Alexander to broker deal on split cap compensation

The Financial Services Authority has lined up three legal experts, including Lord Alexander of Weedon, the former chairman of NatWest, to hammer out a compensation package with companies involved in the split capital investment trust débâcle.

The Financial Services Authority has lined up three legal experts, including Lord Alexander of Weedon, the former chairman of NatWest, to hammer out a compensation package with companies involved in the split capital investment trust débâcle.

The other two are Anthony Willis, who was a partner at the City law firm Clifford Chance for 25 years and is an expert in mediation, and David Ashton, a director of the Law and Economics Group, who has worked for many years investigating professional negligence.

The FSA wants 21 companies involved in the split-capital sector to pay compensation to investors who have lost thousands of pounds from the collapse of many of the trusts in the past two years.

It has set a deadline of today for the 21 to respond by letter to a meeting which it held two weeks ago. At the meeting it unveiled evidence of alleged collusion between a "magic circle" of fund managers which invested in each other's trusts in order to inflate their share prices artificially.

The regulator wants the group to agree to a "declaration of intent" to compensate customers. It also plans to impose financial penalties on those who have colluded and to name and shame them publicly.

However, it is thought that none of the companies that attended the meeting had as of last night agreed to the FSA plan, with some strongly resisting the watchdog's attempt to wring compensation out of them and denying that a magic circle existed. Others have indicated to the FSA that they are willing to pay compensation, but do not want to admit legal liability, on the grounds that to do so would make them vulnerable to being sued through the civil courts by customers even if they had also received compensation.

Some of the companies involved have also made it known that they are against the FSA's appointment of Lord Alexander on the basis that he was not chosen jointly by the regulator and by the industry.

However, the FSA indicated that it would press ahead with its team of mediators. A spokesman said: "We are not aware that any criticism has been made of Lord Alexander."

John Tiner, the chief executive of the FSA, told the meeting on 2 March that he would go ahead with the compensation plan if as few as five companies signed up to it. The regulator is expected to grant a short extension of its deadline for those who want a day or two longer to consider its legal implications.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border