News - Regulation
Arch Financial Products (AFP), Robin Farrell, AFP's chief executive, and Robert Addison, a senior partner and former compliance officer at AFP, have hit back at attempts by the Financial Services Authority (FSA) to ban them from working in financial services and fine them £850,000.
The FSA has today issued a decision notice against the three parties in which it censures them for being "reckless" in failing to manage conflicts of interest with the Arch cru fund range, and for investing the funds in highly illiquid assets without ensuring a proportionate spread of risk.
In a joint statement from Farrell, Addison and AFP, they dismiss the FSA's criticisms as "wrong", and claim the FSA "does not understand the structure" of the Arch cru fund range, and has approached the investigation "with a predetermined view as to alleged fault".
"We fundamentally disagree with every aspect of those notices and now look forward to set matters straight," the statement said.
Farrell, Addison and AFP are referring the matter to the upper tribunal, where they and the FSA will each present their cases in an independent hearing.
Elsewhere in their statement they reiterate previous claims that losses in the Arch cru fund range were not caused by them but were "directly caused by the global financial crisis, the March 2009 fund suspensions by Capita [the authorised corporate director], the subsequent demands for liquidity and the failure to mitigate losses by the new [board managing the fund]'.
Today's publication by the FSA of its decision notice against AFP and its directors follows yesterday's release of the FSA's consumer redress scheme in respect of unsuitable advice to invest in Arch cru, and an earlier censure of Capita for its role in the failure of the fund.
The FSA said it expected between 15% and 30% of consumers will opt in to the scheme, and that based on this assumption the redress scheme could deliver £20m to £40m in redress - paid for by advisers who recommended Arch cru.
The FSA has said 110 firms have already cancelled their permissions as a result of Arch cru sales and it expects a further 100 to do so.
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