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Capita to pay £66m compensation to investors for failed fund

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Capita Financial Managers (CFM) is to pay up to £66m to investors who suffered losses following the collapse of the Guaranteed Low Risk Income Fund, Series 1.

Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority (FCA), said: “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 Fund was an unregulated collective investment scheme (UCIS), launched in March 2008 providing short-term bridging finance to commercial operators in the UK property market. CFM was the operator of the Fund until it resigned on 25 September 2009. The Fund went into liquidation on 3 December 2012.

The FCA found that CFM hadn’t conducted adequate due diligence on the Fund prior to taking it on and failed fully to rectify this failure when it became aware that its processes had been inadequate. It was also insufficiently clear and transparent with investors.

The regulator said in normal circumstances it would have ordered CFM to pay a penalty of £10.5m, but instead struck an agreement with CFM to reimburse investors up to £66m. Capita said it will pay on behalf of CFM, which it sold to Link Group earlier this month.

The FCA itself has been investigated over the incident, with the Complaints Commissioner finding that it was too slow to probe allegations of wrongdoing.

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