The FSA is determined to take enforcement action where breaches are proven, to do what it can to get adequate compensation for retail customers who have suffered financial loss as a result and to assist in restoring market confidence in the investment trust sector.
Since the meeting on 2nd March, there have been continuing discussions between the regulator and the 21 firms. A number of firms have been provided with outlines of the cases that would be made against them, to assist them in considering their positions, on the basis that this information is treated as confidential.
Firms that have already indicated that they are willing to participate in the mediation process are now engaged in constructive discussions with the FSA about resolution of the issues, including payment of appropriate compensation. The FSA intends to continue with those discussions.
Separately, a group of firms has held preliminary settlement discussions with the FSA. These discussions have been conducted on a confidential and without prejudice basis. While it cannot disclose any details, the FSA has carefully considered what has been said in those discussions and, in particular, the amount of money those firms would be prepared to make available for compensation.
The FSA believes that payment of £350 million as compensation would represent an acceptable amount in the context of these discussions. The amount that those firms have indicated that they would be prepared to make available is so far short of what is necessary that the FSA does not intend to continue with these discussions.
The FSA is continuing with its enforcement investigations against those firms that have refused to take part in the mediation and will begin referring cases to the independent Regulatory Decisions Committee in June. In the meantime, it remains willing to involve these firms in the mediation process should they agree to take part on the basis proposed by the FSA.
The FSA has not made public the names of the 21 firms with which it has held discussions. In accordance with the requirements of the Financial Services and Markets Act 2000, it will continue to keep the details of its cases confidential until either the relevant mediation or enforcement processes are concluded.
Today's announcement does not affect individuals currently under investigation. The FSA will decide separately whether to take further action against individuals and its decision is not dependent on the outcome of any negotiations with firms.
