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Now FSA swoops with split-cap probe for IFAs

The FSA is investigating whether IFAs missold split-caps in a series of on-site checks as part of its wider research into the reasons behind the sector&#39s problems.

Following weeks of inquiry into the role of the”magic circle” of providers in the crisis, the FSA has switched focus to IFAs to see if there is any substance to claims that investors were missold policies by advisers.

The move comes as the Financial Ombudsman Service says it is receiving a “trickle” of complaints from investors about IFA advice and key features documents which classify zero shares as low risk.

As the requirements for key features documents are laid down by the regulator, IFAs believe the FSA will find it much more difficult to establish misselling than was the case with the pension review. They say they had every reason to believe they could trust the risk classifications attached to the shares and were appalled when some clients lost up to 95 per cent of their investment in nine months.

Emery (IFA) Associates partner Peter Emery says: “It is clear the error lies between the regulator and the product providers and has nothing to do with advisers. I would hope that the regulator concludes that an adviser selling a regulated product classified as low risk cannot be accused of misselling.”

FSA spokeswoman Jackie Blyth says: “The review is to see if there is evidence of misselling through all outlets. As a regulator, we do not say what is high, low or medium risk.”

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