Key report into UK equity markets

Monday, November 26, 2012

Professor Kay was appointed by the Government to carry out an independent review into investment in UK equity markets and long term decision making.

The final report concludes that short-termism is a problem in UK equity markets and that the main causes are the decline of trust and the misalignment of incentives through the equity investment chain. It recommends that there should be a shift in the culture of the stock market, with relationships of trust and confidence restored in the investment chain, and market structures realigned to provide appropriate incentives.

The Report states that trustees should be reassured that what they do is in accordance with good practice and law. However, it recommends that the Law Commission should review the legal concept of fiduciary duty as applied to trustees – particularly in the context of ‘ethical investment’.

The Trustee may wish to ask its investment managers how they are taking forward the recommendations of the report, and what impact this could have for the Scheme’s investment strategy.

Thank you for all your assistance in helping to meet the deadline for the capital reduction exercise – your professionalism and friendly approach was appreciated.

Finance Director - Leading UK Company

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