Fund managers warn a move to restrict the ability of bank staff to cold-call clients for business will stiffle the sales of fund products. Hong Kong Investment Funds Association (IFA) executive director Sally Wong said fund managers were worried about the impact of the Hong Kong Monetary Authority advice and claimed it added unnecessary regulation. The circular, issued in the middle of last month, warned banks that cold-calling could violate securities laws. Investec Asset Management (Asia) managing director Stewart Aldcroft said the move added to restrictions on how banks sell funds, stock and other investment products. The circular said bank staff could call only existing securities clients to promote the sale of investment products, but could not approach those who only had bank accounts with the lenders. Stockbrokers, who are restricted from cold-calling potential clients, have repeatedly complained of unfair competition from the banks - which can approach customers with whom they have a normal banking relationship. The new rules would also compel banks to use only those members of their staff qualified in securities matters to serve clients who approach them for information on any investment matters. Mr Aldcroft said the restrictions would damage the fund houses' ability to sell their funds through bank outlets. 'Most fund houses are relying on banks as their distribution channels,' he said. According to IFA figures, about 70 per cent of fund products sold in Hong Kong are distributed through banks. But Mr Aldcroft said the figure may be as high as 85 per cent. He called on the government to change the law, separating the regulation of mutual funds from securities. He argued that funds were managed by professionals and so carried a lower risk than pure stock purchases. An official with the Securities and Futures Commission said rules on cold-calling were necessary to protect investors from high-pressure sales tactics. 'The rules are designed to protect investors against the manner of selling,' the official said. 'They are not against particular types of products.' The IFA's Ms Wong said: 'We believe it is important that any measures adopted should strike a balance between investor protection and market development. 'After all, it must be remembered that authorised funds are a very well-regulated product - the products are authorised by the SFC, and managed by approved fund managers and the distributors are subject to the supervision of different relevant regulators.' She said the development of the fund industry in Hong Kong was still in its early stage and that only 10 per cent of the adult population invested in funds. In the United States, 50 per cent of households had fund investments. 'We note that in the Policy Address this year, one initiative identified was to promote the development of the bond market and the fund management businesses and to facilitate new products,' Ms Wong said. 'One key area to achieve this objective is to foster the development of distribution channels. 'Banks have been assuming an increasingly important role in fund distribution because of the level of convenience, security and confidence offered as well as their ability to tie funds into one's personal financial needs.'