IMA RESPONDS TO WALKER REVIEW

In its initial input to the Walker Review, which looks at the future of corporate governance in the banking industry, the Investment Management Association (IMA) made the following comments:

• On risk management, the board should retain overall responsibility but it may be necessary to delegate to a sub-committee in a complex group when the demands on the audit committee are too great.  

• On remuneration, the Combined Code should be strengthened - UK shareholders only have an advisory vote on the remuneration report and companies would be more likely to address investors' concerns if a significant vote against the report meant that the chairs of the board and remuneration committee stood for re-election in the next year.

• On the balance of skills, experience and independence on banks' boards, the non-executives and chair should have sector specific skills.  

• On the role of institutional investors, the existing "comply or explain" framework remains sound but it is apparent there were failings in banks' corporate governance, and investors' scrutiny and challenge to banks' strategies. These did not cause the crisis nor would changes have prevented it but there are lessons to be learnt and the Institutional Shareholders' Committee, of which IMA is a member, has published a series of proposals designed to make governance more effective.

Commenting, Liz Murrall, Director of Corporate Governance and Reporting at IMA said:

"The crisis has shown that large banks and broker dealers give rise to certain systemic issues that may necessitate measures to address and improve their governance.

However, it is important that the Walker Review does not adopt a ‘one size fits all approach' to all financial institutions and understands the different types of risks different institutions pose.   Otherwise, this could cause sectors within the UK's financial services industry to be driven offshore.  For example, fund managers are generally regarded as low risk in that client money and assets are segregated from those of the firms, and the manager's activities do not put their security at risk." 

IMA's response to the Walker Review can be viewed here.

The ISC's proposals to make engagement by investors more effective can be viewed here.  

-ENDS-

About ISC

The ISC is a forum which allows the UK's institutional investment community to exchange views and, on occasion, coordinate their activities in support of the interests of UK investors.

Its members are: The Association of British Insurers (ABI), the Association of Investment Companies (AIC), the Investment Management Association (IMA) and the National Association of Pension Funds (NAPF)

About Investment Management Association
IMA is the trade body for the UK's £3.4 trillion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 0207 831 0898
Mona Patel, Head of Communications, IMA, 07834 089332