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£200m package could settle split-cap debacle
Published: December 2004
This article appeared in Money
Marketing.
A settlement for the split-capital investment
trust debacle is believed to be imminent with some reports putting the
package as low as £200m.
The FSA was originally looking for a £350m
settlement package from 22 firms embroiled in the split problems in an
attempt to meet some of the £900m losses incurred by clients.
In April, the regulator was reported to
have been offered a £100m package by the firms on the basis that
it would withdraw the requirement that the firms admit guilt.
The FSA is believed to be prepared to accept
a figure of around £200m, with an announcement on the settlement
understood to be imminent. Aberdeen Asset Management delayed the publication
of its results on December 13 “in view of the advanced state”
of the discussions with the FSA “in relation to issues surrounding
split-capital trusts.”
Aberdeen is reported to be paying around
£75m, while ABN Amro, UBS and HSBC are expected to contribute around
£10m each.
One report says BC Asset Management and
BFS are not taking part in the discussion because they do not have the
funds to meet the compensation arrangements.
The Financial Services Compensation Scheme
could be hit hard if firms which are ordered to meet the FSA’s requirements
subsequently go into liquidation.
Glazers Financial Services director David
Higgins says: “The FSA did not do anything about splits when it
knew the products were being marketed The blame should lie with the regulator
as well as the firms.
“If this deal were to push companies
into liquidation it would be a crazy situation as it would have an impact
on companies which are run properly. We want a bit of joined-up thinking
from the FSA.”
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