Suspending a fund can protect investors as fund managers are under less pressure to raise cash via a “fire sale”.
The proposed three to six-month notice period would mean they can plan sales and reduce the likelihood of a fund suspending, the FCA said.
The watchdog added that its new rules would also enable funds to be run more efficiently. Managers could invest more rather than holding cash for unanticipated cash calls. Property funds have been known to hold as much as 25pc in cash, causing a serious drag on returns.
Christopher Woolard, of the FCA, said: “Our proposals will