Split-cap victims to get just 50p in the pound payout for every £1

Thousands of investors who lost money investing in split-capital investment trusts are to receive a total of just 50p for each £1 of their losses, it was revealed yesterday, with the final payouts set to be made during the last three months of the year.

Initial estimates of compensation had been as high as 70p for each £1 lost. However, a surge of claims just before the deadline last summer pushed down the size of the compensation.

Fund Distribution Limited (FDL) - the split-cap compensation vehicle, headed by the former HBOS finance director Mike Ellis - said yesterday more than 97 per cent of the 25,000 who had been made an offer of compensation had accepted it.

But about one in 40 are yet to accept their offer from FDL, and remain intent on pursuing their financial adviser, broker or fund manager through the courts.

FDL has so far paid out some £113m - covering some 40p in the £1 of investors' losses. A secondary payment of about 10p for every £1 lost will now be made during the final three months of the year. The fund will then begin winding down.

"This has been a long and highly complex exercise and I would like to thank all those involved for their help in completing the first distribution, with particular thanks to applicants for their patience throughout the process," Mr Ellis said.

Mr Ellis is to step down as head of FDL at the end of this month, handing over to Roman McAlindon, a former senior partner at Arthur Andersen.

FDL was formed at the start of last year, after a three-year investigation into allegations of collusion and mis-selling in the split-cap sector. Investors collectively lost £300m after investing in zero-dividend preference shares, a supposedly low-risk class of split-cap trusts, between 2000 and 2002.