Twenty one companies' representatives were frog-marched to the Financial Services Authority (FSA) headquarters in Canary Wharf, where they were told that the regulator had damning evidence against each of them, and that if they didn't plead guilty and cough up immediately, they would suffer the full wrath and fury of the FSA.
After much bluff-calling, and nine months of arguments, the vast majority of the group finally agreed to collectively put up £197m, on a no-blame basis, to at least partially compensate those who had lost money investing in zero-dividend preference shares, which were meant to have been low-risk investments.
However, two of the smaller firms - BFS Investments and BC Asset Management - slipped through the net. With no resources left to make any kind of meaningful contribution to the compensation pot (they'd paid it all to their directors before the FSA caught up with them), the other companies threw them out of the settlement, leaving the regulator to deal with them. That was back in December last year - and the FSA promised then that it would make an example of the pair by March. But nothing has yet materialised.
While neither BC or BFS were responsible for any material number of private investors' losses, the FSA's inaction (and unwillingness to even provide an update) does nothing for confidence in its ability to effectively protect consumers from bad practice in the financial services industry.
If BC and BFS colluded with other fund-managers, to the eventual detriment of their customers (as the FSA was alleging 18 months ago), then they must surely be held to account. And if the regulator cannot prove its allegations, then it must swallow its pride, clear their names and draw a line under the saga.
Doing nothing, however, and hoping that the mess disappears is not an option. Both BFS and BC are still active companies, taking on (albeit not a great number of) new customers.
While there is no doubt that the FSA is now more efficient and even handed at dealing with disciplinary matters than it was even a year ago, it still fails to get the balance right.
I imagine if they have not buried the split-cap issue once and for all by the end of this month, they will find themselves in for a deserved grilling when they face the Treasury Select Committee on 8 November. John Tiner, the FSA chief executive, was once accused by the committee as being "comatose", only months after his predecessor had been told he was "asleep on the job". I'm looking forward to seeing what they have in store this time.
* * * The Office of Fair Trading's decision to use Amanda Holden to front its latest initiative on raising standards seems a very odd one to me. The campaign is all about highlighting consumer firms who commit to keep their standards at a level well above what is normally required. Unlike Ms Holden of course - whose notorious adultery suggests she's not even able to keep her standards at the level most of us would deem acceptable, let alone above it. Perhaps the FSA should use Kate Moss to promote its next campaign on spending your money responsibly. I hear she's in the market for some work at the moment.
David Prosser is awayReuse content