THE investigation by the Financial Services Authority into split capital investment trusts is the biggest ever undertaken by the regulatory authority, involving nearly 60 staff over a two-year period.

The total cost of the investigation, which will be borne by the financial services industry, is yet to be calculated, but is expected to be lower than the cost of pursuing a settlement through the law courts, and far less time-consuming.

While the 18 firms have agreed to pay £194 million, they will also have to meet the cost of two years’ worth of legal advice, which is expected to run into millions of pounds.

Yesterday an FSA spokesman said that there were outstanding issues in the scandal.

The regulator is still considering the fate of eight individual practitioners involved in the scandal. Announcements concerning two are expected within the next few days, with negotiations continuing over the fate of the others.

The FSA has already reached agreement with Chris Fishwick, formerly of Aberdeen Asset Managers, and David Thomas, a former consultant to Brewin Dolphin, the stockbroker. Mr Thomas, who is 71, has agreed to a permanent ban on practising in the industry while Mr Fishwick has agreed to a seven-year ban.

Similar agreements are expected to be reached with other individuals involved in the scandal.

The FSA is also continuing to pursue four firms that did not participate in the settlement. The firms are BFS, Exeter Asset Management, B&C Asset Management and Teather & Greenwood. Not all the individuals work for these firms.

The FSA is investigating whether to take action against them under its enforcement regime, which could mean unlimited fines and bans. The regulator said that any such proceedings would probably start in March.

Some of the firms have pleaded poverty as the reason for excluding themselves from the settlement. The firms that have chosen not to sign up to deal are thought to be responsible for nearly a third of the losses sustained by investors.

SEVEN-YEAR BAN

One of the most notable aspects of Friday’s settlement was that there was only one significant scalp — that of Chris Fishwick, formerly of Aberdeen Asset Management. He has been banned from working in the industry for seven years.

Correction

David Thomas: A report (“Split capital trusts inquiry is biggest FSA investigation”, December 27) about the FSA investigation into split capital investments wrongly stated that David “Dotty” Thomas had agreed to a permanent ban. In fact Mr Thomas, 71, is retiring and has agreed with the FSA that he will not reapply for approval to perform a controlled function in the industry. The FSA made no finding of any regulatory breach against Mr Thomas and agreed to take no regulatory action against him.

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