FBC Insight – A Quarterly Newsletter for Investment Governance

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Q1 2021

iNED Bootcamp 2021 – book your place now!

Registration is now open for the 2021 iNED Bootcamp, held exclusively online in association with NatWest Trustee and Depositary Services.

Attendees will have access to a range of multimedia content covering all aspects of iNEDs and fund governance, starting on the 19th April with the presentation of the results of FBC’s 2021 iNED survey.

This ‘festival of fund governance’ will feature primarily on-demand content including podcasts, videos, and articles, culminating in a live panel discussion on 22nd April looking out into the future at what success will look like for iNEDs, fund boards, and the AoV in the years ahead.

FBC Spotlight: The AoV Assurance Review

The Financial Conduct Authority (FCA) should have fed back on AoV at the end of 2020, but for obvious reasons this was not possible. In November, at the bi-annual iNED Council meeting, FBC hosted a discussion with FCA representatives about the few reports they had seen so far. The feedback was a mixed bag, with AFM costs and economies of scale receiving a ‘must try harder’ from the regulator.

While we don’t have precise feedback from the FCA on individual firms’ AoV activities, they have reaffirmed their expectations, most recently in this speech by Marc Teasdale.

We know firms will want to prepare for potential FCA supervisory questions and visits, so FBC’s senior adviser Brandon Horwitz has been exploring how we can help our members develop their AoV processes and reports. Find out more about FBC’s new AoV Assurance Review service in a dedicated session at the Bootcamp.

Value Assessment Across Borders in Europe and Down Under

On 18th March, FBC hosted a virtual roundtable discussion for heads of product governance and management from its corporate member firms on how the value assessment concept could translate to Luxembourg, Ireland, and other jurisdictions.

Led by FBC Advisory Council chair Philip Warland, the roundtable also featured First Sentier’s Clare Wood and Columbia Threadneedle’s Richard Vincent who espoused the benefits of having taken AoV’s core principles to their non-UK fund ranges.

Together with Luxembourg iNED Denise Voss and product specialist and former fund selector Jean-Francois Hautemulle, the panel explored how different regulators might approach the value concept given the different prevalent regulatory and distribution models in various jurisdictions.

While European regulators do not have the competition remit that led to the FCA’s Asset Management Market Study, panellists broadly agreed that a focus on price would push developments towards at least some of the elements of the UK’s AoV.

Meanwhile, Deloitte recently published a detailed report on the state of competition in the Australian investment funds industry. The 271-page document includes comprehensive detail on assessing the value for money that funds present to investors.

Given the close comparability of the UK and Australian regimes, fund boards and iNEDs would do well to watch closely the development of this document and subsequent debates. The report can be accessed via the FBC Research Bank.

The FBC Profile: Julian Bartlett

In this, the first of a series of regular interviews with iNEDs and fund board members, FBC spoke to newly anointed Invesco UK fund board chair Julian Bartlett on his experience so far. In a wide-ranging conversation, Julian explains how his career as a consultant prepared him for life in the boardroom, what advice he would give to boards considering an independent chair, and his ultimate expectations for Assessment of Value.

“The process that people have to go through in order to produce the external outcomes is incredibly instructive, and management information is changing as a consequence of this process.”

Read the full interview

FBC in Action – Q1 events

We have had a busy start to the year at FBC. Members who may have missed any of these sessions can click through to access recordings and related materials via the FBC website.

Podcast: The Year Ahead

Philip Warland, chair of FBC’s advisory council, and FBC managing director Catherine Battershill discuss the challenges fund boards face in 2021 and what might shape the path ahead. Podcast available to Members and Non-Members.

12th January: The Governance Relationship on Asset Management Boards

The first digital meeting of the year saw FBC CEO Shiv Taneja joined by Jupiter’s plc non-executive chair Nichola Pease, Schroders’ James Rainbow who chairs the UK fund board, and First Sentier’s main board iNED Richard Wastcoat. The panel discussed the challenges of remote meetings, and how to manage delegation, conflicts of interest, and culture. Members can access the full recording through their Member portal.

26th January: Future of European Management Companies in Light of Changing Regulation

Philip Warland led a panel discussion on the impact of Brexit and other regulatory changes on fund boards, companies, and directors. He was joined by Franklin Templeton’s Luxembourg-based Craig Blair, experienced iNED Eimear Cowhey with board roles in Ireland, the UK and Luxembourg, and HSBC Global Asset Management’s Daniel Rotherford.

FBC members can access the recording through the Member Portal.

2nd March: iNED Council

FBC revealed the preliminary findings of its second annual iNED Survey in the first of two iNED Council meetings of the year. Experienced iNEDs Frank Johnson and Simon Ellis led the discussion of the results, along with NatWest Trustee and Depositary Services’ Peter Christmas. The full survey will be unveiled and analysed at the 2021 iNED Bootcamp in April – register to attend now!

9th March: Overseeing Liquidity: Good Practice for Fund Boards

Brandon Horwitz chaired a discussion with independent directors Emma Griffin and Michelle McGrade along with HSBC Global Asset Management’s Tim Palmer. The quartet assessed the fund board’s role in the liquidity discussion and broader risk management responsibilities.

FBC members can access the recording here.

Board Business – The Latest Fund Governance News

FBC monitors the financial and trade press to bring you the most important stories of recent weeks.

  • Hargreaves Lansdown’s AoV introduced a tiered charging structure for its multi-manager funds as well as mentioning a certain Neil Woodford. (Citywire)
  • Despite this and other positive outcomes, CFA UK was less than impressed overall with AoV, according to a report published in February. (The Times – subscription required)
  • The Central Bank of Ireland has warned funds against potential ESG mis-selling and greenwashing. (Ignites Europe – subscription required)
  • The cost of director liability insurance is spiralling, in part due to changes to audit rules making directors individually responsible for the accuracy of financial statements. (Financial Times)
  • Do board directors need asset management experience? This article argues that it might not always be necessary. (BoardIQ – subscription required)
  • UK equity boutique Unicorn Asset Management is heading back to the drawing board after its first Assessment of Value reports were criticised for being too brief. (Ignites Europe – subscription required)
  • Schroders has decided to apply its value assessment process to its European funds and potentially other ranges. (Ignites Europe – subscription required)
  • Selling funds into the UK post-Brexit is going to get harder for non-UK companies, according to Invesco. (Ignites Europe – subscription required)

FBC publishes a fortnightly news blog rounding up more of the top stories affecting iNEDs and fund boards, which can be accessed on the news and blogs section on the FBC site.