A Conservative peer has drawn parallels between the collapse of Arch Cru and the Bernie Madoff scandal, stressing the need for the regulator to do more to protect consumers.
Speaking during the second reading of the Financial Services Bill in the House of Lords, Lord Northbook called on the FSA's successor bodies to pay more attention to investments described as ‘low-risk'.
He said: "Arch Cru was established in 2006 and was sold as a vehicle to provide low-risk cautious management funds. It is reminiscent of Bernie Madoff's venture.
"Like all investment funds, it was regulated by the FSA. Needless to say, it invested in high-risk property, shipping and ferries."
Bernie Madoff was sentenced to 150 years in Jail in June 2009 for operating a Ponzi scheme which lost investors around $19bn.
During the same debate on Monday, Lord Teverson, a Liberal Democrat peer, said there were a ‘number of problems' with the Financial Services Compensation Scheme (FSCS), which needed to be resolved.
"At the moment it is seen as a rather unfair system, particularly given Keydata and other such instances. I think that we are stalling there because of European recommendations or legislation that is coming forward, but I have a question for the Minister.
"At what point do we say, ‘Okay, we can't wait any longer. Let's change the way that the scheme works'?"
The FSA began its review of the FSCS funding arrangements in October and, following delays to developments in Europe, now expects it to be completed by the end of this year.
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