IFAs subject of 600 FSCS claims over Arch Cru

The Financial Services Compensation Scheme has revealed it has received 600 claims against IFAs related to Arch Cru advice, but added it has yet to decide if it will pay any investors compensation.

The scheme has put Arch Cru claims on hold while it looks into who was at fault for investors' losses when the fund was suspended in March 2009 due to liquidity problems.

Funds in the range lost about 6% in the final days before suspension, adding to previous heavy losses.

"To date, we have received around 600 claims against various independent
financial advisers that are no longer trading," the FSCS stated in its half year review, out today.

"The FSCS is considering whether it will be able to pay claims to consumers who have claims against independent financial advisers.

"The scheme is also considering how it would quantify investors' claims for
compensation, not only to take account of payments from the £54m settlement fund, but also the residual value of the CF Arch Cru Funds."

It is still too early to say how much claims relating to Arch Cru will cost, and
when the costs will fall due, the FSCS said.

However, it said it remains possible claims will be paid during 2011/12. Which sector is responsible for the costs is currently uncertain and likely to depend on the circumstances of individual claims, it said.