THE Financial Services Auth-ority, the City's main regulator, yesterday told a committee of MPs that it is investigating as many as 21 companies for alleged collusion in the split capital investment trust scandal.

John Tiner, the newly- appointed chief executive of the FSA, told MPs on the influential Treasury select committee that the regulator's inquiry into splits ''has now got quite large''.

In February, the FSA said it was investigating about 10 companies for alleged collus-ion. Yesterday's update shows just how deep-rooted the

scandal could be.

Asked for an update on the FSA's splits investigation, Tiner said: ''It has grown signific-antly and has now got quite large. There are now 21 firms involved in the investigation (into collusion).''

Split capital investment trusts have different classes of shareholders, with some investing for income and some investing for capital growth.

However, consumers lost hundreds of millions of pounds when a number of funds collapsed last year because of stock market falls, high levels of borrowing to invest in equities and high cross-holdings in other trusts.

The FSA is investigating whether managers of different funds colluded to buy each other's shares in order to create the impression of demand, thereby supporting their share prices.

Aberdeen Asset Management, the biggest player in the sector with 19 split funds, has acknowledged it is involved in the FSA investigation.

Other big players in the sector include managers such as BFS and Exeter Investments, and brokers such as Brewin Dolphin and Collins Stewart.

Tiner said the FSA was conducting three distinct mini-investigations into the splits scandal - financial promotion, mis-selling and collusion. He said collusion was ''by far'' the biggest element.

He also detailed the pain-staking gathering of evidence taken on by a 60-strong team that is working solely on the splits investigation.

The regulator has the equivalent to 12.5 years of taped telephone conversations between traders and brokers to plough through. It has about 70 interviews to complete with the various people involved, of which it has finished 20.

However, Tiner could not give the committee a definite timescale for when the investigation would be completed.

Asked by McFall whether it would be completed in another year, Tiner said it was imposs-ible to tell, but added: ''We are working as fast and effectively as we can.''

MPs also criticised the relatively low level of fines meted out for misconduct by the FSA, compared with penalties levied by the Office of Fair Trading.

In addition, in his first high-profile public outing since becoming chairman of the FSA, Callum McCarthy was grilled by MPs about why he hadn't suspended Sir Andrew Large, FSA board member and deputy governor of the Bank of England, until an investigation by the Office of Fair Trading into alleged public school fee fixing had concluded.

Large, the warden and head of governors at Winchester school, became embroiled in the OFT's investigation into cartel-like behaviour after Bill Organ, the school's bursar, sent him an e-mail detailing other schools' fee increases.

The note attached read: ''Confidential please, so we aren't accused of being a cartel.''

George Mudie, Labour MP for Leeds East, asked McCarthy whether he'd ''had a word'' with Large about the matter.

''No, I haven't,'' admitted McCarthy. Pressed on why not, McCarthy said that Large was on the FSA board because he was deputy governor of the Bank of England.

Mudie added: ''But he is also a member of your board. So you as a financial regulator don't regard that as something you should talk to him about?

''This man is allegedly involved in plea bargaining and he is sitting on the board of the regulator responsible for the financial integrity of the City, which discusses issues like market abuse. You can't get any more cosy than this situation. It's the old boys' network.''