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FSA aims to stop Arch Cru repeat

Tighter regulation for non-Ucits retail schemes proposed by the FSA could prevent structures similar to the Arch cru fund range being launched.

The plan are designed to improve transparency and liquidity for non-Ucits retail schemes and bring them closer to Ucits’ regulations.

The regulator’s quarterly consultation paper 21 says: “This clarification will ensure Nurs’ unitholders, like Ucits’ unitholders, are not exposed to undue risk arising from, for example, investment trusts which do not disclose underlying investments or are not subject to corporate governance.”

Arch cru has been in the firing line since the suspension of its fund range in March. The Oeics invested in cell companies on the Guernsey Stock Exchange. Last month, Money Marketing revealed that Arch Financial Products suspended the underlying cells investing in the CF Arch cru funds after discrepancies were found in their pricing.

Martin Currie head of product development Toby Hogbin says: “This will limit the investing of Nurs’ products into more esoteric instruments that operate between the Ucits and current Nurs boundaries. It will affect funds that use certain types of structured products and quasi-equity type assets.”

Henderson New Star technical director Stewart Cazier: “I think this is a good move by the FSA as,although some will be unhappy with the changes, they do make a number of improvements.”

Bestinvest senior investment analyst Adrian Lowcock says: “You cannot really argue with anything that looks to improve transparency. I would not be opposed to making it even simpler by having one class of funds.”

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