association aims to raise around £10m from those who benefited most from splits to help compensate those who lost the most from crisis
The AITC is pressing ahead with its intention of setting up a charitable trust for investors suffering financial hardship after the collapse of the split-cap sector.
This week it is writing to 50-70 management groups, brokers, accountants and lawyers that benefited the most from the splits boom and asking them to make a voluntary contribution to the trust, similar to the Hardship Fund used by the Lloyd's market.
According to the AITC, £1m has already been pledged to the trust and it is looking for anything up to £10m.
Speaking at the AITC conference for directors last week, Daniel Godfrey, director general of the AITC, said it is important for the industry to show it is willing to help those who have suffered huge losses and this money should come from those who benefited most when times were good.
In a speech at the same conference, John Tiner, FSA managing director, said it is open to firms to compensate investors without waiting to be ordered to do so.
'Such an act of faith would go some way to restoring the sector's tarnished image,' he said.
Godfrey added he hoped after the process of taking the voluntary contributions, the AITC could get the trust set up in about three months and start handing out donations soon after.
To prove financial hardship investors would apply to the AITC and their situation would be assessed by an independent committee. This would judge their assets and liabilities and then make a recommendation as to whether or not they should receive a charitable donation from the trust.
Godfrey said splits and the bear market have done much to undo a lot of the hard work achieved by the 'its' campaign, so it is now vital to try to restore confidence in the closed-end funds sector and position it for recovery.
Anthony Townsend, chairman of the AITC, said the scale of the losses suffered by thousands of first time investment trust shareholders, who bought what they thought were low-risk products, means it is inevitable the industry will come under the most searching scrutiny by Government, the regulator and the media.
He said: 'This past 12 months have been the worst for our industry I can recall.
'The collapse of nearly 20 splits has done the industry huge damage and the repercussions have called our very existence as a sector into question.'
Townsend added the AITC had a good idea of what to expect from the Treasury Select Committee.
He said some of the answers the trade body gave to the committee may have been delivered with less than perfect polish but were all honest, accurate and entirely in line with the position the AITC had deliberately chosen to take.
He added: 'We knew the sector faced the very real possibility of being regulated out of existence and we were determined to ensure the mistakes of a few did not bring down a long established, and for the most part very successful, industry.'
Partner Insight: Continuing the Architas education series for clients.
What made financial headlines over the weekend?
290,000 already affected
Putting the tech into protection
Square Mile’s series of informal interviews