Capita has warned shareholders it could take a hit as it works on a 'remedy' with the Financial Services Authority for investors in the suspended Arch Cru funds that it administers.

Capita, authorised corporate director for the £350 million fund range, admitted that investors may have suffered 'detriment' but chief executive Paul Pindar (pictured) said he was 'quietly confident' the suspensions could be resolved 'in a satisfactory way'.

'We have a situation around the Arch investment funds we need to resolve simply because we think it is the right thing for investors. We are working with the FSA and seven or eight other parties that are involved with it,' he said.

In an interim management statement Capita said it expected to declare the costs it incurs in resolving the suspension issues separately from the group’s underlying profit, when it publishes its final results for the year ending 31 December.

Shares in Capita fell 36.5p, or 4.8%, to 724p as investors worried about the slowing growth rate of Britain's biggest back-office outsourcer. In the statement Capita revealed it won £1 billion pounds of work in the 10 months to the end of October, down from £1.2 billion this time last year

Pindar said that the group would review its underperforming Capita Financial Managers (CFM) funds administration business. He predicted losses of up to £7 million for the division this year, not including the costs it may bear to resolve the Arch Cru suspensions.

'We need to take a good hard look at the business,' he said.

'What we have got to look at is a business turning over effectively less than £50 million. Is the balance between risk and reward right? This is a business that should be making 15% to 20% margins for the sophistication of the work we are doing. Sooner rather than later we are going to undertake a review that says either, "Yes, we are going to do that", or, alternatively, the risks were simply not worth taking and we need to do something else with it.'