Thousands of people who lost money through split capital investment trusts are being urged to claim compensation.
The Financial Services Compensation Scheme (FSCS) has written to 4,200 customers of BFS Investments, which went into liquidation in 2006.
The company has been declared in default, which means the FSCS can now consider claims against it.
BFS was not part of an industry-wide splits compensation scheme which paid out £143m to 25,000 investors in 2006.
Splits were sold as a low-risk way to invest in shares, but thousands of investors lost money when markets fell sharply in 2000.
'Matter of weeks'
"We are aiming to deal with these claims as quickly as possible"
The FSCS has sent questionnaires to 4,200 BFS customers who it thinks may have lost money as a result of investing in certain BFS split capital investment trusts.
The scheme can pay up to a maximum of £48,000 for claims against investment firms.
"We are aiming to deal with these claims as quickly as possible," said FSCS chief executive Loretta Minghella.
"Some straightforward claims may be completed in a matter of weeks while the more complicated ones are likely to take longer.
"We plan to complete the bulk of them within the next nine months," she added.
Unsuitable investments
BFS ran several individual split capital investment trusts and also managed customers' investment portfolios.
The FSCS will consider claims from those who bought their investments directly from the company, and who could have been misled by its marketing material, and those who took financial advice from the firm, and whose funds may have been put into unsuitable investments.
The split capital investment trust scandal emerged a few years ago, when the fragile nature of their investment policies was exposed by the sudden three-year long slump in share prices.
The investment trusts were sold to thousands of private investors, who were often wrongly given the impression that they were relatively safe investments. In fact, they were very risky.
The Financial Services Authority (FSA) launched an investigation into split-caps in May 2002.
It involved 780 files of evidence, detailing 27,000 taped conversations and more than 70 interviews.
Joint settlement
The FSA presented its evidence to the firms to try to persuade them to offer compensation, because at the time the investments were sold the FSA did not regulate the investment trust industry.
After months of negotiation, 20 split-cap firms finally agreed, in December 2004, to pay into a compensation fund worth £143m. The money was paid out to 25,000 investors in 2006.
BFS Investment did not enter into the joint settlement brokered by the FSA and did not contribute to the fund.
The company went into voluntary liquidation in February 2006. Its funds are now managed by Premier Asset Management in Guildford.
Anyone who thinks they may have a valid claim against BFS Investment can find more information on the FSCS website at www.fscs.org.uk or by calling 020 7892 7300.
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