It was only a matter of time before the U.K.'s Financial Services Authority started turning its attention to private equity after eyeing hedge funds for a good part of 2005. The script for p.e. is similar to its actions on hedge funds: The FSA is not looking to crack down heavily, just enough to tweak it a bit. An area of concern in p.e. is money laundering, reports Financial News, and, after paying a visit to about a dozen firms over the summer, the agency found that more than 50% of identified weaknesses in compliance had to do with anti-money laundering controls. The FSA’s Lucy McClements, who manages its wholesale-investment team, also pointed to out-of-date compliance manuals, insufficient controls on outsourcing and not enough time devoted to compliance as potential other problems.
This closer look at private equity is not sitting well with some p.e. players.
Says attorney Simon Witney, of the law firm SJBerwin, in an FN interview: “We already have a highly regulated environment in the U.K. It is one of only two countries where private equity is regulated and it’s hard to see the need for any further regulation.”