Wednesday, 2 July 2014

Investor Forum launches

So, today we see the formal launch of the Investor Forum, the body proposed by the Kay Review to help foster engagement with companies. The official blurb is here, and below are the objectives of the organisation.

The purposes of the Investor Forum are to improve long-term returns from investment in companies by: 
Promoting the value of long-term approaches to investment to match the long-term objectives of the individual savers who are ultimately the beneficiaries of the long-term returns delivered by investment management.Promoting cultural change throughout the investment chain – encompassing asset owners and their advisers, as well as asset managers and investee companies. Forming Engagement Groups to drive constructive change when there is a critical mass of support among Forum participants that a company is failing in some way that might compromise long-term returns.  
In line with Kay's recommendation, the governance of the Forum is separate from the investor trade bodies (which would presumably be whittled down in any case to just the new IMA/ABI and the NAPF). The Forum has both a chair and an executive director, both from within the investment management industry.

It's worth noting that this has been tried before. The former Institutional Shareholders Committee had a terms of reference that had a rather similar objective:

“To co-ordinate and extend the existing investor protection activities of institutional investors with a view, where this is judged necessary, to stimulating action by industrial and commercial companies to improve efficiency.”
It also had a mechanism - the case committee - for supporting collaborative engagement by shareholders  where there were concerns. In practice such activity was rarely undertaken, but perhaps we've got more used to the idea now. 

Most relevant, perhaps, is what happened to the ISC in the late 1980s. Already by then it had failed to live up to its promise, as acknowledged by Jonathan Charkham amongst others. So in 1988 there was an attempt to relaunch it, with a new director general and a greater focus on activism around strategy and performance. But the industry didn't like it, and by the early 1990s it was refocused back on general shareholder issues (and the DG quit).

I think that IFMA, the forerunner to the IMA, didn't actually join the ISC until relatively late into its existence. So it wasn't all about trade bodies not acting as effective proxies for investors.

Anyway, those that cannot remember the past....

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