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FSA says split-cap debacle is worst case it has seen

The FSA has described the split-capital investment trust debacle as the worst case of misconduct it has seen but is struggling to get the 21 firms involved to sign up to its compensation package.

The statement is believed to be a further attempt by the regulator to force the firms to compromise on a compensation deal or risk an in-depth investigation. But some of the companies implicated in the splits debacle believe the evidence against them is thin.

The FSA has also been putting pressure on the firms to desist from disposing of certain funds until the issue of compensation has been settled. Last August, it told Exeter Fund Managers to ringfence the £9m proceeds of the sale of its retail funds and multi-manager business until the dispute is resolved.

PricewaterhouseCoopers has recommended that split-cap investments bought after January 1990 which were kept until October 2002 should be eligible for compensation.

FSA spokesman Robin Gordon Walker says: “We are not going to get into a league table of what is worst. But we are taking this very seriously and, with 60 people on it, it is our biggest case at present.”

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