by Chris A'Court BBC Radio 4's Money Box

MPs are preparing to hear more evidence on what has become the biggest financial scandal of recent years.

Investing in failed split capital investment trusts could have cost 50,000 people �3 billion.

On Tuesday MPs will get to question 'Mr Splits', Chris Fishwick, the former director of Aberdeen Asset Management, who pioneered the controversial investments.

So many members of the public are expected to want to attend the meeting of the Treasury Select Committee that it has been moved into the biggest committee room available in the Houses of Parliament.

Guernsey

Last week Money Box reported that people investing and losing their money in some disastrous split capital investment trusts might have been made better aware of the risks.

The financial regulator in Guernsey ordered that more strongly worded advice about how such investments could go wrong should be included in prospectuses issued by firms based in the Channel Islands from late 2000.

That was long before splits started running into trouble - yet no-one ordered firms based on the UK mainland to toughen up their documents in the same way.

That issue dominated last Tuesday's discussion at the MPs committee.

The FSA

The Financial Services Authority stressed that it was never given what can be termed a 'warning' from the Guernsey regulator about the systemic risk of splits.

The Guernsey regulator also put out a statement this week agreeing it did not issue a "warning" to the FSA.

Guernsey's director of investment business, Peter Moffat, did convey his views to the FSA's Robert Aitken in early 2001 but the FSA has traced no written record of the exchange between the regulatory officials.

The FSA does admit there may have been 'a gap in regulation' affecting split capital trusts.

Such gaps make it easier for firms to sell riskier financial products which do not need to offer consumers the same level of protection that regulated products do.

Click here to read a statement issued by the Guernsey Financial Services Commission on 23 October 2002.

Click here to see Financial Services Authority statements and publications.