The Government will end the “rigid requirement” for listed companies to publish quarterly results in a bid to end short-termism in fund management.
In its response to the Business, Innovation and Skills select committee inquiry into economist John Kay’s review of equity markets and long-term thinking, published this week, the Government says greater flexibility can improve the reporting of information to investors.
Business secretary Vince Cable commissioned Kay to review the market and Kay published his final report in July 2012.
The BIS select committee inquiry into the Kay Review was published in July this year.
With UK support, the EU Transparency Directive will remove the requirement to publish interim management statements or quarterly reports.
It will involve changes to Financial Conduct Authority disclosure and transparency rules.
The response to the BIS select committee states: “The Government would like to see investors move away from the default use of short-term, including quarterly, relative performance metrics, towards metrics which focus on achieving returns in line with the long-term objectives of the end-investor.”
The Government rejected calls for a “regulatory stick” to force fund manager pay to be more strongly linked to clients’ interests and timescales.
It argues that asset managers should have long-term holdings in the funds they manage but says there needs to be flexibility to fit different fund types and structures.
FortyTwo Wealth Management partner Alan Dick says: “Ending quarterly reporting is an absolutely great idea. Everything is focused on gambling on shares and the market is
a casino right now. Everyone, including advisers, needs more longer-term thinking.”