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Lawyers claim record on split-cap lawsuits

Lawyers representing split-capital investors claim their lawsuit against fund managers and IFAs will be the biggest class action in UK legal history, with a record number of defendants.

Class Law solicitors, the firm leading the action, will make a group litigation application by the end of the month against more than 100 IFA and fund management defendants. The total number of plaintiffs is not yet known but is also likely to be a record-breaking figure.

The firm has already issued letters of claim for £40m and is still responding to all claims not only against the much publicised Aberdeen Asset Management but also BFS, Exeter Investments, Framlington and Gartmore.

If a split-capital investment trust goes bust, the bank as creditor is the first to receive any money back. Only then are zeros investors, then income shareholders and finally capital shareholders paid, resulting in many investors losing everything.

The Financial Services Compensation Scheme will also not cover the failure of a split.

Class Law partner Stephen Alexander says this is why so many investors have resorted to litigation to speed the compensation process before the firms lose all their assets.

He says: “There has been nothing like this before in legal history and we think we have a very good chance of success. It is clear that these products were marketed as low-risk, lots were sold as safe as houses and that the financial advisers failed their clients by telling them they were low risk.”

A spokesperson for Aberdeen Asset Management says: “Class Law has spent the last six months talking up their claim while charging each client at least £400 for the privilege. We look forward to rebutting any allegations they may make – if they ever decide to make any.”

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