The average amount to be returned to Arch cru investors under the FSA-agreed £54m compensation package has fallen to 66% of the value of the funds at suspension, latest valuations from Capita reveal.
The FSA agreed the compensation deal between Capita Financial Managers, BNY Mellon Trust & Depositary and HSBC Bank in June. The FSA estimated at the time that the compensation package would return investors an average of 70% of the value of CF Arch cru funds as at March 2009 when the fund range was suspended, alongside distributions already made and remaining assets.
Capita, the authorised corporate director of the funds, published an explanatory note earlier this week which breaks down exactly how the total return figure for investors is being calculated.
The note says based on the most recent valuation information as at September 30, the estimated total return figure across all funds is 66%. Capita says this figure will continue to fluctuate based on the estimated remaining value of the funds.
Capita has defended the decision to use the suspension value of the funds rather than the original investment to calculate the amount to be returned to investors. It says this is because the suspension value is what investors would have received if they had chosen to redeem their investment on the last day before suspension.
Investors can pursue their IFA to recoup the rest of their original investment.
Capita’s note explains the amount offered to each investor under the compensation package is approximately 34% of the difference between the suspension value and the value of their holdings as at May 31, including distributions made up to that date.
Investors have until December 31, 2012 to decide whether they want to accept the offer under the compensation package or not.
Investors who wait more than six months after receiving their offer may lose the ability to complain to the Financial Ombudsman Service about how their offer was calculated.
Justice for Financial Services and Regulatory Legal have each filed for the compensation package to be judicially reviewed.
Documents obtained by Regulatory Legal show the net asset value of the funds fell before the funds were suspended. Between September 17, 2008 and March 12, 2009, the net asset value in the CF Arch cru investment portfolio dropped by 12% from 115.19 to 101.81 while the specialist portfolio fell by 10% from 114.47 to 102.91.
The value of the investment portfolio fell by almost 6% in the two days before the funds’ suspension on March 13 while the specialist portfolio fell by over 4% over the same period.
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