Asset managers warning on watchdog role: government must not impose better governance
10 November 2009
Treasury-sponsored report by 15 prominent figures in Britain’s investment industry says asset managers believe government must not impose a blanket rule forcing investment managers to push companies for better governance.
The Financial Times reports that asset managers believe that the government must not impose a blanket rule that forces investment managers to push companies for better governance, warns a Treasury-sponsored report by 15 prominent figures in Britain’s investment industry.
“Legislation which mandated engagement [with companies to improve governance] would certainly add to industry costs without any certainty of adding to investor returns or systemic safeguards,” the group says in a report out today.
Investment managers, in their capacity as the agents of pensioners, policyholders and other savers, have provided more than £30bn in capital this year to rescue myriad companies from the effects of the crisis. But they have also been heavily criticised as they failed to hold board to account for the excesses taked before and during the crisis.
Even inside the UK, prominent figures as Lord Myners, the City minister, accused investment managers of behaving like “absentee landlords”; or Sir David Walker in his review of banking governance has suggested engagement by managers should form the core of a set of “principles of stewardship” to be ratified by the Financial Reporting Council.
But today investment industry leaders will counter that while they agree that fund managers could make more effort to check governance failures, it is an expensive activity and there is no evidence that engagement is effective or results in better investment returns for clients.
© Financial Times
