Concerns over Financial Conduct Authority's new iNED rules

Companies may overlook external candidates, argue commentators

With new Financial Conduct Authority (FCA) rules requiring fund management firms to have appointed a minimum of two independent non-executive directors (iNEDs) to their boards kicking in today (30 September), industry commentators have raised concerns fund managers may be relying too heavily on those within the industry to fill the two roles, rather than looking externally.

The regulator introduced the rule on iNEDs following its Asset Management Market Study, which found balancing the interests of investors and shareholders was not always being struck appropriately by boards. However, Paul Boughton, founding partner of MosaicNED, which sources and trains iNEDs, warned many fund boards "will take the least line of resistance" when hiring iNEDs. Boughton said: "The introduction of iNEDs will be key to changing the way fund boards are constructed and hopefully to the way fund boards operate on behalf of asset managers and investors." "[But] there are a ...