Yorkshire Bank has said it will respond to investor claims it was negligent in relation to failed investment Arck by the end of the month - the latest date possible under legal rules.
Around 400 investors are bringing claims valued at about £23m against the bank for what they allege was its professional negligence for failing in its duty to protect client monies which it held on account for investors in Arck, a £63m unregulated collective investment scheme which entered liquidation last March.
The investors - represented by law firm Regulatory Legal - have been fighting the case against Yorkshire Bank since January. They hold the bank responsible for their losses and are demanding it pays them back.
The bank's commitment to deal with the matter by the end of the month takes it up to the deadline of pre-action principles - after which Regulatory Legal are free to pursue the bank through the courts which it will do if Yorkshire does not respond "positively or in an engaging manner" to investors' claims.
The Arck scheme invested via financial advisers in sale and repurchase (SARP) contracts for foreign property developments which were supposed to produce significant returns.
Arck, along with former directors Richard Clay and Kathryn Clark, is currently being investigated by the Serious Fraud Office and Nottinghamshire Police over allegations of fraud relating to investors' missing millions.
Clay and Clark together received in excess of £4m from the business before it collapsed, according to a liquidator's report.
A central feature of the promotion of Arck was the use of segregated client accounts at Yorkshire Bank, and investors believed the money they had invested in Arck would be protected by Yorkshire.
The bank counter signed letters of instruction to state any sums invested by a client in Arck would be credited to those segregated accounts, would not leave the UK, would be held away from any operational monies of Arck, and would be protected against any failure of Arck.
However when Regulatory Legal issued a freezing order on the main segregated account in December 2011 it contained just £25.92.
A group of 16 MPs has pledged to support Arck investors in their fight to get redress from Yorkshire Bank.
Among the actions MPs have been taking include seeking answers from the chief executive of Yorkshire Bank, raising the matter at a Treasury debate and asking the Treasury to outline what action the government is taking to support Arck investors.
They are also pressing the Financial Ombudsman to act quickly in reviewing Arck cases and reminding the Treasury that the wider regulatory environment must protect consumers' interests.
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