Two tier investment structure could prove problematic

10/04/2007  16:57:03

The Financial Services Consumer Panel has warned that the decision to adopt a two-tier listing system on the London Stock Exchange could leave investors with offshore bank accounts at risk.

The Financial Services Authority (FSA) announced last week that the system would continue to be in place for at least another year, with the first quarter of 2008 the earliest point at which it could be axed.

The system currently allows foreign investment offshore companies to list themselves under Chapter 14 of the listing rules, with less in the way of onerous obligations.

"If the back door is open, and is so tempting and undemanding to sneak through, who in future will bother to enter by the front?" claims the panel in its study, published by the Professional Investor magazine.

The chairman of the panel John Howard said he hoped that proposals would be put forward by the FSA to "ensure that the overall protection for UK investors is not diluted".

The two tier system has been in place since October.

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