Make-or-break investor support for Kay investor forum will be clear within weeks: IMA

Funds trade body chief says overall response so far is “lukewarm”.

A make-or-break sign of UK institutional investor backing for an investor forum to engage on governance and long-term investment issues with companies as recommended by the government-backed Kay Review should be evident within the next couple of weeks, according to the UK’s Investment Management Association (IMA). Daniel Godfrey, Chief Executive of the IMA, one of the UK’s investor trade bodies asked by the government to look at setting up the forum, told a Parliamentary committee inquiry into the Kay Review yesterday (March 5), that the initiative would either “move forward or be killed quite quickly”. He said a target date for consensus amongst investors had been set for the “next few weeks”. Godfrey told the hearing that there were “varying degrees” of enthusiasm amongst investors for the creation of the forum. He said the association had approached insurance companies, sovereign wealth funds and pension funds, with responses ranging from “highly enthusiastic” to “opposed”. He said: “In my opinion there is, on the whole, lukewarm support, but mostly on the basis that if we don’t do it we’ll never know if it could work.” Godfrey said he agreed with criticism from Lord Myners, the former UK financial services minister, and one of the foremost voices in corporate governance and shareholder engagement, that housing the forum within an investor trade association would be the death of it: “If we can we will put it in the hands of investors, but we would provide the secretariat and if required, some financial resourcing.”He said that if investors backed the forum then it could be up and running within the next four to five months. The investor forum was one of the main proposals to emerge from the government-backed Kay report into equity market short-termism. But RI has reported that investors have so far been relatively cool to its creation, although the National Association of Pension Funds and the IMA have said they are encouraging members to back it.
Standard Life, the Edinburgh-based fund manager, said it was “debatable” the forum world work: Link
Neil Woodford, one of the leading investment industry figures in the UK as Head of UK Equities at retail investment giant Invesco Perpetual, told the same Parliamentary committee that the forum would not be effective in isolation: Link
The Association of British Insurers (ABI) has also questioned whether a forum is the right vehicle for investor engagement: Link
The Government said it was asking its various regulatory bodies with responsibility for corporate/investor issues to review their rules based on the Kay Review findings, and that it would publish a progress report in Summer 2014 on the implementation of its Kay recommendations