Calling foreign firms to account

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He subsequently retreated under fire, but his comments proved to be a lightning rod for those in London who felt that in the battle to attract foreign companies to list here there was a danger standards might slip.

Accordingly, the Financial Services Authority launched a consultation and review in January to address concerns around the lack of clarity as to what the different listing segments represent. It posed questions on whether the City's listing standards should be tightened or more closely defined so that it would be clear to investors just which London rules were being applied.

Since then the debate has rumbled on in a low-key way, and though it has been largely overshadowed by the more immediate problems in the credit markets, it remains very much a live issue.

The Stock Exchange is concerned that rules are not so restrictive they drive business away and argues that given the different cultures from which these companies come, the best guarantee of investor confidence is full disclosure and transparency. Some investors take a more robust line. Today the Association of British Insurers (ABI), speaking for the institutional fund managers within its ranks, suggested foreign companies should be required to state what kind of listing they have every time they make an announcement.

According to the ABI, there is a need to stop bogus claims by companies that they are London-listed when in fact their London presence is confined to global depository receipts - which carry few regulatory or governance overtones. The ABI feels there should be a "tier one" listing requiring compliance with all the governance codes. Lesser listings might have less-onerous standards. Foreign companies could then choose whether or not they wanted to be in the premium part of the market.

The ABI has a point, but so does the Stock Exchange. Foreign listings are bought almost exclusively by professional fund managers. They ought surely to be able to decide whether a company has merit irrespective of the label it carries or the claims it makes.