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FSA paper points to misselling of splits

The FSA is issuing a paper this week in which it will state for the first time that there has been some evidence of misselling of splitcap investment trusts.

The Feedback paper will say the FSA believes there has been misselling of the trusts although it will say it has not been as widespread as some have alleged.

It comes in response to the discussion paper published last December and will outline the issues for further investigation by the regulator.

In addition to looking at the extent of misselling, the paper will look at whether or not split-cap providers collude within the so-called “magic circle”.

In December, the FSA was considering the arguments for improved corporate governance of splits, guidance for advisers, enhanced disclosure and collaboration between providers.

Spokesman Rob McIvor says: “We have not found evidence of widespread misselling but it is clear there has been some misselling. We have not pointed our finger at any one group in terms of who is responsible for the misselling.

“The paper this week will outline the issues but not make any conclusions.”

AITC communications director Annabel BrodieSmith says: “We have not seen an advance copy of the paper but if there is evidence of misselling, we would want to see investors compensated.”

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