Ruth Kelly Hints At Legislation To Improve UK Fund Management Transparency

by Robin Pilgrim, LawAndTax-News.com, London

20 March 2003

Financial Secretary to the UK Treasury, Ruth Kelly recently warned the country's fund management industry that if substantial moves towards greater transparency are not made by the end of the year, the government will be forced to step in with legislation designed to oblige fund managers and pension fund trustees to stick to the best practice recommendations for institutional investment outlined by Paul Myners in 2001.

Speaking at the National Association of Pension Funds (NAPF) annual conference in Edinburgh last week, Ms Kelly revealed that the government has engaged Consensus Research to conduct a 'very thorough study' of the industry, and to submit a final report in December, a move which Simon Hartley of Richards Butler solicitors said is a positive step:

'Anything that makes costs more transparent and basically allows pension fund trustees to see exactly how much they're spending on fund management is a good thing,' he told Butterworths, continuing:

'It's hard to say what you do and don't regulate but I think it's become clear that so much goes on now in the way of fund management that trustees of pension schemes in particular just don't see and don't understand what's going on. They've got no way of telling what they're spending on management costs.'

'If you look at any other service provider to a pension scheme: the audit costs, the legal costs, the third party provider costs, they're all transparent and you get what you pay for. The one thing you don't see is fund management.'

With regard to the pension funds themselves, according to a survey conducted by the NAPF at the end of last month, more than 90% of those polled revealed that they have implemented, or are taking steps to implement, measures contained within the Myners code of conduct.

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