Value Assessments, Liquidity and Operational Resilience top the agenda at the inaugural FBC Chairs Council
FBC was delighted to welcome Nick Miller, Head of Asset Management at the Financial Conduct Authority and more than 20 fund board chairs to the inaugural FBC Chairs Council meeting on 25th February 2020.
Representing fund boards from corporate member firms such as Schroders, M&G, Jupiter, Franklin Templeton and HSBC GAM, to name but a few, the group also drew on the investment governance experience of attendees who also sit on investment trust and master trust boards.
Hosted by BNY Mellon and chaired by governance veteran and chair of FBC’s Advisory Committee, Philip Warland, the meeting was an opportunity for the group to engage with the FCA on its latest thinking on important governance topics such as the review of the Asset Management Market Study, Liquidity Risk, Operational Resilience and Assessment of Value (AoV) as well as to discuss with the Regulator and peers the challenges and opportunities facing the chairs of these, in many cases, newly-constituted formal fund boards.
Attendees heard Nick Miller outline the FCA’s expectation that fund boards will deliver effective challenge to their organisations in the best interest of investors, not just around the value that they offer to their customers but on wider issues of good product governance such as liquidity management and cyber risk.
Perhaps unsurprisingly with the ink still wet on many first edition AoV statements, the topic of measuring, assessing and articulating value was high up the agenda for both the Regulator and the chairs. Miller emphasised the importance of the process of assessing value and there was much discussion about how asset managers should be challenging themselves on aspects such as third-party charges and fee structures, as well as the need to ensure that the reports speak effectively to customers – both investors and advisors. Recognising that value is not a binary outcome, attendees were left in little doubt that the Regulator will be reviewing closely how firms take up the overall challenge of articulating the value they bring to investors.
Among the wide-ranging discussion, the two-hour meeting also covered the impact of greater independence on boards and compared and contrasted the establishment of iNEDs on boards, including the experiences of a few chairs in the room who themselves are independent! The group discussed the differing approaches towards independent directors in other jurisdictions such as the US and optimal approaches to overall fund board composition.
The meeting concluded with agreement that this was a valuable opportunity to discuss key governance topics with peers and we look forward to picking up on these and other important issues when the group comes together again in September. More information about FBC’s Chairs Council and iNEDs Council and how to join can be found here.