UK Regulators Discussion Paper on Building a Framework for Effective Stewardship

The Financial Conduct Authority and the Financial Reporting Council have published a discussion paper which calls for input on how best to encourage the capital markets community to engage more actively in stewardship of the assets in which they invest. The aim of the paper is to advance debate about what is meant by effective stewardship, what minimum expectations investors have of the financial services firms which invest on their behalf and what higher standards the U.K. should aspire to.

Particular issues highlighted by the discussion paper include:

• questioning what the key attributes of effective stewardship may involve, e.g., understanding clearly the scope, role and purpose of stewardship and robust communication;
• establishing the appropriate institutional, geographical and asset class scope of stewardship;
• whether current and proposed regulation supports the role of stewardship in promoting well-functioning markets;
• any issues with proxy advisers that have not been adequately addressed thus far; and
• whether the FCA should consider amendments to other parts of the regulatory framework – e.g., the Listing Rules, Prospectus Rules, Disclosure Guidance and Transparency Rules – to support effective stewardship.

The discussion paper accompanies two consultation papers published by the FRC and FCA on the same day seeking input, respectively, on the FRC’s proposed revisions to the U.K. Stewardship Code and on the FCA’s implementation of the Shareholder Rights Directive II into the U.K.

Input for the joint discussion paper will close on April 30, 2019.

View the discussion paper.

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