Investors in failed fund are handed £66m payout

UP to 1,200 investors ripped off by a misleading investment fund are being handed £66m in compensation by its former operator Capita.

Despite its name, the Connaught Guaranteed Low Risk income Fund turned out to be highly risky and offered only uncertain returns to its backers.

the unregulated fund collapsed in 2012 and savers who had been persuaded to pump in their cash lost £118m.

Connaught – which until 2009 was overseen by Capita Financial Managers, a division of the outsourcer – handed over investors’ money to a lender called tiuta, which in turn provided short-term bridging finance for businesses in the property market. tiuta went bust after a whistleblower raised concerns it was using backers’ cash to pay directors’ salaries and bonuses.

the Financial Conduct Authority has ordered Capita to hand over the compensation to investors. they had already been given £22m when Connaught was liquidated, plus interest and other payments.

Capita sold the division affected to Australian finance data firm Link Group for £888m earlier this week.

Mark Steward of the FCA said: ‘Consumers are entitled to expect that authorised firms will carry out their responsibilities under our principles for businesses with care and diligence.

‘these responsibilities are paramount and in this instance CFM failed badly,’ he said.

Capita shares rose 0.7pc, or 3.5p, to 507p.