The FCA has ordered Capita Financial Managers to pay £66m to investors in the collapsed Connaught Income fund.
In 2015, the FCA started an investigation into CFM after the Connaught Income Series 1 fund, which invested in high risk loans, lost £110m after the fund was suspended in 2012.
Connaught entered administration in September 2012 after the failure of its Income Series 1,2 and 3 funds that provided lines of credit to bridging loan firm Tiuta, which also went into administration that month.
The FCA said Capita did not conduct adequate due diligence on the fund and failed to communicate its processes properly to investors.
The FCA would normally charge a penalty for the failings but decided to only issue a public censure in relation of the firm as this would not have been able to pay it on top of the £66m.
In its results published in September, Capita said it had set aside £37m after the FCA indicated it could fine the company.
FCA executive director of enforcement and market oversight Mark Steward says: “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.
“The aim of the payment announced today is to return the amount originally invested, placing investors as closely as possible back into the position they would have been in if they had never invested in the fund.”
Investors have already received a distribution of £22m made in the liquidation, as well as interest and other payments, the FCA says.
Payments also include any awards made under the Financial Ombudsman Scheme investors may have received since they invested.
The FCA adds: “We acknowledge this resolution would not have been possible without the co-operation of Capita and CFM. This agreement will provide substantial benefit to all outstanding investors, including those who invested in the fund after CFM resigned as operator.”