Lack of best practices in fund managers prompts complaint to FCA

The Association of Member Nominated Trustees (AMNT) review into fund managers' voting policies and practices found that few fund managers had what the AMNT considers best practice public voting policies and guidelines on climate change, gender and ethnic diversity.

The AMNT represents pension trustees, directors and representatives, engaging with managers and regulars to share information and increase clarity. The represented pension schemes have assets under management of around £750bn - one-third of the total UK occupational pensions sector. The research was prompted by the continued unwillingness of fund managers to accept client-directed voting in pooled funds.

The key findings of the report were that on climate change, of those that publicly disclosed a voting policy, over half of the fund managers did not have a climate change-related voting policy or guideline in their voting policy.

Regarding excessive pay approximately only 25 per cent of those that published their policy had a voting guideline on tackling excessive total remuneration in some form.

Furthermore, on diversity, of those that publicly disclosed a voting policy, although over two-thirds did reference to diversity on boards of some measure, a third did not. For the harder to define area of ‘ethnic diversity’ of those disclosing nearly 75 per cent of fund managers made no specific mention with regard to board diversity.

The AMNT stated: “Our review demonstrates that there is no real market in voting policy due to insufficient transparency. We believe the amount of flexibility is used as an excuse for the lack of transparency is not serving clients’ best interests especially in this regulatory environment, and indeed only serves to create doubt as to how serious the fund managers take the issues. The AMNT has been told that if trustees do not like the policies pursued by their fund managers they can take their business elsewhere. Our review indicates that there is nowhere else to go. “

The AMNT has requested that the FCA investigates the matter, and should propose remedies to enable pension scheme trustees to develop their own stewardship policies and their fund managers to accept them including within pooled funds and operate them at the very least on a comply or explain basis.

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