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FSA issues ultimatum to investment trust market

The AITC and fund managers have six months to sort out the investment trust industry or risk facing FSA action, managing director John Tiner has warned.

The regulator says it could force trust managers to disclose more of their holdings which it says would reveal smaller investments such as the cross-holdings among split-caps.

Currently, investment trust managers must make public any holdings accounting for 3 per cent or more of the trust.

The warning came last week as Tiner testified before the Treasury select committee, which is conducting an inquiry into the performance of the split-cap sector. At the hearing, AITC director general Daniel Godfrey said the trade body is asking its members to provide more information about their holdings.

An FSA spokesman says that while such exercises are encouraging, the regulator will not hesitate to expand its authority if the AITC does not move fast.

Major split-cap player Aber-deen Asset Management is calling for complete disclosure of the holdings of investment trusts but thinks it should be done voluntarily rather than through regulation.

Sales and marketing director Gary Marshall says: “If you start regulating something, then there may be conditions where you are not allowing proper market forces to operate.”

AITC communications dir-ector Annabel Brodie-Smith says: “We are aware of the FSA&#39s timetable. I would anticipate that the industry is more willing to work together on this and I would hope that our efforts are adequate to satisfy the FSA&#39s requirements.”

•Select committee, p7

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