GFSC Denies Warning UK Counterpart Over Split Capitals

by Philip Morton, Investors Offshore.com

25 October 2002

Guernsey's Financial Services Commission has denied issuing a warning to its UK counterpart, the Financial Services Authority with regard to the possible high-risk nature of investment in split capital investment trusts.

The FSA was called upon to defend itself against allegations that it had failed to adequately protect UK investors, following the collapse of several such trusts in the United Kingdom and the Channel Islands. However, according to a report in the Guernsey Press and Star on Thursday, the regulatory body was also accused of failing to act on a tip-off from the GFSC's director of investment business, Peter Moffatt.

Speaking to the Guernsey Press, GFSC director-general, Peter Neville explained that this was not the case:

'Discussions with the FSA in early 2001 covered a wide range of subjects including split capital investment trusts. Although those discussions did refer to the potentially incestuous nature of some investment strategies, it would be wrong to say that the FSC issued a warning to the FSA about systemic risk to the UK financial sector.'

According to the Guernsey Press report, three locally registered split capitals have recently gone into liquidation. This follows reports in the Jersey media last week, which revealed that the Jersey Financial Services Commission is also scrutinising six Jersey-based trusts.

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