Following its decision that there was widespread mis-selling of these funds the FSA has launched a redress scheme to allow investors to ‘opt-in’ to having their case reviewed.
The original proposal by the FSA to have advisers proactively reviewing each sale has been modified as a result of the consultation process, it added.
Advisers will have one month from 1 April 2013 to contact their clients, a process the FSA said it would monitor closely.
The wording of the letters to clients has been mandated by the FSA to ensure they are clear and straightforward and action will be taken against advisers who deviate from this prescribed wording.
Clive Adamson, FSA director of supervision, said: “Advisers have to accept and understand that ultimately they are responsible for making sure their customers’ interests are protected. If they don’t understand a product or haven’t done due diligence on it, they are in no position to recommend it to their customers.”
If clients who invested in Arch cru opt for a case review and receive redress it will put them back into the position they would have been in had they received suitable advice, the FSA said.
This scheme is the first of its type to be implemented through the FSA’s statutory consumer redress power.
The deadline for advisers letting customers know the outcome of their case is 9 December 2013.
Meanwhile, investors can still apply separately to the payment scheme relating to the management of the funds rather than their mis-selling, which runs until 31 December.
Adamson concluded: “It is important that when mis-selling occurs consumers can be redressed. The vast majority of advisers maintain very high standards and mis-selling by a few only further erodes trust in the market which harms the whole sector.”
To see the Arch cru policy paper, click here.