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FSA to probe private equity risks

The Financial Services Authority is to assess the risks posed by private equity firms investing in the UK financial sector.

As a result of a study on private equity investments published last week, the regulator has warned that market abuse and conflicts of interest are the main fears associated with private equity investment.

The FSA’s stance on market abuse follows criticisms that there are often marked increases in the share prices of target firms before private equity firms announce takeover plans.

The regulator will also assess the way banks advise private equity firms before lending to them and investigate the high levels of borrowing that some private equity firms build up to fund takeovers.

To strengthen its oversight of the private equity market, the FSA will improve its data collection by conducting regular surveys into banks’ exposure to leveraged buyouts.

Michael Clapper, chief executive of Enterprise Group, says he had no concerns when Promethean Investments, a private equity firm, bought a 30% stake in his company earlier this year.

Clapper says: “We were comfortable with the arrangement as Promethean had no previous ties with the industry. But I can see how a private equity len-der buying into a distributor could result in bias when it comes to choosing products. This is something the FSA should look into.”

Hector Sants, managing director of wholesale business at the FSA, says the regulator’s approach to private equity deals is “broadly appropriate” but is in need of refinement.


Commercial First appointment

Commercial First has appointed Tom Clark as regional sales manager for its South Central region. He will report to Mark Johnson, head of sales at Commercial First. Clark joins the lender from Northern Rock where he was commercial finance manager for three years.

BBC’s surprising take on interest-only mortgages

As a regular reader of your magazine, I am familiar with all the arguments about interest-only mortgages taken out for affordability reasons. Although there is still a place for interest-only mortgages in the market, for affordability reasons alone they should be a big no-no. I’m also aware of the arguments for and against brokers charging […]

Property transactions up on this time last year

The number of properties changing hands is up 11% in the last three months compared to the same period last year, statistics for Revenue and Customs have shown.Warren Bright, chief executive of property website, says: “This suggests that the housing market is holding up well in the face of rising interest rates. “Brisk levels […]

TMW expands the 100% LTV range

The Mortgage Works is launching three mortgages in the 100% mortgage portfolio.The new deals have an LTV of 99%, with an arrangement fee of 1% which can be added to the loan, taking the loan to 100% LTV. With rates starting from 5.99%, the products are designed for customers who have a small deposit and […]


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