Financial advisers are expected to fork out £31.5m in compensation to clients who invested in the CF Arch Cru Investment and Diversified funds (Arch Cru) and were found to have received unsuitable advice.
The FCA said today that total redress due under the scheme is calculated to be £31.47m. In December 2012, it was estimated that the compensation package would deliver between £30m-£40m for affected investors.
The compensation pay outs have already begun and so far more than £8.26m has been received by consumers, the Financial Conduct Authority (FCA) said.
The money paid out under the scheme, which is overseen by the FCA, is in addition to any redress investors may have received under a separate process administered by Capita Financial Managers.
Under the FCA's consumer redress scheme 3,414 sales have been reviewed by firms and 85.4% of these have been found to be unsuitable.
The FCA said that this was consistent with the results of a review undertaken before the consumer redress scheme was set-up.
Director of supervision Clive Adamson said: "The vast majority of firms have co-operated with us, helping ensure that this compensation scheme has progressed as smoothly as possible.
"We're now seeing compensation flow to those investors who were mis-sold. We will continue to monitor progress to ensure consumers affected by Arch Cru receive redress as quickly as possible."
Arch Cru funds were high-risk products that typically invested in non-mainstream assets such as private equity and private finance.
The FCA said that advisers should only have recommended the funds to investors who fully understood - and were willing to accept - the risks.
However, it found the funds were unsuitably sold to some investors as low or medium risk products prompting it to set up the redress scheme to ensure investors were compensated.
In December 2012, the regulator predicted that up to 30% of affected investors would sign up to be considered for compensation.
By July 2013, 353 firms had informed the FCA that they had clients who qualified under the scheme.
However, there were still firms outstanding following the 29 July deadline, prompting the regulator to write to firms asking them why they had failed to report back.
Letters were also sent to all of the 7,124 reported investors inviting them to opt-in, of which 47.8% chose to do so (totalling 3,405 investors).
Firms had until 9th December 2013 to review the advice for these clients and submit their assessments to the FCA for redress to be calculated where appropriate.
The redress scheme was criticised by industry bodies in the past, which called it "a bureaucratic and costly way of delivering redress" that was "not justified".
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