SAB commissions legal advice on pooling governance
Published: September 4, 2025
The Scheme Advisory Board (SAB) commissioned advice from Burges Salmon to help authorities consider practical ways of working under the government’s Fit for the Future proposals.
As part of this, it asked the legal firm to consider the different pooling governance models currently being operated by pools and wider practice in comparable schemes.
The move, it said, is intended to help inform the development of wider pooling governance guidance that might be issued.
At present, the reforms would see administering authorities delegate the implementation of their investment strategy to their pool, with these pools having to become FCA-authorised investment management companies.
Additionally, authorities are required to take their primary investment advice from their pool with external advice only being sought in exceptional circumstances. Pools will also have more control over sub-fund offerings and investment execution, with authorities only setting the high-level strategy.
All in all, Burges Salmon highlighted several potential conflicts of interest – most notably of which were the fact that authorities may have different investment goals than the pool’s available sub-funds. They could also advise an authority to invest in something that may not be “optimal” for the authority.
It’s also possible some authorities could lose influence in larger pools with more members. Additionally, the governance changes needed for these reforms could create tensions if they affect voting rights or strategic control.
When it comes to preparing for these changes, Burges Salmon says robust governance frameworks are key to managing against any of these risks.
For those involved in a joint committee pool, it suggests the use of an Inter Authority Agreement to define roles, voting rights, and decision-making processes. This would also ensure “fair representation and oversight” and include mechanisms to resolve deadlocks and disputes.
Meanwhile, for those pools that are FCA authorised, it recommends the use of the Shareholders’ Agreement and Articles of Association. This will protect rights through “reserved matters” requiring a super-majority or unanimous consent, and maintain the authorities’ control over strategic decisions.
It has also said that pools and authorities must have “live, adaptive conflicts of interest policies” which should include registers of interests and declarations at meetings, and procedures for managing dual roles and overlapping responsibilities.
Alongside, Burges Salmon stresses that authorities should retain the ability to seek external advice – especially when pool advice may not align with their needs – to preserve fiduciary duties and ensure investment decisions are in beneficiaries’ best interests.
