UK - Collective shareholder engagement should be aided by the establishment of a new investor forum, with greater emphasis on fiduciary duty for all participants in the equity chain, according to the final version of the Kay Review.

Published by the UK's Department for Business, Innovation and Skills (BIS), the Kay Review of UK equity markets and long-term decision making also suggested that the widespread uptake of liability-driven strategies among pension funds was the result of herd-like behaviour, with the report likening scheme trustees to "lemmings".

Advisory board member Chris Hitchen, currently chief executive at RPMI and a former chairman of the National Association of Pension Funds, said Professor Kay's report made a "compelling argument" for trust in equity markets to be re-established.

"If savers are to achieve good long-term returns, they need everyone in the investment chain to be aligned with them," he said.

Business secretary Vince Cable praised the report for describing "vividly" the flaws of the country's equity market.

Christine Berry, head of policy and research at lobby group FairPensions, meanwhile praised the report's focus on the fiduciary duty of all those involved in the equity market.

"Applying these standards to everyone managing other people's money would help address the chronic loss of public trust in an industry that is seen as self-serving and profiteering," Berry said, echoing sentiments expressed last year when FairPensions argued that fiduciary duty needed to be re-examined in an environment when third-party managers often oversaw investment.

Berry added that Kay's report also recognised that fiduciary duty had recently been wrongly linked with short-term returns, and that it was important investors be able to focus on "sustainable" wealth creation.

The comments were echoed by Investment Management Association director of corporate governance and reporting Liz Murrall.

"In the interest of improving trust, one of the principles in the report is that all participants in the investment chain should observe fiduciary standards. 

"This is to be welcomed, as asset managers already have the best defined legal obligations of care towards their clients, and it is right that these be extended to others."

Meanwhile, PIRC's managing director Alan MacDougall welcomed suggestions that major shareholders should be consulted in advance on board appointments.

He was also positive about the notion of establishing a new investor forum to allow for collective engagement.

"The existing architecture for bringing together investors, now called the Institutional Investor Committee, has morphed from an original purpose not far from Kay's vision into a collective of trade bodies principally concerned with co-ordinating industry lobbying activity," he said.

He said a "fresh start" would therefore be welcome, with the new body instead mirroring the US Council of Institutional Investors.

National Association of Pension Funds chief executive Joanne Segars praised the report's "useful, practical" proposals, saying the organisation's members needed to be able to see if they were getting value for money.

UKSIF chief executive Penny Shepherd predicted that Kay's recommendations would have a global impact.

"It could drive a step-change in how investment institutions generate returns for savers," she said.

"Just as the UK has become the corporate governance capital of the world, the UK could also become a global centre for responsible stewardship."