Lack of agreement could linger for years

BC Asset Management, BFS, Exeter and Teather & Greenwood have yet to pay any compensation. In addition, eight individuals under investigation for their part in the collapse of the splits sector have not agreed to the terms laid down by the regulator.

Each group’s lack of participation in the compensation deal is understood to be related to the terms under which each would contribute to the £143m package. One insider has suggested that the smaller firms were forced out of the final package for “commercial reasons”.

According to a statement from the regulator, it will continue to investigate the four firms and eight individuals to determine if it is appropriate to take enforcement action against them. Such action, it says, could include the imposition of financial penalties and restitution orders against them.

Any such proceedings are likely to take place in March when the firms would appear in front of the regulatory decisions committee. If found guilty of wrongdoing, the firms could appeal and their case would then go to the Financial Services and Markets Tribunal. If this occurs, it is feasible the saga could continue for at least the next two years.

It would also mean the FSA would have to present the evidence it has collected since it began its investigation of wrongdoing in February 2002. In an article in the Financial Times, Daniel Godfrey, director general of the AITC, said: “Only then will we know if the FSA has played a weak hand well or a strong hand badly.”