UK - The UK Financial Services Authority is to introduce a series of changes to rules governing the interests of investors in investment companies, including investment trusts. An FSA spokesman says the move is in “reaction to pressure resulting from the split-capital trust issues” and will be “fast-tracked through”.

Limits are to be set on the percentage of total assets that can be invested in other funds, and on the percentage of total assets that can be held in the form of holdings in other funds.

In terms of transparency, the FSA is also demanding greater clarity about investment policy, borrowings, mitigation of risks and corporate governance.

Safeguards are to be imposed affecting investment companies that employ investment managers. These will include:

- investment managers to be appointed annually with appointments ratified by shareholders
- new rules governing the independence of investment managers from investment company boards
- limits on any severance arrangement included within investment management agreements

The proposals will be “fleshed out” before 2003, and will be consulted on early in the year.