Bermuda is one of four dependent territory jurisdictions in which British authorities have said legislation governing UK investor protection in unit trusts is outdated.

And after a recent visit by UK treasury experts in the investment services group, local officials are seeking ways to better protect offshore investors and provide more regulatory control through the Bermuda Monetary Authority.

Legislative improvements are needed here and in three other British dependencies since amendments to the UK laws in 1991 and 1994. There are about a dozen UK class schemes operating in Bermuda.

With some $14 billion in investment funds, Bermuda differs from the other named jurisdictions because of its closer connection to the US market.

Mr. Peter Sousa, investment services division manager at the Bermuda Monetary Authority, said, "The primary reason for the treasury officials' visit to Bermuda was to (conduct a) review. Certainly out of that review, a number of legislative changes were identified as needed. And further enhancements are likely to be made to Bermuda Monetary Authority supervisory systems.'' Mr. Sousa said that UK treasury officials came to Bermuda last November and met with bankers, lawyers and accountants involved in the schemes. They also met with the BMA.

And before any changes are enacted, proposals will be discussed by the BMA, the Ministry of Finance and those service providers in the industry.

The investment services division in the BMA was created last May after the Authority recognised the need for greater attention and resources dedicated to tracking the burgeoning investment service industry here. A part of that was the collective investment schemes, including the UK class schemes.

Bermuda, The Isle of Man, Jersey and Guernsey are islands that appeal to UK companies as offshore centres because investment funds approved under local financial regulations can be sold in the UK through financial intermediaries, according to the Financial Times.

The jurisdictions gained designated-territory status through legislation that brought them in line with the UK 1986 Financial Services Act, as regards certain aspects of investor protection on funds which they authorised.

Such offshore funds have to conform to specific rules on investment policy and structure. And the fund managers would be required to meet a certain standard in terms of financial resources and business conduct.

Investors should be statutorily entitled to compensation if officers of the fund, such as a trustee, manager or custodian, cannot meet the liability.