Call on funds to reveal their pay

FUND groups are under pressure to reveal pay practices following accusations they cannot police excessive rewards at the companies in which they invest due to their own multi- millionpound hauls.

In a memo to executives seen by the Mail, trade body the Investment association warned that lack of clarity about pay, and how it is linked to returns to savers and pensioners, is ‘a weakness and a growing source of reputational risk’. The move comes amid mounting concern that senior fund managers are raking in large rewards for indifferent performance.

Many fund managers are under no obligation to disclose their pay because they are not board directors of a listed company. But pay is a growing public concern as more people take responsibility for saving for their retirement, leaving them reliant on asset managers for a comfortable old age.

The association has called on its members to publish a document that would show how the pay of senior management and investment professionals is in line with the interests of clients. It said it did not require individual pay to be revealed, but the criteria used to work out rewards.

‘Investment managers are playing an increasingly vital role in the economy, in society, and in the stewardship of companies… this is the cause of closer public scrutiny and demand for higher accountability,’ the Investment association said.

The Institute of Directors warned earlier this year that fund managers are at risk of overtaking bankers as public enemy number one when it comes to overblown pay.

The highest paid chief executive of a FTSE 100 asset manager is David Nish of Standard Life, who earned more than £5m last year. But this is eclipsed by £10.6m handed to Ian Gorham of Hargreaves Lansdown, and £ 15m to Richard Woolnough of M&G.