YORKSHIRE Bank has “serious questions to answer” over a failed African property scheme now under investigation by the Serious Fraud Office which left investors millions of pounds out of pocket, an MP has claimed.
North West MP Paul Goggins told the Commons that hundreds of investors had placed a total of £60m in savings and pension funds into a “segregated” account at Yorkshire Bank for the unregulated investment scheme with Arck LLP.
When the firm went bust, lawyers called in by a group of the investors found there was only £25 left in the account.
The Yorkshire Post reported last month that lawyers acting for 150 claimants, more than half of them based in the region, have now filed claims against the bank for allegedly failing to protect their money.
Mr Goggins told MPs yesterday that the scale of the collapse went considerably further, and called on Treasury Ministers to do all they can to ensure investors are “properly compensated”.
“A constituent of mine is one of 750 investors who placed about £60m of their pension funds and savings into a ring-fenced, segregated account at Yorkshire Bank,” said the Labour MP for Wythenshawe and Sale East.
“When Arck LLP went into liquidation, it was discovered that there was just £25 left.
“The Minister must agree that Yorkshire Bank has some serious questions to answer.”
It is understood that the investment scheme run by Arck involved property developments in Cape Verde, an archipelago of tropical islands off the west coast of Africa, some 3,000 miles from the UK.
The deals used a series of complex financial arrangements, but investors were apparently reassured their money would be kept in a safe, segregated account with Yorkshire Bank and ring-fenced from Arck’s own finances.
The promised returns never appeared, however, and Arck went bust in March last year. The Serious Fraud Office is now investigating what happened at Arck, and Nottinghamshire police have arrested two people in connection with the firm, who remain on bail.
The Financial Ombudsman Service (FOS) is now considering whether it has the jurisdiction to carry out a full investigation of Yorkshire Bank’s role in the affair.
The Financial Secretary to the Treasury, Greg Clark, made clear this could potentially result in millions of pounds of compensation being paid, were the bank found to be at serious fault.
“A Serious Fraud Office investigation into Arck is under way, and the Government cannot comment specifically on any ongoing investigations,” Mr Clark said.
“However, lawyers acting on behalf of Arck investors have themselves announced that the Financial Ombudsman Service is investigating complaints about Yorkshire Bank’s role as custodian to Arck LLP.
“If the FOS were to determine that there had been any regulatory breach or failure by Yorkshire Bank, and that that had led to investor detriment, it would be able to set an appropriate level of restitution.”
Mr Clark added that the Financial Conduct Authority, set up to replace the now-discredited City watchdog the Financial Services Authority, is also monitoring the situation.
“I happen to know that the Financial Conduct Authority is already well aware of the case, and it is obviously taking a close interest in the continuing police investigation,” he said.
A spokesman for Yorkshire Bank said: “We are aware of the points raised, but are unable to comment due to the ongoing investigations into Arck.”
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