investment in cru after advice from my IFA. When arch cru collapsed I tried to obtain redress from my IFA but was rejected. Then I submitted my claim to the FSA only to have it rejected. I subsequently dismissed my IFA to ensure that he got no more commission. Does anyone have any suggestions on how I should proceed in the light of other complaints being upheld? The situation is complicated by the fact that I live in Spain.
Andrew
Just for the record it the funds failed due to a lack of governance and alleged fraudulent transactions by the fund manager. Without using a lie detector adisers would have been unaware that the funds were flawed. Indeed the FSA hadn’t detected that nor had Capita with access to information way beyond that available to your advisers. Of course it is nigh on impossible to deduce that fraud is taking place because the fund manager will never tell you. Hence Bernard Madoff was able to dupe RBS Santander into investing with him. The point is that Capita has been denying responsibility for the actions of their delegate fund manager who operated outside of the investment mandate. There is a campaign underway to get the issue debated in Westminster Hall and letters are being sent to MP’s by investors (over 600 in the last fortnight). If you go to the website http://www.theyworkforyou.com/ put in your postcode and it will come up with your mp.
Even if you don’t send the letter below you should read it to get some background as to what has happend and why Capita should carry the can. Here is a draft wording for a letter.
House of Commons
London
SW1A 0AA
08/06/2011
Dear
Re: CF Arch Cru Investment Funds
I wish to draw your attention to a very serious matter affecting some 20,000 investors (including myself) in the CF Arch Cru funds. This is not just a case of an investment that has underperformed due to the Global Financial Crisis but one where there are serious misgivings in relation to the management and governance of the funds. Indeed the Chairman of Cru Investment Management wrote to the Serious Fraud Office in January 2010 (copy attached) with specific allegations of fraud.
The issues are so serious that the funds have been suspended since March 2009 and CAPITA who are the Authorised Corporate Director (ACD) has been unable to offer timely and meaningful valuations of the assets within the funds.
The situation involves several parties (see the further background set out below) all of whom are reluctant to deal with the issues in an open manner and appear to be trying to evade their responsibilities to investors, all of which is being presided over by the Financial Services Authority (FSA).
The FSA to date has provided little or no guidance for those investors in the funds which is frustrating as they are responsible for the regulatory system and any failings which take place within it. The FSA has taken over two years to examine the funds whilst providing no information about their findings or the date they might publish the results of their investigation.
A full independent investigation into this matter is required as the FSA appear to have taken no action concerning the fraud allegations and seem reluctant to admit that CAPITA has failed in the duty as ACD and order CAPITA to return the investors initial investment plus interest. I believe that the FSA are reluctant to do this as it is an admission of further regulatory failings in the UK retail investment sector to add to several other recent high profile failings.
I understand that your colleague Alun Cairns MP for vale of Glamorgan wishes to have the issues debated in Westminster Hall and I would urge you to support him.
Please confirm that you will speak to Mr Cairns, and whether you are willing to lend your support to 20,000 hardworking members of the public who were trying to save for a better future.
I would be happy to meet with you at your local surgery to discuss the affair in more detail and provide you with relevant fund documentation.
Yours sincerely
ADMIN EDIT – DUE TO LEGAL THREATS WE HAVE HAD TO EDIT A SECTION OF THIS COMMENT. WHILST IT STANDS AGAINST EVERYTHING I BELIEVE IN TO HAVE TO DO THIS, I’LL POSTPONE THIS BATTLE TILL ANOTHER DAY PLEASE KEEP COMMENTING.
It is little wonder that there is a significant ‘savings gap’ in the United Kingdom as these circumstances have created a serious loss of faith in the regulatory system. The four statutory objectives of the FSA are to maintain market confidence in the UK financial system, promote public understanding of the financial system, secure the appropriate degree of protection for consumers and help reduce financial crime. I believe the situation can only be resolved by ensuring the FSA meets its statutory objectives and takes action to deal with those parties responsible for this debacle. To date I believe that the FSA has failed CF Arch investors and as such should be answerable to Parliament through the Treasury for the ineffective execution of its powers and duties.
admin
An important development for investors.
http://www.citywire.co.uk/new-model-adviser/fsa-announces-54m-payout-for-arch-cru-investors/a502117?ref=new-model-adviser-latest-news-list
Ian
Andrew—like you we engaged our MP to raise this matter in Parliament.
Then came yesterdays FSA/Capita announcement .
While welcome,the proposal would still leave investors substantial losses.
In our case, since we only investd in December 2008 (thus likely funding some “in the know” who were bailing out !)our losses seem to be purely due to Shares overvalued by Capita /Fund miss-management rather than any subsequent, general, Stock Market falls .
If the FSA/Capita proposal might EVENTUALLY return 70% of the Fund Value at March 2009 (whatever that “small print “might mean for Dec2008 Investors !)—how do we pursue recovery of the remaining Loss (30% +/Interest ??)
FSA say they are still Investigationg “other Parties “—so will those Parties or the FSCS repay the remaining Investor losses ??? The devil will be in the detail —-currently it’s all very vague .
It will be interesting to hear Regulatory legals opinion on all this —ie fight on(versus who ?) or settle for 70%??—AND whether the FSA will EVER hold any Party Guilty/Accountable for this retail Investor travesty .
Deborah Hodson
Hi Anne I have been following your blog with anticipation.My situation is very similar to yours I have power of attorney for my husband who was diagnosed with cancer and between 3-6 months to live in March 2007.We appointed an Ifa and also set up a trust, my husband instructed all concerned that he wanted to make sure that myself and our children would be financially secure should the worst happen. A large sum of money was invested in Arch Cru my husband was assured that this was a cautious fund and that his investment was safe!!!!
Well here we are my husband is thankfully still fighting and excessively stressed with this whole situation.
We are involved with regulatory legal but things seem to be dragging on and why is 70% of our money reasonable when a cautious fund should only lose around 10% in the worst situation!!!
We feel totally mislead and my husband needs to be able to focus on his health not worrying about money which he was assured was safe!!!!
Any advice would be gratefully received.
ann
Hi Deborah I have received your email regarding your situation but unfortunatley when I try to reply your email address isnt recognised. If you let me have another I will try again to reply.
Deborah Hodson
Hi Ann not sure why it’s not recognising my e-mail. ndhx5@btinternet.com
Andrew
Ian,
Sorry I’ve not looked at this site for a while I believe the loss to investors will be in the region of 40 to 50% for most investors. The figure of 70% looks like a red herring. I’ve just noticed comments have been removed from the site it’s happening all over the web. Here is some factual information;
The following is taken directly from the ACD’s (CAPITA) interim short report for the half year ended 15 December 2008 for the CF Arch Cru Investment Portfolio (four months before suspension) -
“The fund will seek to achieve its objective by investing directly in a broad range of collective investment schemes, transferable securities, bonds, money market instruments, cash, derivative instruments, forward transactions and other instruments that the Investment Manager considers to be appropriate from time to time.
The fund has little exposure to credit or cash flow risk. There are no borrowings or unlisted securities of a material nature. The main risks it faces from its financial instruments are market price, foreign currency and interest rate risk. The ACD (capita) reviews the policies for managing these risks in order to follow and achieve the Investment objective summarised above.”
This differs somewhat to what CAPITA stated after the suspension, and now claims it’s role as ACD was to monitor the Guernsey Cells share value on the Guernsey stock Exchange.
Maybe it is why CAPITA in a statement of affairs published with accounts for shareholders in CAPITA stated – “CFM predominately provides administration services to investment funds and, in some cases, additionally acts as ACD. In light of the experience gained from the Arch Cru situation, we have undertaken a strategic review of CFM and decided that the balance between risk and reward in some of the ACD business does not serve our shareholders well. Accordingly, we are now in active discussions to dispose of this higher risk part of this business”.
This is an extract from Capita’s rejection of investor complaints
CFML’s rote as ACD of the Funds
As ACD, CFML is responsible for the management of the Funds. In relation to the Investment Funds, CFML has been the ACD since launch, whereas in relation to the Diversified Funds, CFML assumed the role of ACD in September 2007, taking over from Insinger de Beaufort. The duties of an ACD are set out in the Collective Investment Schemes sourcebook of the FSA Handbook (‘COIL”) and include (among other things) responsibility for issuing the prospectuses of the Funds; handling dealings in the Funds; ensuring that the investments of the Funds comply with applicable FSA rules on investment and borrowing powers and the investment objectives of the Funds; and pricing of the Funds.
Until 4 December 2009, the investment management of the Funds was delegated by CFML to Arch Financial Products LLP (“Arch’) (although CFML remained ultimately responsible under COLL for this investment management activity).
CFML’s responsibilities in relation to the Funds investments in the Cells involved ensuring that these investments complied with the prospectus and the COLL rules and remained appropriate for the Funds. The available information regarding the Cells, and their performance, prior to suspension did not indicate that the Funds continuing to hold these investments was inconsistent with CFML’s responsibilities.
Distinction between the Funds and the Cells
In contrast to its role as ACD of the Funds, as outlined above, CFML had no involvement in the establishment or operation of the Celts, nor did CFML have any ongoing governance role in respect of the Cells.
The constitution, operation and management of the Cells are subject to Guernsey Law and the regulations of the Guernsey Financial Services Commission (the “GFSC’). Although Arch was investment adviser to the Cells, this role was not performed as CFMLs delegate and CFML bore no responsibility for Arch in this regard. Instead, it was the responsibility of the independent boards of the Cells to exercise oversight in relation to the Cells and ensure the objectives set out in the scheme particulars of the Cells were met. The Cells have their own administrators (formerly Bordeaux Services (Guernsey) Limited (“Bordeaux”), now Elysium Fund Management Limited) and auditors (formerly Moore Stephens LLP, now Ernst & Young LLP).
The shares in the Cells were listed on a designated investment exchange, the Channel Islands Stock Exchange (“CISX”) and constituted transferable securities for the purposes of the COLL investment and borrowing power rules. The Funds, for which CFML is responsible, are shareholders in the Cells. CFML did not have day-to day responsibility for managing the Cells or deciding on particular transactions undertaken by the Cells,
Capita Short Report March 2011
The ACD has previously been of the view that the Company did not control the Guernsey Incorporated Cells (the ‘ICs’) in which it is invested and therefore did not produce accounts for the Company which were consolidated with those of the ICs. All previous accounts for the Company had not been prepared on a consolidated basis and had been approved and signed off by the Auditors without qualification.
The Directors have, after consultation with the Auditors, formed the view that, for the purposes of FRS2, the Company controls an IC where it owns 75% or more of it. Applying this test at
31 March 2010, FRS2 would require the Company’s accounts to be consolidated with the accounts of 8 of the ICs in which the Company is invested. In circumstances where the Company is in the course of being wound up, however, the Directors do not believe it is in the interests of shareholders to delay publication of the accounts further and incur the additional costs that would be necessary to produce consolidated accounts. The non consolidation of the accounts does not affect the calculation of the overall NAV of the Company and does not, in the ACD’s opinion, cause any material disadvantage to shareholders.
I’m confused did they or did they not control the cells?
Andrew
I think Regulatory Legal are due to offer some options next week.
Ian
Andrew–thx for your sleuth work above .How CFML can claim not to be ultimately responsible for the handling of our Investments including the ,apparently,wholly owned Guernsey Cells escapes me. So too how the FSA might be willing to let the ACD(CFML)off responsibility for fully compensating Investors for losses in ,all or certain specific, Funds in the CF Arch Cru portfolio escapes me.
The Finance Fund is a glaring example of incredible ,almost “overnight ” losses –launched in November 2008/suspended in March 2009! In January 2009 Arch proudly announced it had attracted over £40M of Investors cash —now seemingly even that specific “low Risk/Highly Secured /Absolute Return etc ” Fund has lost 30-40%.
How could that happen in so few weeks,in a climate of RISING Global Stock Markets /recovering Economies ????
I particularly look forward to either Capita’s or the FSA’s explanation relative to this specific Funds performance –Over just .20 weeks where did THAT money (including my wifessavings !) go –and so fast ? !
joan
My husband and I have recieved a provisional decision from the Ombudsman to have our lifesavings refunded with interest. This was due to be finalised by 3rd. May. The decision has been stalled due to Capita’s offer. We must wait for word from Capita and wonder should we accept the offer. Our investment is 150k+. Joan
Bruce ross
Hi everyone , like most on here I have taken a wait and see approach mainly due to the advice of my IFA which I have used for years .
However it is now apparent that small investors are going to be thrown to the wind with this , my main question to those much further down the line is , how do you raise an action against your IFA , is there a letter template anywhere , or can I go straight to the FSA/FSO .
may thanks Bruce
ann
Hi Bruce from earlier posts you may read that I have been successful with my claim against my IFA and have had the claim settled through the FOS. I do not think there is a template letter as each case will differ. What you do need to state in any letter that you write is that your attitude to risk was,I presume, low to medium and the reasons why and that your advisor was aware of this and that the product sold did not match your risk profile as the product sold was speculative and high risk. I presume you will have documentation from your advisor with his recommendation and your risk profile and why he thought this was suitable for you. In this first instance the complaint has to go to the advisor giving him the opportunity to respond. If you are unhappy with the response it is at that point that the FOS will look at your case. I would contact the FOS direct for guidelines they are very helpful and infact can log the complaint to the IFA on your behalf. If you need any more help let me know if you look back you will see my email address.Good luck
Bruce ross
Ann , many thanks , I have been in direct contact with my IFA who I actually have a very good relationship with (financially), his company are involved with Regualtory Legal which I believe are representing IFA’s as well as individual investors .
You are correct in the belief that all my paperwork states a low-medium risk , also that the returns were based on solid rates of return not pie in the sky rates . I am waiting for a return call on Monday , which will sway my decision as Regulatory Legal are very keen on my money (£200plus Vat ) , however I still dont know if I will be any better off long term .
I will keep in touch and many thanks
Bruce
Andrew
Complaints via FOS have been suspended for the time being and the FSCS are trying to decide if they should pay out or not in the event of advisers going out of business. Meanwhile George Osborne and Hector Sants have been sent a letter and a report with lots of information about regulatory failings of institutions involved in this debacle. In the report there was very little mention of IFA’s other than the fact they were allegedly supplied with a large amount of false information about the funds, information on which they made their recommendations.