Arch cru redress may spark £33m FSCS levy

Advisers may be faced with an extra £33m in Financial Services Compensation Scheme (FSCS) levies as a result of firm failures caused by a proposed £100m FSA Arch cru redress scheme.

The FSA today began consulting on methods to redress an estimated 17,500 consumers who it believes were mis-sold the CF Arch cru Investment and Diversified funds. Its favoured option is for firms to identify internally any unsuitable sales it made using a template (available in appendix 1 of this consultation document). Those firms will then be expected to redress their clients. It estimates that around 30% of the firms affected may potentially breach their regulatory capital requirements as a result of redress paid, causing them to fail. This would mean up to £33m would end up bei...