Financial Conduct Authority  

Slendebroek warns over 'scramble' for independent directors

Slendebroek warns over 'scramble' for independent directors

Jupiter’s chief executive has predicted a “scramble” for independent fund directors following FCA proposals for asset managers to add at least two external figures to fund boards.

The FCA has begun consulting on increasing the independence of fund governance boards, and giving them a greater remit of assessing value for money, as part of its asset management market study proposals.

Currently, these committees only assess regulatory compliance and are typically populated by senior members of the firm’s management.

Jupiter's Maarten Slendebroek described the requirement as a "concern", saying: "Every fund group is going to have to go out and get some [independent board members], so there will be a scramble.”

The FCA said it expected "around 480" independent directors to be required across the industry as a result of its plans. It is also consulting on strict rules over the definition of “independent”, suggesting that candidates should not have been employed by the asset manager in the last five years.

The requirement for more independent boards with stronger mandates would help alleviate many of the issues found in its report on the industry, the regulator said.

Jupiter has some experience in using external board members for its Sicav range, as similar requirements are already in place in Luxembourg. However, the FCA has proposed slightly different rules, where remits would change to include an assessment of funds' value for money and boards would provide formal documentation of their work.

Mr Slendebroek said: “We can’t copy the Sicav system. It’s going to be interesting to see how this interacts with the other governance committees [within Jupiter]. We don’t have all the answers yet.”

His comments come as Jupiter reported a strong second quarter of 2017 – taking its half yearly inflows to £3.6bn, a record level for the firm. The chief executive singled out James Clunie’s Absolute Return and Avinash Vazirani's India funds as strong performers in terms of demand.

Mr Slendebroek acknowledged both strategies, alongside some of the firm’s popular and growing concentrated equity strategies, were capacity constrained but said current asset levels did not warrant taking action.

Mr Clunie’s long/short fund launched in 2011 and has now topped £1.2bn in size, while Mr Vazirani runs around the same amount across his UK and Luxembourg-domiciled vehicles.

The chief executive said both strategies were monitored in terms of daily liquidity and ensuring their investor bases were diversified, but added further steps were not required.

He added: “The India fund has got thousands of individual investors while the Absolute Return fund is held by larger but lots of wealth managers. We don’t have a fund where we are concerned [about capacity], but this is something we look at.”