Campaigners seeking a lighter-touch UK corporate governance regime have met with fresh opposition after a warning from the body that represents £350bn in local government pension investments. In an open letter, the Local Authority Pension Fund Forum (LAPFF) questions whether there is evidence to underpin proposed reforms and argues they could make the UK less attractive for investors.

In a letter to Don Robert, chair of London Stock Exchange Group, Doug McMurdo, chair of LAPFF, warns against pushing ahead with the changes and expresses concern about the role of a lobby group, the Capital Markets and Industry Taskforce (CMIT), which is led by the LSE’s chief executive Julia Hoggett.

CMIT has persuaded the government to abandon key corporate reporting reforms last year. CMIT and Hoggett have also argued for higher CEO pay rates, and called for the end of the Public Register, an archive of shareholder revolts (votes of 20% or more). CMIT has argued that governance in the UK is in need of a “reset” to counter the loss if UK listings.

The Financial Conduct Authority is also consulting on changes to the listings regime that would introduce a single listing category, doing away with the current “premium and standard”. But they would also ease the need for sunset clauses on dual class shares and relax restrictions on who can hold shares with preferential voting rights. FCA changes would also do away with shareholder approval for certain transactions.

‘Little credibility’

LAPFF’s McMurdo attacks the account given by LSE and CMIT about the loss of listings: “It is important that public policy making is evidence based. However, we are concerned that the positions being taken by CMIT are neither evidence based nor balanced, and some positions have little credibility in basic terms.”

McMurdo adds: “In lobbying to lower the governance and listing regime the LSE not only risks loss of its reputation, but also ‘poisoning the well’, making the UK an unfavourable place to allocate capital.”

The letter argues that the CMIT lacks representatives from “beneficial owners” in its members; this is weighted towards “fee takers”, or advisory firms. It also observes that London is not alone in losing listings over time.

McMurdo points out that listings in themselves may not boost the economy (some listed companies are barely more than small offices based in London).

“Investors rely on the LSE (and other exchanges) for accurate and legally robust information regarding companies and such obligations are also requirements for all listed companies making any public statements.

“It follows that in its lobbying work, the LSE should also be presenting accurate and rigorous claims when it seeks to influence policy.”

The letter asks the LSE to provide evidence that listings have been undermined by the current rules.

Debate has been simmering over corporate governance after the government announced in October that it was U-turning on new disclosure responsibilities. Supportive statements from the LSE and the CMIT were included in the government press release.

In an open letter to government published last year, CMIT argued that UK corporate governance was in need of a “reset”.

Julia Hoggett also triggered a debate on executive pay, arguing in a blog that a “constructive discussion” on higher pay was needed to ensure the competitiveness of the UK.

Her views have met with both support and opposition. City grandee Paul Drechsler, a former president of the CBI and ex-chair of financial services firm Bibby, writes in an article for Board Agenda: “The arguments advocating for substantially higher CEO pay in the UK often lack merit. What truly drives economic growth in the UK is private sector investment, which influenced by factors such as political stability, infrastructure investment, adherence to the rule of law, a clear national vision and consistent tax and industrial strategies.”

LSE declined to comment for this article.