UK regulators are preparing to name and shame asset management groups that fail to engage properly with companies over pay, succession and other corporate governance issues.
The Financial Reporting Council will reveal for the first time in July those investment groups that are not putting adequate pressure on companies in their roles as stewards of other people’s money.
Asset managers that are not placing enough pressure on companies to meet stewardship standards will be put on six months’ notice to raise their game.
The FRC will announce a tiering system in July. The first tier of managers will be those that have met expectations. A second tier will be those that have not met expectations. This second group will be given six months’ notice to improve. Although the FRC has not specified whether these asset managers face removal as signatories, this is one of the options.
The UK regulator has been increasingly concerned over the failure of some asset managers to engage with companies on important issues, such as pay, investment strategy, succession and the quality of auditing.
A FRC spokesperson said: “We have been worried about some investors commitment to the code for some time. Some have not entered into the spirit of reporting against the code.”
One worry focuses on the growing number of overseas investors in the UK, which now own a majority of the UK stock market.
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