FSA Reviewing Stance On Hedge Fund Sales To Retail Customers

by Robin Pilgrim, LawAndTax-News.com, London

01 October 2004

Speaking at an asset management conference in London on Tuesday, Hector Sants, managing director of wholesale and institutional markets with the UK's Financial Services Authority (FSA) revealed that the regulator is poised to re-examine its stance on the sale of hedge fund products to retail investors.

Although the FSA concluded last year that it would not be relaxing its ban on the direct sale of the risky investment vehicles to ordinary investors, Mr Sants told delegates that increasing pension fund investment in hedge funds, coupled with regulatory changes taking place elsewhere in Europe "will cause people to assume change, and is leading us to re-examine our current prohibition of the marketing of hedge funds to private customers".

The FT reported that although Mr Sant gave no commitment to lift the ban, he observed that:

"This area will challenge to the full our need to fulfil our consumer protection objective and not stifle competition or restrict consumer choice."

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