FRESH CONTROVERSY over split capital trusts was among the leading stories in most newspapers today. ...
FRESH CONTROVERSY over split capital trusts was among the leading stories in most newspapers today. The Scotsman reports there's fresh controversy over the debacle as the Financial Services Authority was accused of failing to act in response to a warning from the Guernsey regulator that the trusts contained a "systemic risk" to investors.
The paper says Stephen Alexander, a partner in law firm Class Law, told the Commons Treasury committee that the Guernsey regulator had written to the FSA warning split capital investment trusts holding high levels of shares in other splits might "give rise to a systemic risk".
The Telegraph reports that the solicitors Class Law came under attack as "ambulance-chasing lawyers" at the parliamentary hearing yesterday, as the Financial Services Authority admitted there "may have been a gap in regulation" that allowed the split capital trust scandal to escalate.
Both statements were made before the Treasury Select Committee hearing into split trusts. About 25,000 investors have lost millions as fund values have plummeted thanks to a "contagious cocktail" of falling stock markets, cross-holdings between trusts and gearing within the trusts.
The FSA does not regulate investment trusts in the same way as unit trusts, as they are covered only by the stock market listing rules. However, it does authorise the marketing material for investment trusts.
SECURITIES REGULATORS and lawyers from leading investment banks are to meet in Washington on Thursday to consider proposals for reforming Wall Street research, the FT reports.
Regulators are considering plans to force investment banks to fund independent research companies that would provide investors with alternatives to Wall St's stock recommendations.
The banks would then be allowed to continue providing research to their customers, but only after internal changes designed to insulate analysts from investment bankers.
This approach is being considered as regulators - including the Securities and Exchange Commission and the New York attorney-general - pursue a "global" settlement aimed at preventing conflicts of interest.
GOOD NEWS for Egg, the Telegraph reports. The internet bank is reporting a rise in profits at its UK arm, although spending on its international business has pushed the group into the red.
Pre-tax profits for the three months to September 30 in its UK business came in at £9.4 million, compared with pre-tax profits of £4.6 million in the previous quarter and £78.2 million losses during the same quarter last year.
However, losses at the group's international operations pushed it into overall pre-tax losses of £5.1 million for the quarter.
Customer numbers increased by 107,000 to more than 2.4 million.
GORDON BROWN will have to resort to higher borrowing to fill a £7 billion "black hole" in the nation's finances, a Treasury Minister said yesterday.
The Telegraph says it was the first public admission that the Chancellor will have to revise downwards his optimistic predictions for growth in the economy as a result of the world downturn and slumping markets.
Ruth Kelly, Treasury Financial Secretary, said Mr Brown was prepared to let borrowing rise rather than raise direct taxes further in next year's Budget.
INCREASED SALES through IFA has pulled Friends Provident out of its own black hole, the Telegraph reports. Shares in Friends Provident jumped 7.5p to 133.5p yesterday after the life insurer defied the gloom in the sector to report a 7pc improvement in third-quarter sales.
IFAs account for 70% of the company's distribution.
The former mutual, which floated at 225p in July last year, has been badly affected by concerns about insurers' solvency requirements with its shares hitting a low of 104p earlier this month.
Third-quarter new life and pensions sales increased from £86.1m to £91.9m, measured on the industry's preferred annual premium equivalent basis. Total new life and pensions sales rose by 5.6pc to £420m.
The figures mask a strong performance in sales of protection, savings and investment products, which advanced 69pc to £192m, and a 20pc decline in pensions sales to £228m.
THE TIMES City Diary speculates on who is being approached for Royal and SunAlliance top job, which it described by the diary as the "least appealing jobs in the City". Patrick Snowball, in charge of general insurance at Aviva, apparently took the call from the headhunters, but has decided not to take things any further.
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