A pensions trustee organisation has called on the UK financial regulator to “respond positively” to its complaint that fund managers are wrong if they do not apply their clients’ shareholder voting policies to pooled investment funds.
The Association of Member Nominated Trustees (AMNT) complained to the Financial Conduct Authority (FCA) last May, claiming that fund managers were “choosing not to act on the stewardship policies of their clients”.
This is because AMNT research among 35 fund managers showed that none of them who responded were prepared to accept client voting policies for pooled funds.
The AMNT said pooled investment funds accounted for nearly half of UK assets under management.
The FCA has until November 5 to respond to the AMNT’s complaint. However, the AMNT has risen the issue again this week because of a recent letter from the Chair of the Treasury Select Committee to Andrew Bailey, FCA chief executive, requiring a report about how the regulator has responded to the complaint.
As well as this, the Financial Reporting Council has published a new UK Stewardship Code, part of which requires signatories to explain “how assets have been managed in alignment with clients’ stewardship and investment policies”, the AMNT said.
The code also means fund manager signatories must also state their policy on allowing clients to direct voting in pooled accounts and must also demonstrate how they have made resources for the function.
Collectively, the AMNT said, these requirements “strengthen asset owners’ ability to have their policies adhered to by their fund managers”.
Janice Turner, co-chair of the AMNT, said: “It is now accepted that trustees must have the right to direct their voting policy in pooled funds, which represent almost half the assets under management in the UK.
“Now that the new UK Stewardship Code includes a requirement that fund managers must explain how they have aligned their voting policies with those of their clients, we expect this requirement to be respected in both the letter and the spirit.”
Leanne Clements, a manager for the AMNT’s Red Line Voting campaign, added that trustees should hold their fund managers to account for adherence to the Stewardship Code, and investment consultants need to support trustees in this effort.
“The FCA also needs to recognise the scale of the problem that exists with respect to fund manager unwillingness to implement clients’ voting policies and lead efforts to address this market failure as highlighted in the AMNT’s report. Only then will the code’s benefits be fully realised,” Clements said.
Other AMNT research has shown that 20 out of 38 fund managers that published their voting policies did not mention climate change.
