The Financial Conduct Authority risks “watering down” investor protections in its push to revive the appeal of London’s markets, a group of top pension schemes has claimed today.
In a blistering attack on the watchdog’s proposals to overhaul the UK’s listing rules, 10 of the UK’s top pension funds representing some £300bn in assets have warned the FCA not to weaken the UK’s “historically high corporate governance standards and robust investors’ protections are maintained”.
“We do not think the FCA’s proposed reforms to the UK listings regime will lead to the healthy capital markets we all want,” the schemes, which include Railpen, Universities Superannuation Scheme (USS) and NEST, wrote to the regulator.
The attack comes after the FCA proposed a slew of reforms to the UK’s listing rules in May to try and ease the burden of red tape on firms listed in London.
Among the measures tabled by the FCA were plans to remove mandatory shareholder votes on deals in order to “reduce friction to companies pursuing their business strategies”.
The regulator is looking to revive the appeal of London as a listings hub and stop the flow of firms towards New York amid a drought in fresh UK listings. Cash raised via IPOs in London plunged 80 per cent in the first quarter of the year, according to fresh data from EY.
The move from pension funds to block the measures may inflame tensions in the City as capital markets officials and regulators look to boost the competitiveness of London.
The guidelines demanded by the schemes do not exist in the US and it is unclear that many of the pension schemes in questions are putting similar measures on regulators in the US. Railpen stressed it was also campaigning for equal voting rights in the US when asked by City A.M.
An FCA spokesperson told City A.M. the proposed changes “aim to provide a simpler and more accessible UK listing regime”
“Any reform of this market will understandably attract a range of views, which is why we’re conducting an open discussion on the proposals and the shift in risk appetite they’d entail,” the spokesperson added.