An international financial regulator has defended its current global rules for investment funds today in a pointed retaliation to recent criticism made by the Bank of England.
Following the suspension of Neil Woodford’s flagship fund, the Bank of England said the International Organisation of Securities Commissions (Iosco) had not set out how such funds should meet calls from investors for their money back.
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But today Iosco escalated the public spat by insisting that rules it set out last year provided “a comprehensive framework for regulators to deal with liquidity risks in investment funds”.
It doubled down on its defence of the current system, saying that it was up to national watchdogs to implement it.
The securities watchdog also pledged to reassess how its recommendations were being implemented next year.
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Last month Bank of England governor Mark Carney blasted funds like Neil Woodford’s by saying they were “built on a lie”.
Carney told MPs on the Treasury Committee that the way these types of funds are regulated should be changed.
“These funds are built on a lie which is that you can have daily liquidity for assets that fundamentally aren’t liquid,” he said.
Carney said offering clients instant access to their money from funds that were illiquid could make investors complacent about risk.
The current approach “leads to an expectation for individuals that it’s not that different from having money in a bank,” he added.