Split-capital claim against Brewin

A SLEW of class actions over the split capital trust debacle kicks off today with the issuing of a claim against Brewin Dolphin, one of the UK's top retail stockbrokers.

Stephen Alexander, founding partner of Class Law, told the Evening Standard he would be issuing a further 14 such claims in London courts over the next couple of weeks, on behalf of about 700 retail investors who collectively lost millions of pounds.

The claims are being lined up against fund managers and banks which dealt in split-cap investment trusts two years ago.

The legal action threatens to undermine recent attempts by the Financial Services Authority, the City's chief financial watchdog, to bring about its own settlement with 21 leading fund managers and brokers over the splits fiasco.

Fund managers, including Aberdeen, Exeter, Framlington and Gartmore, and brokers including Collins Stewart and Brewin, have refused to sign up to talks with the FSA as their insurers fear even this may be an admission of guilt, triggering private legal action from individual investors.

Now that Alexander is launching these claims, the chances of firms entering talks with the FSA appear even slimmer.

He said: 'Litigation will mean their insurers will say not to talk [with the FSA]. We have done everything we could to settle these actions but the clients are saying enough - we have lost millions. Some are living on State pensions as their investments got wiped out.'

The collapse in value of split-cap trusts cost some 50,000 investors about £620m, according to estimates from the Association of Investment Trust Companies.

Alexander said Class Law had just obtained 'substantial' insurance cover of its own to protect claimants from the risk of having to pay the financial firms' legal fees, which could easily run into many millions of pounds, should the class actions fail.

Lawyers in the UK have trouble getting legal fee insurance cover in these sorts of cases, one of the main reasons why many class actions do not get off the ground.

Alexander said: 'The City will have to take a long, hard look at the way it deals with complaints and ask itself should people really have to got through all this to get redress.'