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FSA calls off watchdog on investment trusts

The AITC is claiming victory following an FSA climbdown on planned changes to the remit of the Financial Omb udsman Ser vice.

The FSA is not going ahead with proposals it outlined in May which would have allowed investment trust shareholders to make complaints to the FOS.

The AITC has been in regular contact with the FSA, saying the FOS should not be involved with complaints concerning the management of an investment trust.

Unlike a complaint on a wrapper product such as an Isa or a saving scheme where the wrapper provider is dir ectly responsible to the inv estor, the AITC says the fund manager is only bound by contract to the investment trust board.

On this basis, it argues, it is wrong for the manager of an investment fund to be held accountable to the private shareholder.

The AITC said the planned changes to the ombudsman&#39s remit would have had the effect of undermining the board of an investment trust, whose role it is to oversee the manager and take any action if problems arise.

AITC director general Daniel Godfrey says: “We res ponded to the FSA&#39s consultation and we are pleased it listened to a variety of opinions and that we got the outcome we were looking for.

“These are public limited companies and the board has responsibility for controlling the fund manager and shareholders have the ability to remedy the board.

“We felt that extending the board&#39s responsibility to the ombudsman was not necessary. The products thr ough which most people access investment trusts are regulated by the ombudsman anyway.”

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