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AITC won&#39t be splits &#39apologist&#39 as FSA steps into &#39magic circle&#39

The AITC told its members to accept responsibility for the troubles in the split-cap sector this week, warning that it “will not act as an apologist for bad practice”.

Speaking at the AITC directors&#39 conference on Tues-day in London, director general Daniel Godfrey criticised the industry for blaming fall-ing markets and negative media coverage for difficul-ties in the sector.

He said the industry should “hold up its hands” and accept that many trusts were too highly geared or had offered unsustainable yields, given lower interest rates and equity yields.

“Much money has been made out of splits over the last few years. But the effect of unexpectedly poor markets and self-inflicted mistakes has been disastrous for many private investors…and has set back the development of the split sector by a decade,” said Godfrey.

At the conference, FSA managing director John Tiner warned that the regulator was treating very seriously allegations of a “magic circle” of firms colluding to invest in each others&#39 trusts . He said that the FSA would use its full powers to deal with any companies found guilty.

Tiner also said the FSA is to visit fund managers and financial advisers to investigate the management and selling of split caps.

He said: “The investment trust sector continues to provide an efficient investment option for many retail investors and we do not want to see the reputation of the sector impaired by poor practices or abuses within the splits&#39 sector.”

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