Cameron to answer call for Arch Cru inquiry in PMQs

Prime minister David Cameron will today be forced to answer calls for a government inquiry into the failure of Arch Cru and the fairness of the redress scheme set up to compensate investors.

The question is scheduled to be posed during Prime Minister's Question Time today at noon by backbench MP Tom Greatrex.

An investigation would look at how the Financial Services Authority (FSA) regulated the fund, as well as the roles of Capita, authorised corporate director of the fund, the two trustees, HSBC and BNY Mellon, and potentially distributors.

Greatrex is part of an inner core of MPs who have been campaigning on behalf of constituents who invested and advised on Arch Cru. They want the Treasury to launch a Section 14 inquiry into failings at the fund, which led to its suspension in March 2009.

The MP for Rutherglen and Hamilton West also wants the government to independently assess the fairness of a FSA-brokered £54m payment scheme, set up by Capita, HSBC and BNY Mellon.

Sources close to Greatrex said the likelihood of Cameron agreeing to an inquiry depends on how much the prime minister knows about the Arch Cru affair.

"The answer will depend on how much the PM knows about it. If it is not much then he may say 'yes'," he said.

"If he knows about it he will probably say 'no' as that is what the Treasury says."

Greatrex's question will precede a closed meeting of MPs and the FSA at 1pm to discuss the investors' payment deal.

Last month, MPs from six political parties battered Capita with a tirade of attacks over its management of Arch cru investors' money - only to have their calls for a public inquiry into the debacle dismissed by Treasury secretary Mark Hoban.