Peter Neville the Director General of the Guernsey Financial Services Commission issued the following statement on the 23 October 2002:

"In the context of increased interest from journalists in connection with split capital investment trusts, and in particular in the exchanges between the Guernsey Financial Services Commission and the Financial Services Authority in the UK on this matter, journalists are referred to a letter dated 9 July 2002 to the Editor of the Guernsey Press which is on the GFSC's website.

"In that letter it is explained that the GFSC regularly meets the FSA and other regulators to exchange views on matters of common interest.

"Discussions with the FSA in early 2001 covered a wide range of subjects including split capital investment trusts and related exchanges with third parties.

"Although those discussions did refer to the potentially incestuous nature of some investment strategies, it would be wrong to say that the GFSC issued a "warning" to the FSA about systemic risk to the UK finance sector.

"The GFSC assesses prospectuses as part of our consideration of applications from companies to raise money.

"Risk warnings in the prospectuses are therefore considered on a case by case basis.

"In relation to the Guernsey market, the GFSC has gathered information from all Guernsey administrators of split capital investment trusts, including details of complaints received by them.

"The GFSC itself has received very few direct complaints, but we are reviewing the activities of all the firms involved.

"If there is any evidence of a failure to act properly, such as inadequate disclosure, failure to adhere to the statements in a prospectus, misleading marketing material, or the giving of misleading advice we will take the appropriate action.

"In the wider context, it is worth remembering that closed ended funds are not currently regulated to the same extent as open-ended funds.

"The nature of closed ended vehicles and the wide range of international practice make the regulation of such funds, which include split capital investment trusts, a complex matter.

"The GFSC has called for a debate to be entered into between international regulators on this subject, but this has yet to get under way and would be likely to take some time before coming to fruition."