Offer made to Arch Cru investors

21 June 2011 Last updated at 11:32 GMT The case surrounds worries about a series of complex investments Investors in complex funds that were suspended in March 2009 are to be offered a share of a ?54m package, the Financial Services Authority has said.

An estimated 20,000 people are to be offered the payout in relation to funds under the CF Arch Cru banner.

The investment funds and diversified funds were suspended after a surge in outflows prompted fears that more withdrawals could not be met.

Investors can still make a claim for compensation for mis-selling.

In some cases, the investments were sold as "low-risk" and investors can still argue their case to the Financial Ombudsman if they feel they were victims of mis-selling by independent financial advisers.

'Fair'

Investors were locked into losses when the funds were suspended.

The settlement comes from the fund administrator, Capita Financial Managers Ltd, as well as the Bank of New York Mellon Trust and Depositary Ltd, and HSBC bank.

The ?54m package has been described as "fair and reasonable" by the City watchdog, and in the best interests of investors.

Investors will be able to decide whether to accept the payout, which would prevent them taking any further action against the three companies but not against any intermediaries.

The payout, together with previous payments and the assets left in the funds, would account for 70% of the value of the funds when they were suspended, the Financial Services Authority (FSA) said.

Investors will be contacted by Capita with further information on how the payment scheme will work by the end of August.

Meanwhile, the FSA said it was still looking into the role of other parties in relation to these funds.

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UK investors in bonds battle

11 June 2011 Last updated at 14:40 GMT By Ben Carter Reporter, Money Box UK investors face losing 80% of their investments Bank of Ireland (BOI) could face a legal challenge from British investors who face losing 80% of their money.

Irish banks are under pressure from the state to raise capital, and bond holders are expected to "burden share".

One of the bond holders affected, Liberal Democrat MP, John Hemming, told BBC Radio 4's Money Box, it was unfair that smaller investors were worst hit.

BOI said that its offer to the holders of the permanent interest bearing shares complies with all requirements.

High returns

Money Box has been contacted by a number of concerned investors, who hold the bonds in question, first issued by Bristol and West in 1991.

The permanent interest bearing shares, or PIBS, were sold by a number of building societies at the time to boost capital.

The bonds pay 13.375% a year, which is a very high return now, but when the bonds were issued, interest rates were running in double figures.

In 1997, BOI took over Bristol and West, and in 2007 the bonds were officially transferred to the BOI UK branch.

Financial woes

Ireland's recent economic problems have resulted in the government insisting that banks shore up their capital positions.

BOI has been told it must raise 4.2bn euros in capital by a 31 July deadline, imposed by the state.

In order to raise the money, BOI announced an exchange offer, which would see most of the PIBS investors receiving 20p in the pound for their holding.

However, people with more than ?100,000 invested in the PIBS, are being offered 40% of the value of their bonds, if they accept new shares instead.

Ordinary investors suffer

In effect, this means the Irish government is getting preferential treatment, according to Mr Hemming, and small investors are being asked to sacrifice the most.

"A lot of small investors are losing out to protect the Irish tax payer," he told Money Box.

"The whole thing is likely to get tied up in a legal complication. There's a firm of solicitors, who are working on coming on board at the moment."

The offer to bond holders will worsen after 22 June.

Under a European Union directive, companies offering exchanges can either aim them at all investors, or deem them only suitable for larger investors.

Investors wanting to accept the deal face a tight deadline of 22 June, 2011.

Acceptance after this date will see the offer reduced to 16p cash, or 32% in shares, for every pound held.

If investors refuse to accept the offer, the Bank of Ireland will seek to redeem the bonds at 1p for every ?1,000 held.

The interests of the bond holders are not protected by the Financial Services Authority, and as a result people cannot claim for compensation through the Financial Services Compensation Scheme.

The BOI UK branch - which bought Bristol & West - falls under the Irish regulator. BOI UK, which was created last year and which operates Post Office accounts, is regulated by the FSA. This means that UK deposits up to ?85,000 in the Post Office are protected by the UK's financial compensation scheme.

BBC Radio 4's Money Box is broadcast on Saturdays at 1204 BST, and repeated on Sundays at 2100 BST.

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