The Consumer Panel has added its voice to the growing number of trade bodies and fund managers who are urging the Financial Services Authority not to apply lighter regulations to offshore companies wishing to seek LSE listings.
The FSA published proposals in October 2006 which would allow offshore firms to operate under reduced requirements compared with UK-based trusts under the minimum standards regime.
Last week, the Association of Investment Companies (AIC) has been warning the proposals could be detrimental to consumer protection and create a scandal similar to that seen with the split capital investment trusts debacle.
The Financial Services Consumer Panel has today joined in the debate by writing to the FSA and arguing proposals to amend the stock exchange listing rules for offshore investment companies threaten to undermine investor protection for the sake of attracting non-UK based companies to list in the UK.
By applying the European minimum directive criteria, the Panel says a range of consumer protection measures will be lost, many of which were introduced after the splits crisis and which have been relied on to assure the government and market that another similar crisis should not occur.
In particular, it warns the proposals would reduce protection measures such as the spread of investment risk, publishing of investment policy, prohibitions on substantial cross-shareholdings, and the independence of board members and investment managers.
John Howard, chairman of the Consumer Panel, says: "We think that, with its current proposal, the FSA is at risk of making a serious mistake that will be damaging for investors and damaging for the confidence of the market. Indeed, a consequence would be that there would be a lighter touch regime for the companies which pose the greatest potential risk for investors – a reversal of the FSA's normal risk-based policy."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7034 2680 or email [email protected].IFAonline
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