A number of asset managers in the UK have been told to improve their reporting and transparency.
In a study of the effectiveness of its stewardship code, introduced in July 2010, the UK Financial Reporting Council (FRC) divided around 300 asset management firms into tiers based on their reporting standards.
The third tier, which included firms such as Apax Partners, Brewin Dolphin, Charles Stanley, Miton Group, Neuberger Berman and Rogge Global Partners, need to make significant improvements to reporting standards, and achieve greater transparency, before their offerings pass muster.
Moreover, when third tier firms were surveyed as to why they were falling foul of the code’s requirements, the FRC received “no, or poor” explanations as to why provisions were departed from. The FRC says firms that have not achieved at least second tier status in the next six months will be struck from the signatory list.
The second tier, which included firms such as 7 Investment Management, Ashmore, Bailie Gifford, Canada Life, GAM, JO Hambro Capital Management, Nomura, Odey Asset Management, Pimco and Tobam, met many reporting expectations, but were less transparent on their approach to stewardship and often did not provide explanations as to why they departed from provisions.
Nonetheless, the FRC is said to be encouraged by the “positive and constructive” responses from signatories to the effectiveness review – over 200, who didn’t make it into tier one, subsequently approached the FRC to discuss improving their reporting standards.
Moreover, almost half the code’s signatories fall into the first tier, and the firms within this group are the UK’s largest.
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