The regulator has said it “is minded to seek a financial penalty” against Capita Financial Management
Capita has set aside £37m after the FCA indicated it could fine the company over its connection to the collapsed Connaught Income Series 1 fund.
Capita Financial Managers was the operator of the fund until 2009. The fund went into liquidation in 2012 and the liquidator brought a claim against Capita and another operator, which Capita settled last year for £18.5m.
The FCA is currently investigating both operators. Capita’s half-year results statement says the regulator recently “indicated” it “is minded” to impose a fine against Capita Financial Managers.
The statement says: “The company is continuing discussions with the FCA in relation to its findings in respect of [Capita Financial Management‘s] conduct and the associated potential financial penalty. While these discussions with the FCA take place, provision at this time has been made for the full potential amount of the financial penalty and associated legal costs (£37m).”
It adds: “The company has taken a prudent approach to this provision reflecting the early stages of our discussions with the FCA and the lack of clarity on the basis supporting the FCA’s position.”
The statement says: “In respect of the redress the board does not consider that the company is liable to pay further sums in addition to the amounts already paid in respect of the settled claims and therefore no provision has been made at this time. Based on the information available to date it is not possible at this stage to determine what the ultimate outcome of the FCA review might be.”
Meanwhile, union Unite says staff it represents at Capita have voted to strike after the company proposed to close its defined benefit pension scheme and transfer to a defined contribution scheme.
Unite has told Capita that staff will be striking for six continuous days from 5 October.
The Capita sites where Unite members are impacted are in Birmingham, Reading, Bristol, Manchester, Stirling and Belfast.
Those staff are employed by Capita Life & Pensions Regulated Services and Capita IT Services. The Capita contracts that are affected are Prudential, Royal London CIS, Phoenix/Royal London, Friends Life, specialist services and IT.