Capita Financial Managers has admitted there is “significant difficulty and uncertainty” in assessing the value of around 75% of the £149m in assets held in Arch cru funds.
Capita, the authorised corporate director of the CF Arch cru funds, published its annual accounts to the end of March earlier this week.
The accounts reveal the value of around 75% of the £113m held in CF Arch cru investment funds, including the CF Arch cru investment portfolio and the CF Arch cru specialist portfolio, is uncertain.
Out of the £36m held in the CF Arch cru diversified funds, including the CF Arch cru Global Growth fund, the CF Arch cru Balanced fund, the CF Arch cru Income fund, and the CF Arch cru Finance fund, around 70% of the value is uncertain.
The accounts state that the fair value of the underlying cells of the funds cannot be reliably measured, with assessments on value often based on unaudited information and changes in market conditions having an impact on recoverable amounts.
The accounts for the CF Arch cru investment funds say: “These circumstances give rise to significant difficulty and uncertainty in ascertaining the recoverable amounts of the cell’s investments carried at cost less impairment. In respect of investment assets carried in the balance sheet of the company of £113m there is uncertainty over approximately 75% of the value.”
The accounts for the CF Arch cru diversified funds quote the same reason for the uncertainty over 70%of the value of the £36m held in the funds.
Ernst & Young, Capita’s auditor, says the accounts do not give a true and fair view of Capita’s financial position and of the investment portfolio sub-fund, and have not been prepared in accordance with UK accounting practice.
The figures cast doubt over the claim made by the FSA that the £54m compensation package agreed with BNY Mellon Trust & Depositary, Capita, and HSBC in June will see around 70% of the net asset value of funds when the range was suspended in March 2009, when combined with distributions already made and remaining assets.
Two judicial reviews have been launched challenging the terms of the compensation package. One is being brought by Justice in Financial Services on behalf of IFA Coull Money, while the second is being brought by law firm Regulatory Legal on behalf of 2,700 investors.
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