This week's annual meeting of the Royal Bank of Scotland, following hard on the heels of last week's at BP, demonstrated that small shareholders can feel strongly about big issues.

Scots investors annoyed at exorbitant pay packets being handed out to executives or those just concerned about a company’s direction will soon find it a lot easier to have their concerns addressed, thanks to a proposed change to the rules governing voting rights.

The change will be significant as it will mean that investment funds will no longer just be able to vote through, as they see fit, the remuneration reports and other resolutions for the companies in which they invest.

Instead, thanks to a European directive and changes being introduced by the Financial Services Authority through the Retail Distribution Review, investment funds will have to “facilitate the exercising of voting rights” by the underlying investors in the fund – all of them. At the very least this will mean actually asking investors how they want the fund manager to vote.

The move to empower investors is timely, not least because repeated investigations into the cause of the financial crisis have found that the fund management industry did little to rein in or even question the corporate direction being taken at the banks which ultimately needed taxpayer bail-outs.

Despite this, however, some financial services firms are extremely reluctant to make the changes which will allow the direct exercising of voting rights. In its consultation paper on the RDR, the FSA revealed that “some industry respondents said that end investors were not sophisticated enough to understand such information”.

Abigail Herron, corporate governance manager at Cooperative Financial Services, does not conform to this patronising view of what investors are capable of digesting. The Co-op has long canvassed the opinions of customers who hold investments through its funds about how they wish Co-op to vote at annual general meetings.

Ms Herron explains: “Retail customers are increasingly realising that a lot of fund managers just blindly support a company’s management. I think for a lot of investors the first time they realised they could take a stand was with Shell and BP over tar sands. We worked with Fair Pensions, who campaigned for people to lobby their pension providers to let the oil companies know they did not want them involved in tar sands.”

The tar sands issue resurfaced not only at the BP meeting but at RBS in Edinburgh, where representatives of Canadian indigenous peoples protested outside and addressed shareholders inside for some 15 minutes.

The FSA’s proposals will be especially useful to those who invest in funds through a platform. The regulator’s research into platforms found that in order for investors to exercise their voting rights – or even to be informed that votes are taking place – they currently have to pay an additional fee for the privilege. Such fees will be banned once the new rules take effect in 2012.

Of course the change will mean that investors could be asked to vote in hundreds of individual votes every year, something which could prove time-consuming for individual investors. But in Europe, organisations are already emerging with a mission to make it easier for investors to have their votes cast in a way which is in keeping with their wishes – but without the need to research each and every prospective vote.

One such facility is provided by EuroVote. Launched by the European Shareholders Association, it will allow shareholders in 31 European countries to cast their votes at the AGMs of major European-listed companies. A full list of the AGMs which ESA will be attending this year can be found on its website.

How EuroVote will vote at any particular AGM will be determined by the shareholder association based in the country where a specific company is located – in Britain that is the UK Shareholders Association.

However UKSA is not the only organisation interested in assisting investors in exercising influence over the companies in which they invest. Brendan Barber, general secretary of the TUC, is a long-standing critic of the way in which the investment industry has failed to challenge the corporate strategies of the companies whose shares it holds on behalf of retail and pension investors.

Mr Barber believes the TUC’s involvement in filing shareholder resolutions, and the closer scrutiny it is giving to the voting records of institutional shareholders (fund managers), is nudging some managers into exercising greater independence when voting at AGMs.

The TUC’s annual fund manager voting survey in 2010 confirmed the view that managers do tend to vote through company resolutions – including those on controversial issues such as pay and the environment – as it found they sided with the board 80% of the time.

Mr Barber said: “Following the convulsions of the past few years, we now have a genuine window of opportunity to change the way investors and companies behave.

“There is a clear public interest in ensuring that shareholders act responsibly in relation to their stewardship of the companies in which they invest.”

The TUC has 6.2 million members, and believes that if it could develop the capability to cast votes at AGMs on behalf of individual members who hold pensions and investment funds, the potential to affect real social change would be considerable.

A TUC spokesman told The Herald: “This is an exciting development and one which we would be interesting in developing guidelines for.”