Responsible Investor

UK investors split on key Walker recommendations

Following the publication of yesterday’s final report on UK corporate governance in banks and financial institutions by Sir David Walker, former chairman of Morgan Stanley, Responsible-Investor.com took a sample of UK investor and fund manager reactions to the report, which the UK government says will be quickly implemented into legislation:
George Dallas, director, corporate governance, F&C Asset Management: “We are generally supportive of the Review’s Final Recommendations, which were broadly in line with the preliminary conclusions and recommendations that were presented this past July. We agree with the Review’s conclusions that board behaviours are more important than board structures, but that there is nonetheless scope to consider organisational and operational changes in the approach to corporate governance of financial institutions.

Moreover, we believe the Review addresses the right themes in terms of greater board effectiveness, more focus on risk management for financial institutions, and a risk-based approach to long-term remuneration planning. With regard to the role of institutional investors, F&C welcomes the introduction of a Stewardship Code as a means through which the standards of investor engagement are improved and made more explicit in investment mandates.
Alan MacDougall, managing director, Pensions & Investment Research Consultants (PIRC): “A sigh of relief will be almost audible amongst the UK’s banking community upon the publication of the final report of Sir

David Walker on the governance of UK banks and other financial institutions (BOFIs) in the wake of the greatest financial market crisis the UK has suffered in living memory. In the face of the almost total collapse of the UK’s banking system in September 2008, the Walker report fails to take the radical steps needed for reform of our financial market governance. The public and many of our pension fund members and insurance services clients have a right to expect more. The failure to exercise fiduciary responsibilities by board directors of BOFI companies, asset managers supposed to be acting in their beneficiaries’ interests and our market regulators, has been ignored by the report. Virtually everyone who bears some responsibility for the crisis has been let off the hook. A slap on the wrist has been administered and the foundations of our current financial market system have been barely been touched.”
Raj Thamotheram, senior adviser, responsible investment, Axa Investment Managers: “Having watched this debate for 10 years, I am much less interested in the policy minutae and much more interested about what in practice the UK Government and its regulators, notably the FSA in this case, are willing to do to nudge the system into the new paradigm. What is certain is that just working in the old ways and through the old alliances and networks will not deliver the desired change, however much jawboning happens. We have a well respected CEO of a leading bank speaking openly of casino capitalism so clearly we face a big challenge! Neither regulators nor institutional

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