The EU’s Shareholder Rights Directive could become the first pension-related European legislation to be scrapped due to Brexit, a consultant has claimed.

Under the rules, which are awaiting final approval from the European Parliament, pension funds and other institutional investors must report regularly on their engagement with the companies in which they invest.

They must also report regularly on fund manager remuneration, incentives and portfolio turnover costs.

David Everett, partner at LCP, said the “potentially onerous” rules may not be enforced in the UK, with the British government poised to start official EU exit negotiations in March.

“Whether this directive will find its way into UK law could all be down to timing,” Everett said.

“Right now, it is more than possible it will not become EU law until after the government fires the Article 50 starting-gun for Brexit. If this proves to be the case, then it would seem this will be one of the first EU directives the UK can ignore.”

The Financial Reporting Council (FRC), which had significant input into the UK’s response to the directive’s consultation process, said in a recent report it was “unclear how the UK may be affected by ongoing regulatory changes”.

However, when referring specifically to the Shareholder Rights Directive, the FRC praised European lawmakers for retaining a ‘comply or explain’ approach used widely in the UK.

“The government and FRC will consider how we may incorporate elements of the directive as necessary when it has been approved in plenary early in 2017,” the FRC added.

A spokesperson for the FRC said: “It is the government’s decision [whether] to implement [the directive], and we will assist in whatever way we are needed to.”

As the UK prepares to start negotiations to leave the EU, speculation is mounting as to the economic and regulatory impact on the country’s financial services sector.

Earlier this month, the Financial Inclusion Centre, a think-tank, warned that asset managers might try to resist new rules from the UK’s regulator by citing Brexit-related uncertainty.

But Francois Barker, partner and head of pensions at Eversheds, said it would be politically difficult to scrap many EU financial rules, even those not yet enshrined in UK law.

“If we do want to be in the club at all, we will have to have some form of [regulatory] equivalence,” Barker said, although he admitted the government may “soft-pedal” on some areas, delaying input or implementation until the UK is out of the EU.