Macfarlanes response to the law commission's consultation on fiduciary duties

05 September 2014

Macfarlanes responded to the Law Commission's consultation on fiduciary duties of investment intermediaries. The Law Commission published its response in July 2014. The genesis of this consultation was the Kay Review published in July 2012, which criticised “short termism” in UK equity markets and suggested that a misunderstanding by pension trustees and their advisers about the nature of their fiduciary duties in relation to investment were a contributory factor.

Macfarlanes' response challenged this view, suggesting that, where short termism exists, it is more likely to be the result of the pension regulatory system, including the mark to market approach, which encourages trustees to avoid asset and liability mismatches and may discourage a long term view on investments.