The National Association of Pension Funds (NAPF) welcomed the BIS Select Committee’s Report into the Kay review published today (Thurs).
The report recommends the Financial Conduct Authority (FCA) clarify that dealing commissions can and should be used to fund long-term investment research, voting advice and important stewardship work. It also proposes that the FCA set out an expected proportion of an asset management firm’s commissions that should be used towards such activities.
Will Pomroy, NAPF Corporate Governance Policy Lead, said:
“More effective stewardship requires financing.The recommendation to emphasise that stewardship research can be paid for from dealing commissions is a significant step in the right direction that will help catalyse the market further.
“Furthermore, the transparency around the proportion of this spending by firms will enable pension funds to identify those long-term stewards who are committed to adding long-term value for their clients.”
On industry plans to improve shareholder and company dialogue through the introduction of an Investor Forum, Mr Pomroy said:
“We agree that stewardship should be about engagement on strategic issues as well as those around corporate governance. We have supported the formation of the collective engagement working group, which will report later this year as to how investor collaboration can be improved. However, any Investor Forum should be formed by investors for investors without interference from Government.”
In support of the drive for increased and more effective stewardship the NAPF last November published its own set of Principles for Stewardship Best Practice along with a range of tools to help pension funds embrace their stewardship responsibilities.
Mr Pomroy added:
“Pension funds recognise that they have stewardship responsibilities and understand the need for a long-term approach, as such we are beginning to see the market for stewardship develop.
“A growing number of asset owners have signed up to the Stewardship Code since its introduction and we encourage others to follow suit. A greater weight of pension fund signatories to the Code will further influence behavioural changes that lead to better stewardship by asset managers and companies.”
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