More delays for splits victims

By JAMES CONEY FOR THE DAILY MAIL
Updated:

 

FORTY thousand victims of the split capital investment trusts scandal face a new delay before learning how much compensation they will get from a £144m special fund.

Fund Distribution Limited, set up by regulators to hand out the money, says it will be February at the earliest before investors receive any details of redress - three months later than expected.

It means investors have been waiting a year since a compensation deal was announced by regulators last Christmas Eve. The hold-up is because FDL has not fully checked all the applications.

The fund is bankrolled by 18 firms involved in splits. They agreed to it after marathon negotiations with watchdog the Financial Services Authority.

Split capital trusts had several types of share, including zero dividend preference shares (zeros), promoted as offering safe returns for pensioners or parents saving for school fees.

But some trusts invested heavily in each other's shares, leading to a dominolike collapse when share prices fell. Some investors lost tens of thousands. Only zero holders will be compensated.

The delay is the latest blow in a scandal which has dragged on for four years. Investors have complained about being unable to contact FDL and of complex forms. It says some did not fill the forms in correctly.

Fund commissioner Mike Ellis says: 'While we had planned to announce an offer before Christmas, FDL must be satisfied that it has completed all the necessary final checks. This is taking longer than expected.'

Last year splits firms suggested investors might get 50p-65p in the pound back. With more applications than expected, the talk now is of 40p-50p.

Once the first cash is awarded investors must decide whether they accept it, or begin private lawsuits. Countdown to a scandal

2001-2: 45 split trusts collapse

2002/3: Treasury Select Committee reports

May 02: FSA begins probe

Mar 04: FSA's John Tiner threatens splits firms

Dec 04: Compensation fund agreed

Feb 06: First payments due

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most watched Money videos