The Investment Management Association (IMA) has called on the Treasury and Financial Services Authority (FSA) to re-consider its proposals for the creation of a UK Recognised Covered Bond system.
According to the organisation, the plans - which will see such bonds become undertakings for the collective investment of transferable securities (Ucits) eligible assets - could compromise the Ucits brand if lower quality assets were included.
The IMA stated that the timetable for introducing new legislation is "unworkable", the system would be "too liberal" and would not offer enough protection to investors if a bond issuer was to become insolvent.
Richard Saunders, chief executive of the organisation, said: "The Treasury and FSA should take time to rethink key aspects of the proposed regime to ensure the necessary quality and oversight in the interests of investor protection."
Ray Boulger, senior technical manager at John Charcol, recently said that bringing the covered bonds legislation in line with the euro zone would be "helpful".
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