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FSA looks at probe into fund supermarket selection

The FSA is considering an investigation into fund supermarkets amid

fears that advi-sers without adequate qualifications are using them

to select funds on a discretionary basis.

The regulator says it is concerned that investors are being moved

into unsuitable funds by advisers lacking the required Part IV

permission or the appropriate expertise. It fears this is happening

throughout the lifetime of some portfolios and not just at the

outset.

The FSA is considering a thematic project, where it investigates

across the industry to see whether intervention is required. This

method precipitated its investigation into split-capital investment

trusts.

It says the project may also review the requirement to provide

regular fund reports, with full disclosure of performance and fees to

clients. But it says it could be months before the project gets off

the ground.

FSA spokesman Rob McIvor says: “It is important to assess the scale

of the issue and make sure what we do is appropriate. We need to get

a feel about whether regula-tory intervention is necessary.”

Cofunds sales & marketing director Rodney Aldridge says: “I do

not see how dealing through a supermarket increases risk. It is down

to the agreement between client and adviser.”

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