The Financial Reporting Council (FRC) launched a consultation on 11 November 2024 on significant updates to the UK Stewardship Code, the voluntary code for investors who manage money on behalf of UK savers and pensioners and for the service providers that support them. The FRC said the proposals focus on supporting economic growth and investment, increasing transparency for investors and reducing reporting burdens for signatories.
Corporate INTL Newsroom · Advisory & Accounting
FRC Opens Consultation on a Leaner UK Stewardship Code
By The Corporate INTL Newsroom · 12 November 2024
The consultation follows engagement with more than 1,500 stakeholders during 2024 and four years of analysis of reporting against the 2020 Code. It builds on interim measures announced in July 2024, which removed some annual reporting requirements, allowed signatories to cross-refer to previous reports and set clearer expectations of what counts as a stewardship outcome.
Key proposals
- Definition: a revised definition of stewardship that emphasises creating long-term sustainable value for clients and beneficiaries.
- Reporting: a streamlined process that separates policy disclosures from activity disclosures.
- Targeted principles: principles tailored to different types of signatories, and for the first time a separate set of principles for service providers, including a dedicated principle for proxy advisers and coverage of investment consultants.
- Guidance: new guidance indicating the range of information signatories might include in their reports.
How the Code fits the wider framework
The FRC noted that the UK Stewardship Code operates alongside the Financial Conduct Authority's oversight of markets, the Pensions Regulator's protection of members and the Department for Work and Pensions' scheme regulations. While voluntary, it is widely used by global investors and asset managers as evidence of good stewardship practice.
What happens next
The consultation runs until 19 February 2025, with engagement events during the consultation period. The FRC expects to publish the updated Code later in 2025, for implementation and a first reporting cycle in 2026. Asset managers, pension schemes, insurers and proxy advisers that are signatories, or plan to apply, should review how the new definition and reporting structure would affect their stewardship reports and internal evidence gathering, and consider responding to the consultation.
Sources
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