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Newby wants split-cap redress paid out quickly

Liberal Democrat Treasury spokesman Lord Newby is calling for the Financial Services Ombudsman to speed up split-cap investors&#39 compensation over fears that many are bec-oming too ill to fight their cases or benefit from compensation.

Newby says he has had hundreds of letters from elderly investors who have lost their entire life savings and many are waiting as long as six months for the ombudsman to even process their letters. He believes there may be an internal dispute between the omb-udsman and the FSA over funds needed to meet the cost of assessing claims.

According to Treasury select committee evidence, 24,000 investors have lost money in the split-cap crisis. The FSO is dealing with only 600 applications for compensation. It denies the hold-up is due to lack of funding and says the delay has been caused by the lengthy process of establishing whether claims fall under its jurisdiction.

Newby says: “It is important that the compensation should be agreed and paid out quickly. Many policyholders are elderly and should not be made to wait.

“This is the first major test of the FSA&#39s power. It is grappling with a huge enquiry. The investigation timetable is slow and deliberative and will not be completed until 2004.

“The remit of the FSO in all this seems unclear and this lack of clarity is adding to the delay.”

In a separate move, Aber-deen Asset Management has come under fire for failing to timetable compensation for victims of the Aberdeen progressive trust fund in its quarterly trading statement which included board member pay and bonus cuts.

Morgan Stanley research shows AAM estimated compensation for the trust could top £45m but with costs and an FSA fine could top £80m.

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