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The allegations concerned the sale of two hedge funds for which TLI agreed to pay compensation in August – geared with-profits bonds and Circus Capital’s protected growth fund. Disgruntled investors formed a global action group in July and hired London lawyers Class Law to take legal action in the UK against TLI and its present and former parent companies HHG and AMP. On July 9, TLI closed to new business, blaming “difficult market conditions”. One issue that seemed to have been resolved in May was the European Union Savings Tax Directive. A compromise was agreed after lengthy negotiations to allow both Switzerland and EU member Luxemburg to preserve their banking secrecy provisions. This did not prevent the EU announcing in July that the directive would start on July 1, 2005 rather than the previously scheduled start date of January 1, 2005. The delay was caused by the fact that Switzerland was unlikely to pass the necessary legislation in time. Observers are sceptical as to whether all 25 EU members and 13 non-EU countries will even be able to meet the revised start date. One piece of legislation that has been implemented is the relaxation of the rules on how offshore funds gain distributor status. In the past few months, asset managers, including SG Asset Management, Merrill Lynch and Fidelity, have been bringing Luxemburg funds into the UK. The offshore life sector ended the year in better spirits. In March, SG Life became the latest insurer to close to new business while many others have retrenched. But at the end of the year, Standard Life and Legal & General revealed that they are carrying out feasibility studies into establishing offshore operations while Axa and Prudential have been setting up specialist offshore salesforces for the UK. Insurers also celebrated the news that certain trusts will be unaffected by the pre-owned assets tax that will begin on April 6, 2005.