The Institute of Directors (IoD) has called for a review into the British fund management sector, as part of a broader initiative to enhance corporate governance at UK firms.
According to IoD, the industry is now "ripe for investigation". In a policy paper named ‘Priorities for Corporate Governance’, the body called for promoting long-termism and value creation in the investment process, diverse boards as well as an entrepreneurial corporate culture.
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IoD director general Simon Walker said that there was an "alarming lack of transparency" in terms of pay and practices of fund managers.
Recommending a FCA review into fund fees and groups’ approach to stewardship, Walker continued, "If the fund management industry doesn’t take steps to address growing public concern about their practices and oversight, then an FCA-driven approach may be the only way forward."
The group said that the review would lead to the creation of "a more transparent and governance-oriented share ownership system".
At the same time, IoD also called for fund managers to declare how they vote at annual general meetings.
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By GlobalDataIoD Director of corporate governance Roger Barker added that effective corporate governance required the right culture, attitudes and expertise at board level.
"Shifting the boardroom appointments process away from ‘the usual candidates’ and towards those who can better manage emerging opportunities and risks – particularly in areas like digital technology – should be a key business priority after the next election," he remarked.
