MPs have called for people who lost millions of pounds in split capital investment trusts to be given compensation.

The Treasury Select Committee said in a report it had found evidence people were not given adequate warnings about the risks involved with splits when they took them out.

It added there were also "suggestions of a network of improper conduct", or a so-called "magic circle" of people within the sector working with each other at the expense of the investor.

Committee Chairman John McFall said: "We were highly disturbed by some of the evidence we received.

"People seeking a safe investment were misled into putting their money into investments which were anything but. They have lost much more money than the falls in the market generally.

"A number of people in a number of firms may have been involved in serious wrongdoing."

He added City watchdog the Financial Services Authority needed to investigate thoroughly what went wrong and identify those who were to blame.

The report did not give details of how much compensation investors should receive but it is likely to run into millions of pounds.