UK regulator rejects quarter of applicants to latest stewardship code

Addition of 74 investors including State Street and Goldman Sachs AM takes AUM to £33trn

The UK’s financial reporting regulator has rejected a quarter of applicants in the latest round of signatories to the UK stewardship code, although it said reporting had improved for many over the past six months.  

The Stewardship Code seeks to establish “high stewardship standards for those investing money on behalf of UK savers and pensioners, and those that support them”, and was strengthened as part of an overhaul in 2019. Asset owners, managers and service providers can apply to become signatories in order to demonstrate their commitment to issues such as good governance, voting and engagement. The Financial Reporting Council (FRC) assesses the quality of the reports and decides whether to accept the applicant as a signatory.  

In its latest round, the FRC received 105 applications, which it said was “substantially more” than it expected. Of these, 74 made the grade and will be added to the list, including big names such as State Street, PGIM, T. Rowe Price and Goldman Sachs Asset Management. The new members bring the total assets managed by asset manager signatories to £33 trillion. 

On the asset owner side, new signatories include a number of local government pension schemes and pools such as Border to Coast, the Wales Pension Partnership and Lothian Pension Fund, as well as the Tesco Pension Scheme and the UK’s £38 billion ‘lifeboat’ fund, the Pension Protection Fund. 

Schroders was one of 64 applicants to be rejected in the last round of applications, which the investment house said at the time was “due to the format rather than the substance of our submission”. In today’s announcement, it was accepted as a signatory and, more broadly, the FRC noted an “encouraging” level of renewed applications from previously unsuccessful organisations.  

In December last year, the FRC published guidance on good practice reporting, warning that many reports were failing to disclose how effectively they identified and responded to systemic risks.