Standards & Guidance
AIC opposes cut in rules for offshore investment companies
The Association of
Investment Companies (AIC) has
warned that the Financial Services
Authority’s (FSA’s) decision to allow offshore investment companies to
bypass 120 pages of regulation risks a repeat of scandals like the split capital
investment trust crisis.
AIC director general Daniel Godfrey said people do not
realise how many vital rules would be abolished under the new regime and urged
interested parties to register their objections by responding to the
FSA
consultation which ended last month.
He said that under the proposals companies will not have
to maintain a spread of risk, have an independent board or report on how they
apply the Combined Code. He added that companies will be allowed to build up
substantial cross holdings – a major cause of the splits crisis – and will not be
required to act with integrity towards shareholders.
“The investment company industry has only recently
recovered its historically good reputation,” he said, “and everyone involved in
the sector should act to ensure that investors do not suffer a new scandal”.
The editorial in the
Financial Times (27 February) urged the FSA to
listen to these objections, arguing that the regulator needs to find a middle
way that will afford investors in such funds a degree of protection: for
instance, argued the FT, there could be requirements for secondary listed
vehicles to have independent boards.
Links
Association of Investment Companies
AIC Briefing Paper
Financial Services Authority
CP06/21: Investment Entities Listing Review
Financial Times
March 2007 |
