Sir
Following further discussion of the Financial Reporting Council’s Stewardship Code, including John Plender’s Analysis [FT 12 July 2010], we now have the FSA’s consultation on compulsory publication of investment managers’ “commitment” to the Code. Given that the Code’s Principles include public disclosure of voting records, it is fortunate that the FSA’s proposed requirement leaves scope for firms to take an alternative approach.
Public disclosure of voting should not be undertaken lightly. It will not be long before pressure groups use this information to cajole fund managers into casting votes which reflect the views of the pressure group but do not reflect the interests of the fund managers’ clients. With the experience of the tactics used to damage the legitimate business of Huntingdon Life Sciences, it is not difficult to see how publication of voting records could introduce significant conflicts of interest for fund managers. It is to be hoped that firms will make clear that they consider the voting of shares that belong to their clients to be a matter of client confidentiality.
Oliver Lodge
Director, OWL Regulatory Consulting
12th July 2010