The Association of Member-Nominated Trustees (AMNT) has backed legislation to make standardised vote reporting by asset managers to pension schemes mandatory.
The legislation, which is an amendment to the Digital Markets, Competition and Consumers Bill tabled by Baroness Wheatcroft, is currently before the House of Lords.
The amendment would give the Financial Conduct Authority (FCA) a legally binding duty to make rules requiring investment managers and insurers to give occupational pension schemes, personal pension providers and the Local Government Pension Schemes (LGPS) standardised information on all votes relating to their investments within 30 days of receiving the request.
The £1trn body said that the existing FCA rules do not achieve this.
Legally required reporting is annual and does not cover any prescribed reporting period, is not standardised, and is at firm level, not fund level, AMNT said. It added that this means that pension funds cannot distinguish between a few hundred votes cast on their behalf and many thousands of votes on other companies in which they are not invested.
AMNT added that the current legislation is only “comply or explain”, allowing managers and insurers to opt out of the whole process altogether.
Baroness Wheatcroft said: “Government has regularly said that stewardship – including voting – is essential to good corporate governance and good investor outcomes, as well as wider policy goals such as net zero.
“To put this principle into action, we need transparent, consistent, comprehensive fund-level voting information for pension providers, so they can hold their managers to account.
“My amendment will enable trustees and others to make better decisions on behalf of consumers and make the UK a better place to invest.”
Janice Turner, co-chair of the AMNT said: “This amendment would be very helpful to pension schemes.”
She pointed out that most pension schemes employ several fund managers and the response to requests for information varies greatly from manager to manager.
She said: “At a time when most asset managers of pooled funds still refuse to allow pension schemes to direct a voting policy for how their shareholder votes should be cast, the least we should be able to expect is real accountability.”
FCA consultation
In the summer, an advisory group set up by FCA sought feedback on how asset managers should report their voting decisions at company annual general meetings.
The proposals suggested that managers should submit basic information about meetings at which they voted, as well as some further details about the topic, but it said that a balance must be struck between asset owners’ desire for granular information and the reporting burden on managers.
However, the proposals were only for a voluntary approach and the AMNT said the FCA had yet to respond to the consultation.
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