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Deal uncertainty sees lawyers take split-cap action

Lawyers are pressing ahead with law suits against IFAs who sold split-capital trusts despite the terms of the FSA’s Christmas Eve deal.

Many more investors who received advice on splits in 1999 are likely to start action this year because of a six-year time bar for claims.

City lawyers are set to push through misselling cases because they cannot guarantee investors when or how much cash will come from the regulator’s compensation fund.

It could render the FSA’s deal, that saw 18 firms sign up to give £195m to investors, almost useless.

Class Law is handling around 700 cases. Partner Stephen Alexander says it is pushing ahead with cases.

Reynolds Porter Chamberlain partner Harriet Quiney says the deal is confusing, particularly for investors who received advice on splits from different companies, with some part of the FSA deal and some not. She says: “Does this mean that if you receive compensation from one company you cannot then go and follow legal proceedings for the advice given on the others? It is so uncertain.”

Alexander says: “If you could tell a client you would get 70p in the pound on this date, then you could advise them to go for the FSA deal. But you can’t.”

FSA press officer Kate Burns says: “There is a great deal more certainty if you are eligible to go through the fund than going through the courts. But it is up to individual investors.”

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