NAPF: ABI dismisses ‘concentration of power’ charge

UK – The National Association of Pension Funds and the Association of British Insurers have dismissed an accusation that too much power is becoming concentrated in pension industry associations.

Speaking at the NAPF’s annual investment conference, commentator Anthony Hilton suggested that there was an “unhealthy concentration of power” in the UK pension industry, with the NAPF and the Association of British Insurers becoming too prominent. On the conference sidelines, delegates agreed that the associations were wielding increasing influence.

“Forget it,” NAPF corporate governance head Geoff Lindey told the meeting. “I have no power. The same with Peter Montagnon from the ABI. We make recommendations.” From the floor of the conference, ABI spokesman Peter Montagnon concurred. The shareholder associations have been involved in several prominent corporate governance issues in the UK recently.

“We shouldn’t be seen as the enemies of management,” Lindey said in his presentation. “We mustn’t develop a mindset where we’re shackling people. “We should remember at all times that we represent shareholders who want success.”

Lindey said ‘enlightened ownership’ was a better term than activism – he pointed to the term “investment terrorism” coined by Pinsents’ Robin Ellison. Lindey acknowledged that shareholders, led by the NAPF and ABI can appear to be meddling in companies. “That shouldn’t be the case.”

The corporate governance issue was more to do with attitudes than rules, Lindey said. “This has got nothing to do with rules – change of attitudes and mindset. “It hasn’t gone as far as it should.”

Guy Jubb of Standard Life Investments said the shift to specialist mandates would boost shareholder activism. He added: “Pension fund deficits have changed attitudes to activism.”

“There is an important distinction between investment activism and shareholder activism,” he added. “It is the owners who have the ultimate sanction.” Standard Life has announced the launch of a new corporate governance platform. “We are building governance into our global investment process.”

Jubb said that from “time to time”’ institutional fund managers had to go public if they have an issue over how company is run. It was part of the “tools of the trade”.

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