Fund board purpose and why it’s not just a ‘nice to have’
The role and purpose of fund boards was under the microscope earlier in June when Fund Boards Council kicked off a new research initiative exploring the evolving work of the fund board and the steps boards are taking to ensure wider stakeholder understanding of their role and purpose.
The survey is the first in a series of research studies, named the FBC Barometer, which FBC will be running across its corporate membership and wider industry, over the course of 2022/23. Forming part of FBC’s Fund Board Effectiveness programme, the Barometer examines how fund boards are operating and aims to provide FBC corporate members with insight and examples of good practice across a range of fund board effectiveness topics.
This first survey in the Barometer series seeks to explore four main questions.
How are the aims and priorities of the fund board evolving and how well understood is that amongst stakeholders in the wider firm? How are overall levels of understanding impacting on the work of the boards themselves? And what are directors doing to enhance that enhance overall engagement with the board?
These were also the topic of discussion at an FBC Members’ Meeting held in June where over 40 members got together to consider this in more detail.
Opening the conversation with insights into the increasing prominence of purpose in the FCA’s regulatory agenda was Marc Teasdale, former Director of Wholesale Supervision at the Financial Conduct Authority and now Managing Director at Allen & Overy. In addition to discussing what this means for the role and purpose of the fund board, Marc also outlined the importance of governance and purpose as part of the FCA’s drivers of culture and the role of fund boards as agents of cultural change. The meeting also
The meeting also heard some thought-provoking points from Rachel Treece, CEO of fts Global and The Henka Institute and experienced executive coach working with board directors across a range of financial services boards, on some of the challenges for board directors when it comes to exploring the topic of purpose.
From both the initial results of the research and the ensuing discussion among FBC members, it is clear that the scope of oversight duties for fund boards is becoming more extensive. In addition to ensuring that the operations of the mutual fund business are in compliance with the rules and that investors’ interests are well represented at a senior level in the organisation, boards are also tackling emerging accountabilities around ESG, third party oversight and operational resilience…to name but a few.
And whilst that won’t be news to those at the coalface of fund board work, it prompted two key discussion points; firstly around the extent to which the purpose of the fund board and scope of its work is understood within the wider firm and secondly, that that level of understanding matters, because where there is any lack of understanding, it can impact on the work of fund directors in a variety of ways. Both of these topics, along with the evolving scope of the fund board’s role, the work directors are doing to enhance overall understanding of that role and to boost overall engagement with the board will be set out in detail in the forthcoming FBC Barometer report. The recording of the meeting is now available on the FBC Member Portal and the full report will be landing in FBC Corporate Members’ inboxes in July.