The FSA has handed companies which are embroiled in its probe into the split-capital investment debacle two weeks to decide whether they are prepared to contribute to its radical collective compensation process.
The 21 companies – including Aberdeen and BFS – have until March 16 to decide whether to take part in negotiations aimed at ensuring that they pay suitable compensation and that disciplinary action is taken where appropriate.
If companies decide not to participate in the compensation process, they risk the FSA – backed by its 60-strong investigative team – starting enforcement proceedings against them.
Individuals already under investigation will not be affected by the deadline, with the FSA pledging to decide separately whether to take further action.
At the meeting, which was held at the FSA's Canary Wharf offices this week, FSA chief executive John Tiner provided an update on its investigations, including site visits, taped conversations and its examination of financial promotions.
After some of this evidence was presented, the FSA suggested that attendees – all of which were chief executives and chairmen – consider taking part in the negotiations.
Given the regulator's hard-line stance, sources believe that all 21 companies will co-operate but the AITC says it expects some companies to take their chances.
A senior industry source says: “For any group in the magic circle, it would be absolute madness for them not to co-operate given the stance that the FSA has taken.”
AITC director general Daniel Godfrey says: “It appears that the FSA thinks it has strong evidence but recognises that if firms choose to fight tooth and nail, it could take a long time to resolve. Some providers will be willing but certainly not all of them.”