THE Financial Services Authority is beefing up its inquiry into whether the City has been infected with the abuses that have undermined the US fund management industry.

Chief executives of top UK unit trust groups have been summoned to a meeting next week with FSA chairman Callum McCarthy.

The US mutual fund sector equivalent to our unit trusts has been riven by scandal over ‘late trading’ which is illegal, and market timing, which is frowned upon by regulators.

Both practices put hedge funds and other large investors at an advantage over small savers.

Those treading a path to the FSA’s Canary Wharf HQ are likely to include the bosses of Fidelity, Threadneedle, Scottish Widows and Legal General. There is no suggestion that any are guilty of wrongdoing.

The FSA has collated preliminary data and at the meeting will inform fund bosses how its probe will proceed.

Several fund managers, including Standard Life, have been forced to act to stop market timing.

Regulators and the industry are concerned that firms may have been unwitting victims. They say some may need to improve their controls.

Sources believe late trading is unlikely to be a big problem because controls here are tighter than in the US.