AN MP on the Commons Treasury Select Committee yesterday accused the City regulator of avoiding “proper disclosure” by announcing the split capital settlement on Christmas Eve. An estimated 40,000 investors will have to wait at least nine months before they can receive any compensation.

Norman Lamb told The Times he was concerned about the timing of the announcement to offer £194 million in compensation to investors who bought split capital investment trusts. He said: “The timing of it does appear to be a decision to avoid proper disclosure.”

A spokesman for the Financial Services Authority defended the timing. He said: “We had to make it public as soon as it was signed because it was market sensitive.”

The FSA admitted that no payments would be made before the fourth quarter of 2005.

The deal — finally agreed with 18 banks, brokers and fund managers — leaves some of the best-known names in the City named and shamed. Aberdeen Asset Managers, a subsidiary of Aberdeen Asset Management; Brewin Dolphin; Collins Stewart; F&C Asset Management; Framlington; Gartmore; HSBC; Jupiter and New Star were among the parties to the settlement.

Each has paid money into a new £143 million compensation fund. A new company, Fund Distribution Ltd (FDL), will process claims.

As well as contributing to the FDL fund, Aberdeen — the biggest player in the scandal — is paying out £43.3 million through an “uplift package” to investors in its Aberdeen Progressive Growth Unit Trust.

Other firms, which the FSA refused to name, are paying a further £7.67 million via other compensation arrangements.

In return for the cash, the FSA has agreed to make no determination of possible regulatory breaches and to impose no formal fines.

The FSA argues that the settlement is the best way forward, meaning victims will be compensated far earlier than if it pursued the firms through formal enforcement proceedings.

It defended the nine-month wait ahead. “You’re talking about a lot of victims here,” a spokeswoman said. “All their claims have to be processed and checked for eligibility.”

One victim, Jonathan Williams, a London insurance broker whose family members have lost £25,000 in splits, said: “I’m pleased a settlement has been reached. But the proof of the pudding will be in the size of the compensation cheque.”

The deal excludes institutional investors, and victims must have held the shares between July 2000 and June 2002 to qualify. Claims for losses below £250 will not be entertained.

The FSA urged the industry to behave better. The rights of different classes of shareholder in splits must be clearly presented, it said. Deals between different funds managed by one manager must be done “transparently and at arm’s length”.