“The debacle started in 2006 when Arch Cru launched  ‘low-risk’ investment funds aimed at private savers. Unbeknown to them, their money was in fact syphoned into racy assets such as wine, shipping and timber.

All this became clear when  in March 2009 the funds were frozen amid allegations of fraud and investors’ losses estimated at £140million.

Capita’s fund division, as trustee of the Arch Cru portfolios, failed to spot the problems, and carries much  of the blame. What happened in the following months is cloaked in secrecy.

In June 2011, private meetings between Capita, the FSA and other parties resulted in a £54million compensation deal being put before investors. This would still leave them shouldering losses of 30 per cent of their original money or worse.

The Daily Mail began at once to call for an improved offer. In particular, they insisted that Capita, as the prime culprit, pay more.

A number of MPs lent their support. But there were early signs that the watchdog (whatever it said to the contrary) was not inclined  to bite.  Just before last Christmas, campaigning Tory MP David Davis spotted in correspondence from Hector Sants, the FSA’s then boss, the assertion that ‘one of the firms involved’ was ‘unable to pay’.

Davis swiftly wrote to Sants, asking whether that company was Capita. And from documents released by the watchdog last week, we now know the answer was yes. Technically, the division of Capita responsible for the mess was too small to make amends for its failures.

The £32million that Capita contributed to the £54million deal was, we now know, only possible because the Capita parent company wrote the cheque. But why was the FSA satisfied with just £32million, when clearly Capita, at a group level, could pay far more? We will never know.”