FCA orders Capita to refund Connaught investors £66m

The Fund was an unregulated collective investment scheme which launched in March 2008, providing short term bridging finance to commercial operators in the UK property market.

Capita was the operator of the Fund until it resigned in September 2009. The Fund ultimately went into liquidation in December 2012.

The FCA said Capita failed to adequately monitor the Fund and failed fully to rectify its failure when it became aware that processes had been inadequate.

It also found that Capita failed to communicate with the Fund’s investors in a way that was clear, fair and not misleading.

The regulator noted that while these failings would ordinarily have resulted in a financial penalty, Capita would not have been able to reimburse the £66 million to the Fund's investors on top of a fine.

The FCA says this brings an end to its investigation into Capita, but investigations into the operation of the Fund are continuing.

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 amount to be returned to investors to achieve this takes into account the fact that investors have already received a distribution of £22 million made in the liquidation, as well as interest and other payments. This also includes any awards made under the Financial Ombudsman Scheme they may have received since they invested.

“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.”