Investors deserve an inquiry into collapse of ‘low-risk’ fund

Amid the ongoing austerity measures, the seemingly endless cutbacks and daily haemorrhaging of jobs it is difficult to find crumbs of comfort.
We are all feeling the pinch and wondering how we would pay the bills if the worst happened to us.
But even in these dark times we look to the future. We hope and plan for better days.
It’s human nature and it is one of the things that keeps us going.
That’s why we save up – no matter how small the amount.
We put money away to fund our children’s university education, to pay for that once-in-a-lifetime holiday or to simply help us get by in old age.
Imagine then the gut-wrenching feeling of being told that those hopes and dreams won’t be realised.
Imagine learning that the savings you have invested for the future simply aren’t there anymore.
That’s the grim reality that hundreds of families in North Staffordshire and South Cheshire are facing up to in the wake of the collapse of a £400m investment scheme.
People like 62-year-old Malcolm Redmond, from Oakhill, who ploughed more than £10,000 into the Arch Cru Investment Funds but now finds himself joining a very long line of creditors.
Just £54m has been set aside for compensation which means that investors will only recover a fraction of their money.
Financial experts agree this is a woefully inadequate package for 20,000 investors when we consider that financial advisers estimate that in MP Tristram Hunt’s Stoke Central Constituency alone, losses may amount to £1.5m.
When it was launched back in 2006, Arch Cru was promoted as a low to medium risk fund.
By the time it was suspended in 2009 it had suffered a catastrophic meltdown in terms of its value which clearly calls into question how the funds were managed, the investments made and the assets purchased.
An investigation by the Financial Services Authority discovered that “funds were used to buy assets from which it is very difficult to get money back”.
This makes you wonder if the fund was marketed properly to ordinary investors back when times were good.
If not then the poor sods who invested in good faith may have a case for having their policies mis-sold.
The collapse of Arch Cru is the latest in a line of scandals to emerge from the financial services sector and begs a number of questions that nothing short of a wide-ranging, Government-instigated inquiry could answer.
However, speaking in Parliament, Treasury Minister Mark Hoban described the compensation offer as a ‘trade off’ which avoided a more lengthy and complex settlement process.
He might as well have said ‘let off’ for the three parties responsible for managing the funds – Capita, BNY Mellon and HSBC.
In layman’s terms, someone, somewhere dropped the ball and sonehow they seem to have got away with it.
Mr Hoban went on to say, with all the sincerity of a man looking down from his ivory tower, that he saw no need for additional inquiry into the Arch Cru debacle and that investors were ‘free to pursue redress through the courts if they were unhappy with the compensation on offer’.
Unhappy? It makes you wonder how Mr Hoban would he feel if he had been told that a large chunk of his savings had been wiped out.
It seems that there is one rule for wealthy individuals and the powerful institutions in this country and another for ordinary taxpayers such as the thousands of Arch Cru customers – many of them pensioners – left in the lurch by the failure of this scheme.
This isn’t a get-rich-quick scheme that went pear-shaped. Rather it is a case of ordinary people paying a hefty price for following advice about an investment fund which they were told would be cautiously managed.