Weekly outlook: Brexit drags on and the FCA eyes a more transparent form of capitalism

The key events for UK wealth managers for the week starting 25 March

The UK was this week due to leave the European Union on 29 March 2019, but this date is now likely to be pushed into April or May. Meanwhile, the Financial Conduct Authority has been consulting on engagement in light of the the EU shareholder rights directive.

Brexit drags on

Yet again Theresa May’s Withdrawal Agreement is due to go before MPs. The third meaningful vote will determine for how long the European Union is willing to grant an extension of Article 50. If the prime minister is rejected by MPs a third time, the UK gets until just 12 April to find its way out of its Brexit bind. Alternatively, if a deal is agreed, the EU will agree to extend the UK’s exit date to 22 May, just before EU parliamentary elections.

The day for the meaningful vote is currently due to take place on either Tuesday or Wednesday.

UK stewardship under the spotlight

Alongside with life insurers, asset managers will have to step up disclosure on stewardship policies, such as voting and how they work with other investors, according to FCA proposals on shareholder engagement.

The proposals were first published in January alongside changes to the Financial Reporting Council’s consultation on the UK Stewardship Code, which also closes to feedback this week.

The FCA’s consultation makes steps towards a more transparent form of capitalism, said Andy Jones, engagement at Hermes EOS, Hermes Investment Management. “We believe that active stewardship of assets is essential to build a sustainable global financial system that delivers improved long-term financial returns as well as better sustainable outcomes for society.”

They are part of the EU shareholder rights directive and will not apply if the UK leaves the EU without a transition deal, according to PwC, which says the FCA would then revise proposals at a later date.

Meanwhile, the FRC proposals expand the Stewardship Code beyond equities and deem environmental, social and governance (ESG) factors financially material.

Both consultations close on 27 March.

ShareAction strongly supports both the FRC’s and the FCA’s sets of proposals, said UK policy manager Rachel Haworth. It is also calling for the FRC to implement more robust enforcement measures and the FCA to make voting disclosure mandatory for asset managers.

Tags: | |

Recent News

Leave a Reply