The Statement of Principles, published 28 April, outlines 10 core guidelines that the IA says investment managers should adhere to in light of increased industry scrutiny.
With the UK investment industry worth more than £5tn, the IA believes that there should be further recommendations to managers than the concept of “treating people fairly”, as expressed by regulatory requirements.
Daniel Godfrey, IA chief executive, cited the increasing influence that investment managers have in the economy alongside the pension reforms as providing opportunities for the industry to expand, but also increasing pressure on its constituents to conduct themselves in the correct way.
He expanded: “The industry is under greater focus than ever before, not only through its role in defined contribution pensions but in other areas too, such as the expectation on investment management to replace bank funding in some areas of the economy.
“Investment management has a higher-profile role in a world that does not trust people just because they say they are trustworthy.
“These points demonstrate that the industry acknowledges it should put clients interest first, even if it conflicts with our own interests, which goes beyond ‘treating people fairly’.”
Godfrey also stressed the importance of managers’ accountability, particularly with the increased regulatory presence.
“Once a manager agrees a fee and an objective with a client, it is all about the client’s interests,” he said.
“If investment managers uphold these principles then regulation would not be an issue. The statement shows that the industry is happy to be scrutinised and held accountable.
“We are going to publish a list of signatories, and ask managers to confirm on a periodic basis that they are upholding these principles.”
“Investment managers recognise that they need to welcome scrutiny and to be held accountable,” added Helena Morrissey, chair of the IA.
“They also need to demonstrate clearly that they have an obsession with high standards of integrity and competence.”
The points outlined in the report are as follows:
1. Always put our clients’ interests first and ahead of our own
2. Take care of clients’ money as diligently as we would our own
3. Only develop, offer and maintain funds and services designed to add value for clients and help them achieve their financial goals
4. Maintain and apply the investment and operational expertise needed to meet the objectives agreed with clients
5. Make all costs and charges transparent and understandable
6. Disclose to investors the source and value of any other material benefit we receive as a consequence of our role as investment manager
7. Ensure regular, timely and clear lines of communication with clients
8. Set out clearly our approach to the stewardship of client assets and interests
9. Maintain a corporate culture that sustains these principles
10. Work with industry colleagues and stakeholders to develop and maintain guidance on industry best practice
The full IA Statement of Principles can be found here.
