BIS updates on progress in Kay Review implementation: BIS has published the Government's progress report on the implementation of the Kay Review of UK equity markets and long-term decision making. The report covers the three main strands of reform recommended by the Review and outlines next steps:

  • Shareholder engagement and stewardship: the report highlights the update of the Stewardship Code, the creation of the Investor Forum and the National Association of Pension Funds' (NAPF) Stewardship Disclosure Framework.
  • Reporting: the report highlights the introduction of corporate narrative reporting, the removal of quarterly reporting and the research into metrics and models used to assess company and investment long-term performance, published at the same time as the progress report.
  • Fiduciary duties and incentives: the Government supports the finding by the Law Commission that fiduciaries have a duty to consider long-term factors. The report also stresses the reforms to introduce binding votes on remuneration and improve reporting on remuneration, and the changes to the Takeover Code in relation to breaches of statements of intention. As regards regulation of investment and asset management firms, the report highlights European, FCA and industry initiatives. It also praises reforms to the governance of contract-based workplace pension schemes and the Pensions Regulator's new statutory objective to promote sustainable growth.
  • Next steps: these include:
    • embedding the Law Commission's findings on long-term investment in regulatory guidance for pension trustees and providers;
    • requiring trust-based pension schemes to state their stewardship policy;
    • celebrating a roundtable in January 2015 on further steps to increase engagement and long-term investment;
    • building on the conclusions of the research into the use of metrics and models in the investment chain;
    • reporting on the impact of reforms on directors' remuneration; and
    • FCA's review of competition issues in the wholesale financial markets, which covers asset management and investment consultancy.

(Source: Implementation of the Kay Review: Progress Report)