FSA issues progress report on split capital investment trusts

The report covers:

• proposed improvements to the governance of investment trusts generally;

• the FSA's continuing supervision of regulated firms operating in the industry (the FSA does not regulate investment trust companies); and

• the continuing enforcement investigations in allegations of mis-selling and collusion and market manipulation.

Separately, the Financial Ombudsman Service (FOS) is publishing its own update on progress in handling complaints.

The full text of the FSA's report is appended to this press release. The FOS report may be viewed at www.financial-ombudsman.org.uk

Notes for editors

1. Previously, the FSA has published two reports on the split capital investment trust sector.

   In December 2001, Discussion Paper 10, Split Capital Closed End Funds, reported on the regulator's research into the sector and called for views on the regulation of Splits. It focused particularly on the areas of disclosure, governance and the guidance offered to financial advisers who recommend these investments. It can be viewed at www.fsa.gov.uk/Pages/Library/Policy/DP/2001/discussion_10.shtml

   In May 2002, an FSA Policy Report , Update report on FSAs enquiry into the Split Capital Investment Trust Market detailed the responses to DP10 and revealed that the FSA would begin formal investigations into alleged collusive behaviour, promotions that may have misled, and possible mis-selling to private investors. This report can be viewed at www.fsa.gov.uk/pubs/policy/pssplits.pdf

2. The FSA proposals to improve governance in the investment trust sector were published in Consultation Paper 164 in January 2003.

3. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the appropriate degree of protection of consumers; and fighting financial crime.

4. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.