In 2006, following a wide-ranging thematic review of private equity markets, the FSA published Discussion Paper 06/6, Private equity: a discussion of risk and regulatory engagement (DP06/6). In DP06/6 the FSA set out its thoughts and questions on the appropriate regulatory approach for the private equity sector.
The FSA has now published Feedback Statement 07/3, Private equity: a discussion of risk and regulatory engagement - Feedback on DP06/6 (FS07/3). In FS07/3 the FSA sets out the comments it received on DP06/6, its response to those comments and the steps the FSA will be taking as a result.
The structure of FS07/3 is as follows:
- Chapter 1 gives an overview.
- Chapter 2 gives an overview of responses and outlines the FSA's regulatory remit in the context of the wider market.
- Chapter 3 summarises detailed responses to the questions raised in DP06/6.
According to FS07/3 further measures that the FSA will be implementing include:
- Enhancing financial reporting requirements for private equity firms.
- Regularly surveying leveraged lending and distribution.
- Engaging in a targeted fact-finding exercise to understand the issues and risks inherent indealing with financial distress and default in a heavily traded corporate name.
- Undertaking further thematic work regarding identifying and mitigating conflicts of interest within private equity markets.