Test-the-waters bill on fiduciary duties introduced in UK parliament

Brief bill from opposition MP Wilson

An exploratory bill on investors’ fiduciary duties has been introduced in the UK House of Commons by an opposition MP calling for all those managing an investment to be placed under a legal duty to act in the saver’s best interests.

It comes as the Law Commission, the body which reviews legislation in the UK, is consulting on fiduciary duty at the request of the government following a recommendation from the Kay Report on UK Equity Markets and Long Term Decision Making.

The Law Commission aims to publish its report with recommendations to government – albeit with no draft legislation – by June 2014.

Labour Party MP Phil Wilson, the member for Sedgefield in northern England, told Parliament: “Today it is millions of pensioners from all over the world who own shares in the world’s global companies.

“Over the decades, the Labour movement has championed workers’ rights. Now we must champion the rights of working people as capital holders, as investors in the stock market.“Financial institutions need to reflect their duties to society in the way that they practice their craft.” He also called for investors to be more transparent and accountable in their actions.

The so-called Ten Minute Rule Motion on Investment Management (Fiduciary Duties) followed the weekly Prime Minister’s Questions – ensuring the House would be relatively full. The procedure is a way for MPs to introduce legislation, though they are used more as a means of making a point and gauging Parliamentary opinion. Under the rule, MPs are allowed to make a brief introductory speech of no more 10 minutes.

Wilson’s call echoes a recommendation from campaign group ShareAction that fiduciary duties be applied to all pension providers not just trust-based schemes and be clarified to ensure investors look after savers’ long-term interests, taking account of social and environmental factors and non-financial interests of the beneficiary.

ShareAction CEO Catherine Howarth added: “There is growing political momentum behind ShareAction’s call for a more transparent and accountable investment system.”