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FSA to probe claims over missold splits

The FSA is to investigate allegations of IFA misselling and provider collusion in the split-capital investment trust arena, according to a discussion paper published this week.

The regulator undertook an analysis of the sector at the end of September after several trusts ran into trouble in the falling markets, exacerbated by the US terrorist attacks on September 11.

Since then, a handful have been forced to suspend dividends and have come close to breaching their bank coven-ants. There are also fears that the sector will soon see the first defaulting zeros.

The sector&#39s sharp fall in valuations has been exaggerated by the high level of cross-holdings in the sector, with the FSA revealing that one in five split-caps have more than 40 per cent in other splits.

It is now investigating allegations that several trusts have colluded by buying shares in each other&#39s funds to sustain the share prices and is considering a change to the listing rules to ensure greater disclosure.

The AITC has already begun its own disclosure initiative, asking all split-cap trusts to provide it with details of cross-holdings greater than 0.5 per cent of net assets. So far, it has received data from around a third of trusts, which will be published on its website this week.

Communications director Annabel Brodie-Smith says: “Nobody has said they are definitely not going to provide the information yet. It is early days for our initiative.”

The FSA paper says it is also considering drawing up a joint code of practice for split-cap trust directors and will carry out an investigation on the possibility of any misselling in the sector. The paper says: “We are not as yet aware of any proven cases of misselling but there have been some allegations. We are continuing work in this area.”


Schroders – Schroder UK Select Isa

Monday, December 17, 2001.Type: Unit trust maxi Isa.Aim: Growth by investing in Schroder UK equity fund, Schroder UKmid 250 fund and Schroder UK smaller companies fund.Minimum investment: Lump sum £1,000, monthly £250.Maximum investment: £7,000.Catmarked: No.Investment choice: Schroder UK equity fund 50 per cent, Schroder UKmid 250 fund 30 per cent, Schroder UK smaller companies fund […]

Packagers plan trade body to increase regulatory clout

Mortgage packagers are in talks about setting up a trade body which would aim to increase the sector&#39s influence in the new regulatory regime.Talks on the creation of the UK Association of Mortgage Packagers are being facilitated by Julian Jennings, who is stepping down as chief executive designate of the National Association of Mortgage Brokers […]

Tilney to diversify via Monaco office

Private-client investment manager Tilney Investment Management has opened an office in Monaco to access the European market with its funds that are geared towards high-net-worth clients.It is launching a new fund, the Opal alternative growth fund, to assist its expansion in Europe. The fund is a fund of hedge funds offering investors exposure to alternative […]

Group to seek ruling on DBS fee hike

Angry DBS members are forming an action group to challenge the network&#39s charge increases on the grounds that they are unfair.The DBS Action Group currently has the support of 60 member firms. It is looking to seek a court declaration that the price hike is unfair as it fundamentally changes the existing contract between DBS […]


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