FSA to look at mis-selling of split trusts

The move comes after three of the Big Five accountancy firms – KPMG, PricewaterhouseCoopers and Deloitte & Touche – were named by group legal action specialist Class Law as having advised clients to invest in the trusts.

An FSA spokesman said the report would raise questions on the operation, governance and regulation of the trusts. ‘We have been looking at whether there has been widespread mis-selling, but will not single it down to a particular group of advisers,’ he said.

Investors lost thousands of pounds in the trusts, which suffered from falling stock markets and a ‘magic circle’ of funds that invested in each other.

The complex structures were marketed as low risk investments, but now many investors face losing up to 90% of their money.

But Class Law’s Stephen Alexander, who is currently preparing pre-action letters on behalf of investors, questioned the effectiveness of the enquiry.

‘I am concerned it would appear the FSA for many months failed to take action when they were warned of some concerns,’ he said.

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