The UK’s financial regulator, the Financial Services Authority, has told investment advisor firms that many of them are not giving customers...

The UK’s financial regulator, the Financial Services Authority, has told investment advisor firms that many of them are not giving customers the right information about their services at the right time. Recent research by the FSA found that over half of firms surveyed are failing to follow new rules on disclosure of firm status and commission charges, introduced under depolarisation regulatory changes last year. The regulator carried out 130 mystery shopping assessments of 81 firms of all sizes. Advisors gave out both of the required documents in only 58 per cent of the assessments. And in only 42 per cent of the assessments were both of the documents given out and at the right time. The FSA also carried out desk-based work into the contents of 519 disclosure documents from 168 firms. Sixty-five per cent of these documents contained errors and many of these were in key sections that could make it difficult for consumers to make comparisons. The regulator will be contacting firms to ask for further information to help evaluate their compliance. It will consider the most appropriate tools to address any non compliance that is identified, which may include referring individual firms to enforcement. The FSA will also be gathering additional information from firms and conducting a further round of mystery shopping later in the year. In a separate development, the FSA has proposed letting hedge funds have publicly traded listings of funds in the UK, marking a significant step in bringing the alternative investments to retail customers. Under the proposal, retail investors would have the ability to buy shares in individual hedge funds rather than listed funds of hedge funds. The proposals suggest eliminating rules on listed entities, such as restrictions on short-selling stocks and wide use of synthetic investments, which have served to prohibit hedge fund listings.