July 16, 2009

UK institutional investors will be made formally accountable for the first time for their engagement with bank boards as part of a raft of new measures to boost corporate governance in the financial industry.In a widely anticipated report, David Walker said on Thursday the Financial Services Authority (FSA) will monitor whether fund managers are fully disclosing their compliance with new rules on engagement with banks.

Walker, tasked by Prime Minister Gordon Brown to examine the governance failings that sparked the near-collapse of the banking industry, also proposed greater powers for the Financial Reporting Council (FRC) to ensure fund firms stick to new "principles of stewardship" set out by an industry body.Institutional investors, the biggest owners of London-listed companies, have been blamed for failing to demand greater accountability from companies, especially banks, in the financial crisis.