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Motley Cru

Gill Cardy takes her campaigning cause to Westminster. Watch out, Westminster

 westminster

By the time this month’s magazine reaches your desk or desk-top, I will have visited the Houses of Parliament, as the guest of George Galloway MP, to brief Members of Parliament on ‘the Arch Cru situation’.  As many as 15-20,000 investors were affected by the failings of the Arch Cru funds.  Many cannot expect to get more than half of their original investment returned.

If investors withdrew their funds in March 2009, just days before dealings were suspended, and reinvested in other funds, they could have obtained returns of around 55% in the last four years.  Instead, they have been forced to watch their locked-in funds diminish in front of their eyes by a further 40%, and potentially more depending on how much is realised from the orderly wind-down of the residual investments.

Can’t Hear, Won’t Hear

So, why am I briefing MPs on this sorry tale?

MPs do not understand what goes on under the bonnet of investment funds, so they defer to those who do – which is to say, Treasury ministers and the regulators.  MPs, I suspect, have as little interest in the intricacies of anything financial as the rest of the UK population.

Therefore, when investors and advisers write to their MPs expressing their concerns, their questions are almost always passed on to either the Treasury or the regulator, or both, for a detailed response.

What comes back is a standard letter from the Treasury or the regulator, or both, which says that a redress scheme has been put into place which will ensure investors are compensated for their losses.

Except that it’s only some investors, in some situations.  And the compensation will come from advisers or their PI insurers (though more advisers than anyone is prepared to admit are actually not covered for Arch Cru claims, or will find that paying the excesses will bankrupt them).  Worse, where firms have departed, either coincidentally as a result of RDR or as part of a deliberate plan to contain their liabilities, the liabilities will fall on all other adviser firms by way of Financial Services Compensation Scheme levies.

Half-Truths

So I’m sure you’ll understand that the task of writing a briefing to set out the events of the last six years, simply, accurately, fairly and honestly, has been a challenge.  Our elected representatives are being fobbed off with half-truths, and they have no information to challenge what they are being told.

I will set out how the Arch Cru investments worked, the role that each party played, and what went wrong.  I will explain how many investors will never see a return of their investment in spite of platitudes from Whitehall and Canary Wharf, and in spite of the fact that every single party in the product design and delivery chain was authorised and regulated by the Financial Services Authority.

In these days when integrity in financial services and confidence in financial markets has been under the spotlight as never before, it is not too much to hope that well-briefed and knowledgeable MPs will want to hold the appropriate parties to account, for the benefit of individual investors, their constituents, and for the benefit of the financial system as a whole.

Gill Cardy’s IFA Centre has engaged solicitors Harcus Sinclair to set out a case for a better deal for Arch Cru victims. And an online claims centre has been established at www.archcruclaims.org