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Last Updated: Saturday, 29 October 2005, 11:42 GMT 12:42 UK
Splits compensation payout near
By Chris A'Court
BBC Radio 4's Money Box

A man watches as stocks fall
When markets fell, thousands saw their investments collapse

People who lost money when their investments collapsed in the "split-cap scandal" will now get some cash back early in the new year.

The announcement has been made by Funds Distribution Limited (FDL), the organisation set up to dole out the 144m compensation fund paid into by almost all the firms who sold split-capital investment trusts and zero shares.

FDL said people will be told how much compensation they are each being offered in December, and anyone accepting the offer will have money early in the New Year.

Forty thousand people have applied for compensation and many lost tens of thousands of pounds when their investments collapsed.

Split-cap trusts and zero shares were often bought by people planning for school fees or seeking extra income in retirement.

The claim was that firms mis-sold and mismanaged these investments but despite setting up the compensation fund they always refused to accept any blame.

'Cooling off'

The compensation payments are coming later than FDL had first predicted because it said claims were often complex and needed additional information from the people claiming.

FDL also has to build in a short "cooling off" period for people to change their minds about accepting compensation.

Fund Commissioner Mike Ellis said of the 40,000 applications: "Each of these has been looked at individually with an emphasis on consistency, accuracy and fairness in our approach to all applicants."

If people choose not to accept they can take a case to the Financial Ombudsman, but if the case is lost they cannot go back to FDL again, so may end up with nothing.

Those who do accept may get a second small compensation payment, though that is not guaranteed.

BBC Radio 4's Money Box was broadcast on Saturday, 29 October, 2005, at 1204 BST.

The programme was repeated on Sunday, 30 October, 2005, at 2102 GMT.

Money Box



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