The long-running Arch cru saga has taken another twist following an inappropriate approach to redress payment by administrator Capita.
It has written to a number of pension investors to ask them to return money paid from the Arch cru redress scheme or face a 40{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} higher rate tax charge.Capita had paid the redress money directly to clients of Scottish Equitable rather than into their Self Invested Personal Pension (SIPP) schemes. This broke HMRC pension scheme rules and amounted to an unauthorised pension payment. The people affected have the option of facing a 40{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} higher rate tax charge on the pay-out, or returning it to be invested back into their pensions.
The payments were part of the £54 million compensation scheme, for investors in the failed Arc cru funds, arranged by the Financial Conduct Authority between authorised corporate director Capita, BNY Melon and HSBC.
Capita’s letter to the Scottish Equitable SIPP investors said: “When we originally wrote to you we should not have given you the option to receive the redress money as a cash withdrawal from your pension plan. Unfortunately making a payment in this way does not comply with current HMRC regulations and is an unauthorised payment.”
Many financial advisers have been affected directly or indirectly by the Arch cru case with some facing negligence claims for advising on the funds. “Financial advisers now need a rapid conclusion to the Arch cru case,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “It has been going on far too long and the continued series of claims, re-assessments and counterclaims has been damaging for the industry. It has contributed in part to the difficult market for professional indemnity insurance that many now face.”
Further details of the Capita redress issue have been published by Investment Week and New Model Adviser.
