In the interview, the first since his resignation in October, Godfrey says he sees no philosophical reasons why there should be any tension between championing the interests of consumers in investment management, and the interests of the investment management industry itself.
At the time, Godfrey’s departure was attributed to a clash of values as fund managers proved reluctant to sign up to his reform agenda. The Association’s ‘Statement of Principles’, where members were asked to commit to greater transparency and to justify fund manager pay, proved a sticking point.
Godfrey told the Financial Times that investment managers should use their influence to highlight issues surrounding pay among executives of listed companies more generally. He said: “Shareholder activism has been on the rise for 20 years, but the outcome is that structures have become more complicated, and pay has gone up. My kids would call that an epic fail,” he says.
Fund manager responsibility extends to a greater role in the stewardship of the companies in which they invest. Godfrey called for fund managers to exert pressure on companies to ensure, “a sensible environmental footplate, paying the living wage, and the fair payment of tax.” He added: “If we’re supporting companies for their long-term prospects, we should be supporting, cajoling and if necessary pressurising them to be sustainable”.
He said that investment managers faced greater regulation unless they identified and dealt with the problems themselves. He added: “The industry needs to focus on meaningful transparency…I don’t think the industry has a problem with transparency, but it needs to be meaningful, and help consumers and advisers make informed choices. Some fee structures could be simplified and that would make them easier to understand.”
He suggested that there was a ‘massive prize’ for those managers who could do it well, as auto enrolment and pensions’ liberalization brought opportunities.
