The FSA has broken off discussions over split-cap compensation after providers offered a fraction of the amount it sought.
The FSA, which began preliminary talks with 21 providers three months ago, believes £350m represents an acceptable sum of compensation for the thousands of investors in collapsed split-caps.
But providers yet to enter its mediation process – believed to represent the bulk of the 21 – offered only £120m through broker Collins Stewart.
They now face enforcement action, with the FSA poised to begin referring cases to the independent regulatory decisions committee in June.
Until then, the FSA says its door remains open to any firms wanting to take part in the mediation process.
An FSA statement published last week says: “The amount those firms have indicated that they would be prepared to make available is so far short of what is necessary that the FSA does not intend to continue with these discussions.”