Split Cap Probe Was Most Expensive Ever, FSA Reveals

by Robin Pilgrim, LawAndTax-News.com, London

24 February 2005

Following a request made under the Freedom of Information Act by the UK's Independent newspaper, the Financial Services Authority revealed that the inquiry into the collapse of several split capital investment trusts and the subsequent settlement agreement with 18 of the 22 firms involved cost it more than £6.4 million in external legal fees.

In addition to the 61,718 man hours spent on the case to the end of 2004, which the financial services regulator explained it was unable to put a cost on, new legal fees are likely to have accumulated this year, as the FSA is continuing to pursue three firms not involved in the December 24 settlement.

According to the Independent report, going on the figures so far announced, this represents the most expensive investigation in the Authority's history. However, the fact that the split cap settlement agreement was reached on a 'no blame' basis meant that the FSA could not impose fines or penalties, which would have gone some way towards mitigating its costs.

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