Value, transparency, a greater focus on conduct, culture and director accountability: converging themes that are likely to drive fund governance in key money centres around the world in 2020 and beyond….
…and nowhere was this more apparent than at the Dublin iNED Roundtable, chaired by Fund Boards Council (FBC) member, Eimear Cowhey, hosted by Matheson’s Tara Doyle on 29th January 2020 and of which FBC was proud to be a part.
The group of 25 independent directors (iNEDs), including FBC members and many who sit on both Dublin-based and UK-based funds, discussed the similarities and differences of the evolving fund governance environment in Ireland and the UK.
Fund Boards Council’s CEO, Shiv Taneja, talked through the latest fund governance developments in the UK and the implications of the Asset Management Market Study while FBC’s Managing Director, Catherine Battershill, outlined how Fund Boards Council is tailoring the support it provides to executive and independent directors from across Europe and further afield.
A lively discussion ensued examining the crucial differences and similarities in fund governance across the two jurisdictions and where the regulatory environment in Ireland, the UK and Europe is heading.
Among the many discussion points in the two-hour session were:
The likely convergence across Europe on key areas such as Assessment of Value (AoV), conduct and culture and the requirements for greater accountability for fund directors
Differing approaches to value assessment including the changes AoV has already led some firms to make to their product range and fee structures, how firms are assessing customer service as part of AoV and the role of AoV in a wider discussion about conduct and culture.
The Senior Managers & Certification Regime (SM&CR) in the UK was discussed in the context of Fitness and Probity rules in Dublin and the proposed Senior Executives Accountability Regime (SEAR), and the fact that similar rules are taking root in multiple jurisdictions elsewhere around the world.
Potential for conflict of interest – on the one hand, independent directors have a fiduciary duty to investors and on the other, a responsibility to the company on whose board they sit and a key challenge for iNEDs in both jurisdictions is striking the right balance between the two.
There was much discussion about the importance of defining the scope of the fund board and its relationship with a firm’s management or corporate board. Interestingly, one of the challenges that emerged is the language used to describe the various governance structures – we’ve heard “fund boards”, “management boards”, “top cos”, “corporate boards” and “management committee boards” to name a few. If this is causing confusion in the industry, how are investors supposed to understand who representing their interests and on what board? This is an area we’ll return to in the coming months, no doubt.
It’s clear from these few examples alone that, despite the regulatory specifics of each market, there are a great many areas of common interest and challenge between Irish and UK-based independent directors.
The group agreed that sharing insights across jurisdictions is highly valuable and Fund Boards Council looks forward to continuing these discussions and playing a role in this cross-border information sharing in the future!