The redress deal struck by the Financial Services Authority and Capita, HSBC and BNY Mellon will return Arch Cru investors just 10%-15% of their original capital, according to lawyers who have seen the offers.
Capita Financial Managers last week sent a letter to investors who lost money in the Arch Cru fund range to set out their individual entitlements under a £54m "redress determination" scheme, announced on 21 June.
The FSA has said the deal should return approximately 70% of investors' capital, on the basis of an upfront sum from the three companies and the assumption there will be further cash distributions from the fund as it is wound down.
Investors who received their offer at the weekend said the upfront sum represents between 10-15% of their initial investment in cash terms, according to the law firm acting on their behalf, Regulatory Legal.
One investor offer seen by IFAonline shows a total loss of £63,430 from a couple's original investment of £85,278, a fall of 74%.
Speaking about his loss, which included his wife's lump sum retirement payout from the NHS after a career in nursing, the husband said: "My wife and I were close to tears when we opened the attached "offers" yesterday.
"Whilst we would have expected a drop in the value of our investment following the financial meltdown caused by the banking crisis, these huge losses are almost too much to comprehend."
Elsewhere the letter states the recent sale of some of the Arch Cru portfolio at a discounted price to JP Morgan has already reduced the potential 70% return to investors down to 65%.
Gareth Fatchett, partner at Regulatory Legal, said the prospect of a 70% cumulative return looks "very unlikely".
"We simply cannot see an orderly wind down being at anything other than a significant discount the original prices. The JP Morgan deal supports this assertion," he said.
The husband of the couple who lost 74% of their combined investment said: "I think we can both safely say that we are never going to trust the financial services sector with our money ever again.
"I wonder how many other people will take the same view - look out for IFAs bereft of clients going bust one after the other!"
Those people who are invested through third parties such as a platform have been told they may have to wait a further two weeks for their offer.
Under the terms of the FSA-brokered deal, Arch Cru investors can not complain to the Financial Ombudsman against Capita, HSBC or BNY Mellon from the period after 31 August 2011 and before the date of their offer letter.
The FOS is required to consider complaints which are referred to it after the date of the letter on the basis of what their entitlement under the payment scheme would be.
Investors have until December 2012 to choose whether to accept their individual offer.
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