The Financial Conduct Authority has said that advisors are set to pay £31.47 million ($52.17 million) in compensation as part of its Arch cru redress scheme.

The Financial Conduct Authority has said that advisors are set to pay £31.47 million ($52.17 million) in compensation as part of its Arch cru redress scheme.

The FCA said in a statement that £8.26 million had so far been paid out to customers that invested in CF Arch cru Investment and Diversified funds following the mis-selling of a range of financial products. In December 2012, previous regulator the Financial Services Authority estimated that the compensation package would deliver between £30 million to £40 million for affected investors.

Arch cru funds were high-risk products that typically invested in non-mainstream assets such as private equity and private finance. In some cases, Arch cru was sold as a medium to low risk investment, but it was in fact high risk and should only have been recommended by advisors to investors who fully understood and were willing to accept the risks.

It was suspended in March 2009 by the FSA, following a warning that it could no longer trade due to pricing and liquidity issues.

Under the consumer redress scheme 3,414 sales have been reviewed by firms and 85.4 per cent of these have been found to be unsuitable. The regulator said this was consistent with the results of a review undertaken before the consumer redress scheme was set-up.

The money paid out under the scheme is in addition to any redress investors may have received under a separate process administered by Capita Financial Managers.

“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," said Clive Adamson, director of supervision at the FCA.

In December 2012, the FSA predicted that up to 30 per cent of affected investors would sign up for the scheme. In July 2013, 353 firms informed the FCA that they had clients who qualified under the scheme and 47.8 per cent chose to opt in. Firms had until 9 December 2013 to review the advice for these clients and submit their assessments to the FCA for redress to be calculated where appropriate.