Silence on role of custody
Custody services provider, Northern Trust, says the government’s recent pension reform proposals did not address a key aspect of the Myners report on the independence of custodianship. “We’re almost back to before Myners raised the question,” says Steven Hayward, head of UK pensions relationship management at Northern Trust.
He says the government’s Green Paper on pensions, released in December, did not even mention independent custody, although it was one of three areas addressed by the Myners report in 2001, along with trusteeship and corporate governance. “The fact there was no reference to independent custody seems to confirm our view that it was unnecessary to legislate in this area. However, it would have helped to close the debate if there had been an acknowledgement that this should be adopted as industry best practice.”
The appointment of an independent custodian should be a conscious effort by trustees, not just part of a package of services delivered by the investment manager.