Some of the UK’s largest asset managers have come in for criticism after a report alleged the industry often sided with company management when voting on controversial shareholder resolutions.

ShareAction, a responsible investment charity, also said regulators in the UK should be more forceful ensuring compliance with the country’s Stewardship Code among signatories, as several of the asset managers surveyed failed to disclose their voting record.

The charity’s report examined the voting records of AGMs from 2014 where more than 30% of shareholders voted against management, with the votes largely concerned with board appointments and remuneration.

It argued that there was often a disconnect between the voting behaviour of asset managers and its stance outlined in public voting policies.

ShareAction chief executive Catherine Howarth criticised that many firms were failing to take their stewardship responsibilities seriously.

“While the detail of any one vote may not be indicative of an approach, there does seem to be a pattern for some managers across the votes we looked at with significant shareholder dissent. 

“We expect investors will be asking tough questions of their asset managers, particularly those who appear to be simply backing management most of the time, based on this report.”

It praised Aviva Investors, F&C Investments, Newton Investment Management, Royal London Asset Management and Standard Life Investments as the five most transparent companies of the 33 surveyed.

Aviva Investors was also one of four praised for most consistently opposing management – alongside Goldman Sachs Asset Management, Threadneedle Asset Management and AllianceBernstein.

Aberdeen Asset Management, BlackRock, HSBC Global Asset Management, Schroders Investment Management, Hermes Investment Management and M&G Investment Management were the asset managers identified as most likely to side with management.

Saker Nusseibeh, chief executive at Hermes IM, said his company’s approach to engagement was about achieving “beneficial change”, as opposed to mounting a campaign or “box tick”.

“We take a graduated approach and base our decisions on annual report disclosures, discussions with the company and independent analysis,” he said.

“At larger companies or those where clients have a significant stake, we seek to have dialogue ahead of voting against or abstaining on any resolution. We vote accordingly and as part of a constructive discussion with the company’s board.”

ShareAction’s report also urged a more consistent approach in disclosing the rationale behind a vote, noting that some asset managers took the time to explain why they voted with or against management, while others only explain a vote against a company.

It also said a large number of asset managers declined to disclose voting rationale publicly, as it hindered engagement efforts – an argument the charity dismissed as “unconvincing”.

“[Twenty four] of the 33 managers included in this study did not disclose any information on their voting rationales, and the level of disclosure of the remaining nine varied significantly,” ShareAction said.

“There is room for significant improvement in the disclosure of voting rationales by asset managers, and this is critical to achieving real accountability by an industry that invests other people’s money.”

The report also suggested that the Financial Reporting Council, the regulator behind the Stewardship Code, and the Financial Conduct Authority be more proactive in enforcing the Code’s principles – for example, in instances where signatories failed to publish voting records.

“It is clear current regulation is not leading to the level of disclosure that is desirable in the market,” it said. 

“We suggest the Stewardship Code needs to be revisited in light of these failings and that some mechanism is needed to prevent managers claiming to comply with the Code when they do not.”