The Financial Conduct Authority (FCA) said the firm had “failed badly” in its responsibilities to investors in the Guaranteed Low Risk Income Fund, later renamed the Connaught Income Fund.
Capita was the operator of the fund, an unregulated collective investment scheme (UCIS) providing short-term finance in the UK property market, for only 18 months before resigning in 2009.
The fund went into liquidation in December 2012.
The £66m will be paid out on top of an earlier £22m already paid out to investors in efforts to repay every penny of what was lost.
Mark Steward, executive director of enforcement and market oversight at the FCA, 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.
“The aim of the payment announced today is to return the amount originally invested, placing investors as closely as possible back into the position they would have been in if they had never invested in the fund.”
The regulator found Capita responsible for multiple failings in its running of the fund.
It had failed to conduct “adequate due diligence” on the fund before taking it on and then failed to rectify it once it realised processes had been inadequate, the FCA said.
It also found the firm didn’t properly monitor the fund throughout “most” of its operation of it and then failed to inform the replacement operator of the issues when it resigned in 2009.
Investors were not communicated with in a way that was clear, fair and not mis-leading, it added.
However, the FCA did praise Capita for working alongside it to address the issue of compensation.
“We acknowledge this resolution would not have been possible without the co-operation of Capita plc and CFM. This agreement will provide substantial benefit to all outstanding investors, including those who invested in the fund after CFM resigned as operator,” Steward said.
Capita escaped a hefty fine for its failings after the FCA decided it would not be able to compensate the fund’s investors fully if a financial penalty was also imposed.
Instead it has issued a public censure in relation to the firm.
Duff and Phelps has been appointed agent for the FCA to distribute compensation, and investors do not need to take any further action at this time.
The FCA confirmed further aspects of its investigation into the operation of the fund are continuing.
