HC Deb 21 October 2003 vol 411 cc485-6W
Mr. Caton

To ask the Chancellor of the Exchequer what assessment the Treasury has made of the Financial Services Authority's ability to regulate split capital investment trusts. [132990]

Ruth Kelly

The Treasury has full confidence in the way that the FSA is carrying out its regulatory responsibilities. Split-capital investment trusts are not currently directly regulated by the FSA—the Treasury has undertaken to consult on whether the FSA should regulate these companies.

Mr. Caton

To ask the Chancellor of the Exchequer what assessment the Treasury has made of the security of investment in split capital trusts. [132991]

Ruth Kelly

Investments in split-capital investment trusts have many risks in common with other forms of equity investment. It is for individual investors to take appropriate financial advice before investing in the shares of these companies.

The Treasury, however, welcomes the changes to the listing and conduct of business rules, as they apply to investment trust companies, recently announced by the Financial Services Authority. We believe that these will improve investor protection and effectively tackle the issues which have arisen at some split-capital investment trusts.

Mr. Caton

To ask the Chancellor of the Exchequer (1) if he will bring investment trusts fully into the regulation regime of the Financial Services Authority; [132992]

(2) if he will accept the recommendation of the Treasury Committee to bring investment trusts directly within the scope of investment product regulation by the Financial Services Authority. [132993]

Ruth Kelly

In its response to the Treasury Committee (published in the Committee's Fourth Special Report of Session 2002–03, HC651) the Treasury said'The Treasury welcomes the proposals put forward by the FSA in CP164 and believe that, when implemented, these will effectively tackle the issues which arose directly from split capital investment trusts. However, we accept that there may be a case for bringing investment trusts fully within regulation by the FSA. There are a number of ways in which this could be done and it is by no means clear which, if any, might be the most appropriate. The Treasury will, therefore. in conjunction with the FSA consider the available options for doing so and will, in due course, consult fully on these.'

This remains the Treasury's position.