Guy Opperman, Conservative MP for Hexam and secretary of the All Party Parliamentary Group on Arch Cru, is "reluctantly" urging his constituents who lost money in the scandal to accept the deal put forward by Capita to recoup some of their investment.
The Capita payment scheme is a £54m compensation package funded by Arch Cru's authorised corporate director Capita alongside the funds' depositaries BNY Mellon Trust & Depositary and HSBC Bank.
It was announced in June 2011 with the backing of the then-regulator, the Financial Services Authority (FSA).
Investors have until 31 December this year to sign up to the payment scheme, though, by doing so, they will forfeit the right to participate in any litigation against Capita.
According to Opperman's (pictured) calculations - based on information from Hugh Aldous, chairman of the board of the Guernsey Cells of SPL Private Finance, formerly the Arch Cru funds - investors who take the Capita deal can expect up to 55% of their investment back.
This is based on funds realised so far of £133.5m, the Capita settlement of £54m, and funds that remain to be realised of £65m, totalling £257.5m which makes up 55% of the original investment of £463m.
However the £65m of funds that remain to be realised are tied up in highly illiquid assets that may fall further in value, which would diminish the returns to investors. There is also some dispute about the original value of the funds with some estimates putting it at the lower figure of £363m.
Opperman said: "Although [the 55%] figure can change it does highlight the stark fact that full compensation is not going to happen.
"For the avoidance of doubt it is my reluctant view - as an MP, and not as a lawyer / advisor - that my constituents do accept the Capita settlement."
At least 500 Arch Cru investors have chosen to reject the offer and are instead pursuing Capita through the courts for their losses.
The claims - which lawyers Harcus Sinclair who are acting for the investors said could cost Capita £16m or more if successful - centre on the allegation that Capita failed in its role as authorised corporate director of the Arch Cru fund range.
Capita has been censured by regulator for its role in the downfall of the fund - but was neither fined nor made to compensate investors, due to its claim that it had no responsibility for the funds' underlying investments.
Investors are arguing that Capita owed them a common law duty of care to safeguard their money and that it failed in this regard.
The now regulator, the Financial Conduct Authority (FCA), has also forced advisers who recommended Arch Cru to contact those clients and ask them if they want a review of the advice. If they believe they were mis-sold the investment the advisers must offer them redress.
The Arch Cru fund range was suspended in March 2009 by the FSA following a warning that it could no longer trade due to pricing and liquidity issues.
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