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Splits firms agree £100m deal if guilt is dropped

Split-capital investment trust providers have put together a reported £100m compensation package on the basis that the FSA will reveal evidence on its split-cap probe.

Most of the 21 companies involved in the split-cap debacle are understood to have agreed to contribute to the compensation fund on the basis that the FSA withdraws the requirement that they admit guilt.

Firms also want to see the FSA&#39s evidence against them – which the regulator has promised to give on or around April 30 – before agreeing a settlement figure.

An admission of guilt was understood to have been a sticking point for firms because they fear it could open the floodgates to a wave of claims but the FSA has agreed to drop it.

The AITC estimates that £620m has been lost by investors in the 26 trusts that have either collapsed or been suspended so far.

The FSA gave the 21 companies – which include Aberdeen Asset Management and BFS – a March 16 deadline for agreeing to enter settlement negotiations or face a full-blown enforcement procedure.

Some providers are believed to have been told by lawyers that they have no case to answer and could withdraw their offer of compensation if the FSA&#39s evidence against them is weak.

Hargeaves Lansdown chief executive Peter Hargreaves says: “The biggest culprits are the ones with the shallowest pockets so you can understand why some of the very big names are reluctant to cough up. Most providers will want to wipe the slate clean but you can buy a lot of legal representation with £100m.”


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