The Bernie Madoff scandal has prompted the European Union to launch a review on how mutual-fund rules are implemented around the 27-country-bloc, Bloomberg reports.

An EU spokesman told the wire service that the EU is looking at how governments enforce rules that require EU-regulated funds to safeguard client assets.

A fund is "liable for losses due to failure to perform its duties or improper performance," Bloomberg quotes EU spokesman Oliver Drewes as saying.

The Madoff scandal has caused a tiff between France and Europe's biggest market for EU-regulated funds, Luxembourg. Also, Oddo & Cie, a French fund manager, has filed suit against UBS, who serves as custodian of a Luxembourg fund that invested with Madoff, according to the report.  

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