3rd April 2012
FSCS has now decided how it will compensate consumers with eligible claims against independent financial advisers that are no longer trading in relation to CF Arch Cru funds.
FSCS has sought external expert advice on the residual value of the CF Arch Cru funds. FSCS is obliged to take this value into account when determining levels of compensation.
FSCS is satisfied that the funds have been valued on a reasonable basis. But, because of the nature of the underlying assets, there is uncertainty about the amounts investors will eventually get back through the wind-down process of the funds which is currently underway.
FSCS does not believe that investors should have to wait until that wind-down is complete to receive compensation. It will make interim payments now and then, if necessary, make top-up payments once the CF Arch Cru wind-down process is completed. It is currently expected that this will be in 2015. These interim payments will also take into account compensation due to consumers from the payment scheme administered by Capita Financial Managers Limited, announced in June 2011 (regardless of whether an investor has actually claimed or received this sum).
This approach means that, as soon as FSCS has assessed a claim and confirmed it to be eligible for compensation, claimants will receive a significant part payment to compensate them for their losses. Claimants may then be paid a further compensation payment in 2015 once their precise losses are confirmed.
Based on the expert advice FSCS has received, interim payments assume the value of a claimant's investment in a CF Arch Cru sub-fund on the basis of the most recently published net asset value for that sub-fund, plus a premium of 12%. This approach aims to maximise the immediate pay-out to investors while minimising the risk of FSCS paying too much compensation if the funds realise more than expected.
FSCS is now finalising the claims process and expects to start processing claims in April 2012. We will be contacting all claimants who have previously submitted claims with further details about the process during April.
Further information about the process is included in an updated Questions and Answers document.