Tuesday 20 August 2019

Capita Financial Managers to pay up to £66m for failings

CFM failed to conduct adequate due diligence on the Connaught Income Fund Series 1, the Financial Conduct Authority found.

Brexit impact
Brexit impact

By Ravender Sembhy, Press Association City Editor

The City watchdog has said that Capita Financial Managers (CFM) will pay up to £66 million to investors who suffered losses due to a series of failures relating to a high-risk investment scheme.

The Financial Conduct Authority (FCA) found that CFM failed to conduct adequate due diligence on the Connaught Income Fund Series 1 prior to taking it on, and failed fully to rectify this when it became aware that its processes had been “inadequate”.

In a damning report, the FCA said that CFM also failed to adequately monitor the fund throughout most of its tenure as operator, as well as not communicating with investors in a way that “was clear, fair and not mis-leading”.

CFM’s Connaught fund, which is now in liquidation, was an unregulated collective investment scheme that launched in 2008.

The FCA also “publicly censured” CFM.

Mark Steward, executive director of enforcement and market oversight at the watchdog, said: “Consumers are entitled to expect that authorised firms will carry out their responsibilities under our Principles for Businesses with care and diligence.

“These responsibilities are paramount and in this instance CFM failed badly.”

Because CFM itself is not able to make the £66 million, parent firm Capita will foot the bill.

Mr Steward added: “The amount to be returned to investors to achieve this takes into account the fact that investors have already received a distribution of £22 million made in the liquidation, as well as interest and other payments.”

PA Media

Today's news headlines, directly to your inbox every morning.

Editors Choice

Also in World News