Friday, 10 November 2017

Investors to get £66m back - five years after collapse of Connaught fund, says City watchdog



More than 1,200 investors in a collapsed income fund are set to get the value of their investments returned - a total of £66m.
 
The announcement was made by the City watchdog as its long-running inquiry into the Capita Financial Managers' (CFM) Connaught fund continues.
 
 
The fund - formerly known as the Guaranteed Low Risk Income Fund, Series 1 - was placed in liquidation in December 2012.


The Financial Conduct Authority's (FCA's) inquiry found a series of failures including inadequate due diligence prior to CFM taking on the fund and a lack of oversight.


It also identified poor communication - finding investors were ultimately misled.


But the FCA said it had decided not to impose a fine as such a move would have meant customers losing out.


It added that it had also taken into account that parent firm Capita - the FTSE 250 outsourcing specialist - was funding CFM's £66m payment to the FCA for the investor redress.
 
 
Its shares were trading 2% lower on Friday.


Capita had announced in its half-year results in September that it had made a £37m provision to cover the cost of any fine in the Connaught case. It is now believed to be planning the booking of a £29m charge to meet the £66m payout.


The company said it had previously paid £18.5m following a claim brought by Connaught liquidators.


It described the FCA's announcement as a "full and final settlement" and added that it had since disposed of its Asset Services businesses, including CFM, in a sale to the Link Group a week ago.


It has been a tough few years for Capita - announcing in March that its chief executive Andy Parker was to leave in the wake of a series of profit warnings related to tough trading conditions and relegation from the FTSE 100.



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