HISTORIC PRESS RELEASE : Myners review of institutional investment [May 2000]

The press release issued by HM Treasury on 16 May 2000.

Paul Myners today launched his review of UK institutional investment with a consultation document setting out the main themes which the review will examine, and almost fifty issues for discussion. It invites comments on the current position and how this could be improved to remove unnecessary barriers to investment in growth and innovation in the UK economy.

A primary focus of the review will be to investigate whether there are factors distorting institutional investors’ decision-making, encouraging, for instance, excessive dependence on industry-standard investment patterns.

Paul Myners said:

“I have been concerned for some time that we are not making the best possible use of our capital markets.

“It is not appropriate for Government to second-guess institutions’ investment decisions. But if there are structural factors that are distorting rational decision-making, then there may be a role in helping to remove them. So when the Chancellor asked me to lead an inquiry into these issues, I was delighted to accept.”

The review will cover all types of institutional investment, including pension funds, insurance companies and unit trusts. It will consider issues such as the benchmarks against which investment performance is measured, the impact of public discussion of investment performance, and the regulatory environment in which decisions are made. The review will report to the Chancellor of the Exchequer in time for the next Budget.

Mr Myners added:

“I welcome views from as wide a range of organisations and individuals as possible. As well as the views of those in the investment industry itself, I would also like to hear the experiences and opinions of those who have looked, successfully or not, to institutional investors for funding to develop ideas and commercial opportunities.

“To get the best spread of views, the consultation document is available on the internet, and I very much look forward to receiving responses by e-mail if this is the most convenient way for contributors to contact me.”