Home > ESG > UK Regulator Eyes Climate Disclosure Rules

UK Regulator Eyes Climate Disclosure Rules

The Financial Conduct Authority says current policies do not meet investors’ needs.

By Michael Katz


The UK’s Financial Conduct Authority (FCA) is seeking input on proposals on climate-related disclosure rules the regulator recently published for listed companies and certain regulated firms.

The FCA is consulting on proposals to extend the application of its climate-related disclosure requirements to issuers of standard listed equity shares. It is also looking for feedback on select environmental, social, and governance (ESG) topics in capital markets. The FCA said the proposals will directly affect issuers of standard listed equity shares, excluding standard listed investment entities and shell companies, and may also impact issuers of other listed securities.

The regulator is looking for feedback from a wide range of stakeholders, such as law firms, corporate finance advisers, investors, asset owners, accountants, auditors, second-party opinion providers, ESG data and rating providers, industry groups, trade associations, civil society groups, industry experts, academics, and regulatory bodies.

It said effective capital markets rely on good corporate disclosures, and that high-quality information on companies’ exposure to climate-related risks and opportunities is increasingly important to informed asset pricing and allocation of capital to support the transition to a net-zero economy.

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“By introducing our proposals, we would be creating a regulatory framework that aims to ensure in-scope financial services firms contribute to wider government aims to achieve a net-zero economy by 2050,” the FCA said in its consultation paper.

The FCA said “high-quality information” on how climate-related risks and opportunities are being managed will help investors make better informed decisions, adding that it should improve competition in the interests of consumers, protect consumers from unsuitable products, and push investment toward greener projects and activities. It said it is looking for three main results: better outcomes for clients and consumers; deeper consideration of climate-related risks and opportunities by firms; and coordinated information flow along the investment chain.

The FCA said it is also looking for input on other ESG issues in capital markets, including green and sustainable debt markets and the increasingly important role of ESG data and rating providers.

The FCA is inviting feedback until Sept. 10 and said it will confirm its final policy on climate-related disclosures before the end of this year. The regulator also said it will separately consider stakeholder views on the ESG-related discussion topics in capital markets, with the aim of publishing a feedback statement in the first half of 2022.

“Managing the risks of climate change and transitioning to a cleaner and less carbon-intensive economy will require high-quality information on how climate-related risks and opportunities are being managed throughout the investment chain,” Sheldon Mills, executive director of consumer and competition at the FCA, said in a statement. “However, climate-related disclosures do not yet meet investors’ and market participants’ needs. The new rules will help markets, investors, and ultimately consumers better understand the impact of climate change and make more informed decisions.”

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Home > News > Asset Allocation > Transamerica Settles 401(k) Lawsuit for $5.4 Million
Asset Allocation

Transamerica Settles 401(k) Lawsuit for $5.4 Million

The complaint alleged the insurance giant saddled its plan portfolio with proprietary duds.

By Michael Katz


Transamerica has settled a lawsuit in which it had been accused of breaching its fiduciary duties by using underperforming proprietary investments in its 401(k) retirement plan.  

The plaintiffs, who are participants in the insurance giant’s 401(k) Retirement Savings Plan, had alleged that Transamerica Asset Management, which managed the plan’s investment portfolio, breached its fiduciary duty year after year by choosing and retaining poorly performing proprietary investments when better options were available.

“The plan’s participants trusted Transamerica to construct a 401(k) plan that offered superior investment options and world-class investment management,” the complaint said. “Yet Transamerica saddled the plan’s participants with substandard investment portfolios that were managed by a Transamerica affiliate.”

For example, the lawsuit claimed that over the course of nearly a decade, the plan’s international equity and small core portfolios underperformed their benchmarks by approximately 30% and more than 15%, respectively. It also cited the retirement plan’s own documents that showed that both portfolios and its mid-value portfolio underperformed their respective investment benchmarks over the past one, five, and 10-year periods.

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The complaint also said Transamerica made matters worse by encouraging participants to sign up for the company’s Portfolio Xpress tool, which automatically allocated their money to the company’s investment products and therefore “increased the likelihood that participants would invest in one of Transamerica’s imprudent proprietary portfolios.”

The plaintiffs said the alleged breaches caused the plan and its participants to suffer “hundreds of millions of dollars of damages” but they settled for a $5.4 million payout.

However, the plaintiffs got more than just money out of the settlement, which also stipulates that the retirement plan will offer fiduciary training to the trustees for three years. This will be conducted annually by outside legal counsel or by an unaffiliated investment consultant at Transamerica’s election.

The settlement also stipulates that the plan will retain an unaffiliated investment consultant to provide independent investment consulting services to the trustees approximately every quarter.

Transamerica denies any liability or that it has done anything wrong, and said it is only agreeing to the settlement “solely to eliminate the burden and expense of protracted litigation.”

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