The Financial Services Authority has asked the High Court to make an "urgent" decision on whether a group of IFAs can judicially review the £54m Arch Cru investors payment scheme.
Six IFAs, who all recommended clients to invest in the funds, are backing a request made in September in the name of IFA Coull Money asking for a judicial review of the FSA-brokered deal which has contributions by Capita, HSBC and BNY Mellon.
The group argues the scheme, which caps the three companies' contribution at about 34% of investors' capital and restricts claims at the Financial Ombudsman Scheme against them to the same amount, leaves IFAs exposed to compensation claims for the outstanding amount.
No decision to grant the review has yet been reached by the Administrative Court. But a note on the case file stated the court had received an application from the defendant - the FSA - asking for the permission decision to be dealt with "urgently".
The court could not give an indication of when a decision would be made.
Foot Anstey, the law firm advising the IFAs on their action, has previously acted for the Arch Capita Compensation Group (ACCG), set up by Cru founder Jon Maguire.
Cru, which marketed the Arch fund range to advisers, has been heavily criticsed for its role in promoting the funds as low-risk.
Alan Hughes, partner at Foot Anstey, denied the association creates a conflict of interest: "We have acted for ACCG in the past but now act for the investors who were part of that group individually.
"We don't see there is a conflict or we wouldn't be acting," he said.
Manchester law firm Pannone is seeking to bring professional negligence claims against IFAs who invested clients in Arch Cru, following Treasury Secretary Mark Hoban's refusal yesterday to launch a government inquiry into Capita's role.
The FSA has said the deal, combined with non-guaranteed future distributions from the winding down of the fund range, will return 70% of investors' capital and represents a "good outcome". Chief executive Hector Sants has advised investors to take the deal, and drop their fight for 100% redress.
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