Business Secretary Vince Cable has launched an independent review of investments into equity markets to crack down on short-termist behaviour.
At the Association of British Insurers’ biennial conference last week, Cable said there is evidence that risks are being taken with the reputation of UK businesses, with companies focusing on short-term gains.
To investigate the extent of the problem, Cable has commissioned economist Professor John Kay to carry out an independent review of investments into UK companies.
Cable said: “Professor Kay will look at behaviour right along the investment chain, from company boards through to pension funds, advisers and fund managers and, ultimately, to beneficiaries.”
The review will make recommendations on issues such as ensuring investment timescales match client interests, ways of boosting transparency for clients and the legal duties of asset managers.
An interim report is expected by the end of this year with final conclusions next year.
Cable is also looking to tackle excessive executive pay and remuneration, and plans to launch a consultation in July on changes to company reporting.
He said the Government will propose additional provisions on disclosure of executive pay and its link with company performance.
Cable said: “I also intend to explore other ways to intervene sensibly in executive pay and in particular to put an end to the culture of rewards for failure.”