The Financial Reporting Council has given tier three signatories a six-month time frame to improve their reporting standards.

A number of well-established asset management firms, including Brewin Dolphin, Charles Stanley and Neuberger Berman, need to make “significant improvements” to their financial reporting standards, according to the UK's Financial Reporting Council.

The FRC, a body that promotes high standards of corporate governance while monitoring and enforcing accounting and auditing standards, has categorised fund managers into three tiers based on the quality of their statements on its stewardship code.

There are nearly 300 signatories to the code.

In tier one, there are around 120 signatories representing around 90 per cent of assets under management of members of the Investment Association. These firms provided a “good quality and transparent description of their approach to stewardship and explanations of an alternative approach where necessary”.

Signatories in tier two meet many of the reporting expectations but are less transparent regarding their approach to stewardship or do not provide explanations where they depart from the code's provisions, the FRC said.

Those in tier three need to make significant improvements to ensure their approach is more transparent as they have failed to engage in the process of improving their statements by providing no, or poor, explanations where they depart from the code's provisions, the FRC said.

Among the firms listed in tier three, in addition to those mentioned above, are Absolute Fund Managers, Beagle Partners, Cavendish Asset Management, Miton Group, and Veritas Asset Management, to name a few. 

Asset managers that fail to achieve at least tier two status after six months will be removed from the list of signatories as their reporting fails to demonstrate commitment to the code's objectives, the FRC warned.

Some of the stellar performers who made the FRC's tier one include BlackRock, BNP Paribas Investment Partners, Investec Asset Management, Goldman Sachs Asset Management, JP Morgan Asset Management and Old Mutual Global Investors.

“Reporting against the Stewardship Code is not a box-ticking exercise and signatories were encouraged to provide a clear description of their approach to stewardship, with explanations for non-compliance where appropriate,” said Stephen Haddrill, chief executive of the FRC.

He added: “Constructive engagement between investors and companies is vital for the long-term success of our economy. Investors play a crucial role in encouraging companies to think more about their long-term strategy.

“We will be looking for continuous improvement from Code signatories, but we are pleased with the response to this exercise and many signatories have reaffirmed their commitment to quality, transparent reporting and to stewardship,” he said.