The Financial Conduct Authority has rapped a group of hedge funds and private equity firms over the way they value less liquid assets — as the watchdog delves deeper into the practices underpinning the UK investment industry.

The regulator has been forced to send letters to a number of firms after contacting a random selection of fund managers to request their valuation policies for all asset classes. The submissions received were insufficient, according to a valuation expert who has seen the correspondence, and the FCA has demanded more information.