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The UK Shareholders' Association (UKSA) is the leading independent organisation representing the interests of private shareholders in the United Kingdom. We:
A UK Shareholders’ Association (UKSA) paper published today finds serious deficiencies in the International Accounting Standards Board’s (IASB’s) attempt to assure equity investors that company accounts will be more dependable in future than has been the case in recent years.
Roger Collinge FCA, UKSA’s head of corporate governance, analyses in detail faults in the IASB’s thinking revealed by a recent article written on the IASB’s behalf by IASB member Steve Cooper, published in the IASB’s journal, Investor Perspectives. The article, “A tale of ‘prudence’” sets out to explain how the IASB has responded to investors’ concerns that the removal of ‘prudence’ as an accounting principle from International Financial Reporting Standards (IFRS) was a contributing factor in the banking crisis of 2008.
The IASB is responsible for IFRS and has just published what it calls an ‘exposure draft’ of a revised Conceptual Framework for Financial Reporting. This is where the concept of prudence reappears, but as the conceptual framework is not being accorded the status of a standard, neither is prudence. UKSA has long campaigned for the reintroduction of prudence, but as a standard, not as some vague reference point. UKSA questions the logic behind the conceptual framework and is asking the IASB to think again. Any body of work which purports to have underlying concepts must fully embrace those concepts.
Hot on the heels of the Brussels conference on EU proposals for a capital markets union (see previous news item), the UK Shareholders’ Association (UKSA) has sent the Commission its opinion on two vital matters for private investors.
The EU has issued a ‘Green Paper’ to consult on its Capital Markets Union proposals. As a member of Better Finance, the organisation representing private shareholder associations and the like across Europe, UKSA supports that body’s representations to the Commission, but we also had something special to say. This is because the UK is different from other member states in denying normal shareholder rights to investors using pooled nominee accounts.
UKSA has for many years been in the forefront of efforts to amend the law with regard to nominee accounts. This principally rests with the UK government to do and we are seeking an early resumption of our discussions now that the new government is in place. However, the EU, through various directives and regulations, sets the conditions for member states’ legislation on such matters, so what the EU decides does matter to us. This is why UKSA has substantially raised its financial contribution to Better Finance (which is now 85% of the contributions from the UK).
Join UKSA to help secure the rights and protections that UK savers and investors need.
What part do private investors have in the EU’s plans for a ‘capital markets union’ (CMU)? They may have to fight to be heard, because they are thought to be too risk averse and short-term oriented.
Three representatives of the UK Shareholders’ Association (UKSA) attended a conference in Brussels on 6th May to hear a series of eminent speakers, including the new financial commissioner, Lord Hill, discuss what CMU is likely to involve.
The European Commission has stated that EU households are the main source of long-term financing for the real economy. That is where the money comes from, but what guarantees will they have that their savings are being properly looked after and invested? As things stand individual European citizens run the risk of being sidelined and dismissed by the future architects of the CMU, but this must not happen, says Guillaume Prache, managing director of Better Finance, an organisation representing investor bodies across Europe to which UKSA is the principal UK affiliate.
Guillaume Prache asserts, “For CMU to succeed, European citizens, as individual investors and savers, should be at the heart of the project. With 62% of financial savings invested in long-term investment products and (more) in small and mid-caps than large caps, (they) prove themselves to be less risk-averse and more long-term oriented than institutional investors are”.
Return Capital Markets to Their Natural Participants A Better Finance Press Release May 2015
An EU Capital Market Union for Growth, Jobs and Citizens A Better Finance Briefing Paper May 2015
The iPad has a new app. Devised by Capita Asset Services, ‘Signal documents’ enables users to download and use shareholder documents for most of Capita’s 880 stock market clients, 43% of the market.
Experienced investors from the UK Shareholders’ Association (UKSA) were consulted by Capita early in the project and again at a late stage providing advice on using the app. There is no intention of abandoning printed reports for those who want them, but ‘Signal’ will provide additional facilities for investors, which UKSA warmly welcomes. The app is now available. Search for “signal documents” on the app store to download for free to your iPad.
The app enables users to mark passages, highlight them and add notes using a soft keyboard. Once opened in ‘my documents’, reports can be handled using normal iPad features such as expanding text for readability, but there is also a very user friendly search facility and the ability to move swiftly through documents such as company reports to find the desired location. Companies can be placed on a ‘watch’ list to notify you of new documents available for download. Documents can be viewed and annotated offline once downloaded.
Following feedback from UKSA to Capita, new enhancements are on the way, including a simple explanation on how to use the app and an annotations margin.
The Sunday Times, on April 26, has quoted Hargreaves Lansdown as claiming that private investors “have the same rights and benefits under a nominee service” as those holding shares in certificated form. This is incorrect and seriously misleading.
Some nominee account providers provide additional services which go some way towards compensating investors for the shareholder rights they do not have, but these are not the legal rights enjoyed by investors who have their own names and addresses on the relevant share registers. Not only are investors using nominee accounts not the legal owners of the shares bought with their money, they have only minimal protection if a nominee account provider fails to keep proper records and stay solvent and such situations are not unknown. These significant differences are not spelled out to investors when offered inducements to transfer to a nominee service and this is something which the UK Shareholders’ Association condemns.
Nominee accounts can be of benefit to some investors and it is not possible to invest through an ISA or SIPP in any other way (although this should not prevent an investor’s name and address being placed on the register with the nominee’s), but how such investors are treated depends on each nominee’s terms of business which can be changed arbitrarily at any time, leaving such investors trapped.
Do Alliance Trust directors deserve the support of their thousands of individual investors in resisting Elliott Advisors’ attempts to influence the company’s performance? Or is the hedge fund genuinely seeking long term improvement, rather than just looking for short term gain?
The UK Shareholders’ Association (UKSA) believes that, as always, investors must answer these questions for themselves, but our concern is that many may be left out of this process. Once again, those holding shares in nominee accounts are liable to be left ill-informed and potentially without the ability to vote or, as one large broker has declared, have their shares voted instead, in bulk, by their nominees as they think fit. This is a continuing scandal, which the new government must address.
Alliance Trust has an annual investor forum in London, in addition to its AGM in Dundee, so its directors make an effort to engage with investors. Those in its own savings scheme will also receive regular information, but perhaps more is required to facilitate investor input, especially for the thousands of investors in other nominee accounts. Four years ago, UKSA asked the Trust’s directors to establish a representative private shareholders’ committee, to enable regular, two-way engagement to take place. The Alliance Trust board rejected this idea, but may be regretting this now it wants active investor support.
A forum for UKSA members' views is open to members only in the members area.