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200m package could settle split-cap debacle

A settlement for the split-capital investment trust debacle is believed to be imminent with some reports putting the package as low as 200m.

The FSA was originally looking for a 350m settlement package from 22 firms embroiled in the split problems in an attempt to meet some of the 900m losses incurred by clients.

In April, the regulator was reported to have been offered a 100m package by the firms on the basis that it would withdraw the requirement that the firms admit guilt.

The FSA is believed to be prepared to accept a figure of around 200m, with an announcement on the settlement understood to be imminent. Aberdeen Asset Management delayed the publication of its results on December 13 “in view of the advanced state” of the discussions with the FSA “in relation to issues surrounding split-capital trusts”.

Aberdeen is reported to be paying around 75m, while ABN Amro, UBS and HSBC are expected to contribute around 10m each.

One report says BC Asset Management and BFS are not taking part in the discussion because they do not have the funds to meet the compensation arrangements.

The Financial Services Compensation Scheme could be hit hard if firms which are ordered to meet the FSA’s requirements subsequently go into liquidation.

Glazers Financial Serv-ices director David Higgins says: “The FSA did not do anything about splits when it knew the products were being marketed. The blame should lie with the regulator as well as the firms.

“If this deal were to push companies into liquidation it would be a crazy situation as it would have an impact on companies which are run properly. We want a bit of joined-up thinking from the FSA.”

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