Court to hear Arch Cru case

This article was originally published in The Financial Times

Court to hear Arch Cru case

By Tanjil Rashid

The High Court has agreed to hear a £16m claim against Capita Financial Managers by 550 investors in Arch Cru funds.

The Arch Cru fund range was suspended in March 2009 by the Financial Services Authority. Capita was publicly censured by the FSA for its failures in managing the fund, and in 2012 the FSA brokered a corporate redress scheme, where investors could recoup about 60 per cent of their investment from Capita.

The legal action is being brought by investors who refused to sign up to the redress scheme. Those who intend to accept it have until December 31 to do so, and waive the right to further legal claims.

At the time, it had as many as 15,000 investors and was worth £364m. After the fund’s suspension, most of its assets were sold at a heavy discount, and the rump of the fund now valued at only £66m. Arch Cru investments were marketed as being safe and low-risk, but in fact investors’ money had gone into highly illiquid venture capital and private equity assets.

The FSA judged that Capita had no responsibility for the fund’s underlying investments, but the investors are now arguing that Capita owed them a common law duty of care to safeguard their money. The Financial Conduct Authority, the successor to the FSA, is forcing advisers who recommended Arch Cru investments to contact investors and inform them of the litigation action.

Should the claim prove successful, it may pave the way for further claims on behalf of investors who lost their money in investment funds that were similarly mis-sold.

Sharon White is first woman named Treasury permanent secretary

This article was originally published in The Financial Times

Sharon White has become the first woman – and the first black person – to be appointed as a permanent secretary at the Treasury, in a sign of the changing face of Whitehall’s most powerful department.

Ms White becomes second permanent secretary with responsibility for managing Britain’s public finances, including overseeing a fiscal squeeze expected to last until 2020.

She worked at the Treasury in the early 1990s – former Conservative chancellor Ken Clarke was said to be a big fan – and has also worked across Whitehall. In 2011, she led the review of the Treasury’s management response to the financial crisis. Before becoming a civil servant, she worked for a church in a deprived area of Birmingham.

Ms White’s ascendancy reflects a change in the make-up of the Treasury, which a decade ago had a staff that was more than 75 per cent male only. Today 43 per cent of employees are women.

Dame Anne Mueller was a Treasury permanent secretary in the 1980s, but she secured her job as part of a general Whitehall upheaval. Treasury officials say she was not “appointed” to the post.

As Ms White remarked in an interview with The Guardian last year, the Treasury has been seen by many on the outside as having “quite a macho culture” and that economics, as a discipline, was still male dominated.

But her appointment also throws up an intriguing dynamic in the White household; while she oversees Britain’s public finances, Robert Chote, her husband, runs the independent Office for Budget Responsibility.

The Treasury said Ms White was “overwhelmingly the best candidate for the job” and that, while she would come into contact with the OBR, she was not the lead official dealing with the budgetary watchdog.

Ms White works under Sir Nick Macpherson, permanent secretary, and alongside John Kingman, a second permanent secretary.

Tom Scholar, the incumbent, moves to Downing Street as David Cameron’s foreign policy adviser.