The Treasury is turning up the pressure on fund managers to produce a code of best practice. It is preparing a discussion document on the subject which will be issued later this month.
Treasury sources said the discussion paper fleshed out ideas that were floated in November's pre-Budget report to encourage transparency in institutional investment.
However, senior fund managers believe the Government wants the industry to introduce a code of conduct - to include details of voting tactics and pay structures - which will allow investment groups that do not follow it to be 'named and shamed'. Investment sources said the Treasury is determined that fund managers should reveal the basis on which the remuneration of senior staff - whose annual bonuses can amount to millions of pounds a year - is founded.
Insiders at the Treasury said the discussion document was not intended as 'a blueprint for a code of best practice'. But it is meant to 'assist the industry in drawing up its own set of guidelines about how a good fund manager should operate'.
The Treasury has not yet made up its mind whether to publish the paper.
'We would like to see something from the industry which reflects its views rather than ours,' said a source. 'This is not a huge 100-page document. Officials have merely written something which crystallises our views.'
In the pre-Budget report, the Government said there was room for improvement in the relationship between institutional investors and clients, notably pension and life funds. It said an effective market structure could be one in which fund managers would be expected to set out, to their clients and publicly, their objectives, how they assessed investment performance and the basis upon which key staff were