A New Consumer Duty from the FCA

Just before Christmas I wrote a critical blog post on the proposals by the Financial Conduct Authority (FCA) to reform the Financial Services Compensation Scheme. It generated a lot of supportive comments. At the same time the FCA published a consultation paper (CP21/36) on a “New Consumer Duty”. This seems to have similar objectives in that it is an attempt to stop consumers from being provided with misleading information, being provided with unsatisfactory support or buying products that are inappropriate or harmful.

For “consumers” read “individual investors” in the investment sector.

The FCA therefore is proposing a whole new set of rules to enforce a new Consumer Duty and the consultation paper alone consists of 190 pages of convoluted text, even though it is supposed to be principle based. It is also clear that there was considerable opposition from the financial services industry particularly as they will incur substantial costs in adapting to the new rules and maintaining them. There is also doubt as to whether it will result in any benefit as there is already an obligation to treat customers fairly and a multiplicity of other rules are already in place.

It might even increase costs to consumers as firms pass on their additional costs, and increase the risk of litigation. One aspect of the proposal is however not to provide a Private Right of Action (PROA) for a breach of the new rules or principles so consumers would have to rely on the Financial Ombudsman for any redress. This is very unsatisfactory as that organisation is hardly very effective at present and takes way too long to deal with complaints.

An example of the sophistry in this consultation paper is the discussion of two possible Consumer Principles to underpin the conduct of firms: Option 1 – A firm must act to deliver good outcomes for retail clients; or 2 – A firm must act in the best interests of retail clients. Can you divine any difference?

What are the likely costs of the adoption of this new Consumer Duty and associated rules? The paper says total one-off direct costs to comply will be in the range of £688m to £2.4bn. Annual on-going costs will be in the range £74m to £176m. The paper is remarkably unclear on the likely cost benefits to consumers.

I don’t know how much labour was put into writing this paper but it must clearly have been very considerable. I consider it a waste of effort. I doubt that consumers will be much better protected by adoption of the new Consumer Duty. The problem with the FCA is not lack of adequate rules, but an inability to enforce them vigorously. Firms devise new products that are too complex, badly understood by consumers and yet the FCA does not stop them being sold. They also approve firms and their management who should not be and fail to step in when matters are clearly going wrong.

It’s a management problem in essence and inventing new rules will not help.

My detailed comments in response to the consultation are present here: https://www.roliscon.com/Consumer-Duty-Consultation-Response.pdf

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Discrimination Against High Net Worth Individuals?

The cost of the Financial Services Compensation Scheme has been increasing substantially in recent years, as more mis-selling scandals have proliferated and firms have gone bust. This has led to complaints from those firms who fund the scheme and has led the FCA to undertake a “Compensation Framework Review”.

This includes looking at possible changes to the scope of protection such as limiting it to “mainstream” products. But a more serious proposal is that High Net Worth or Sophisticated Investors be excluded from compensation. The FCA suggests such individuals might be expected to absorb losses, might be able to take their own private action against a failed firm, or would have a better understanding of the risks they were taking when dealing with authorised firms.

But this is a very dubious argument when High Net Worth persons only need to have liquid assets of £250,000 or more to qualify. Many moderately wealthy individuals would have more than that in direct shareholdings, ISAs and deposit accounts. But they would hardly be in a position to finance complex legal actions and FSCS compensation is limited to £85,000 already.

It is not clear what moral principle is being invoked here except that it would potentially save the FSCS scheme money.

I suggest that high net worth or sophisticated investors send in a response to the FCA’s review – go to this link for information  https://www.fca.org.uk/publications/discussion-papers/dp21-5-compensation-framework-review and an online response form.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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A Bumper Edition of Investors Chronicle

Over the Christmas period we were treated to a bumper edition of the Investors’ Chronicle. And I have to say that this magazine has improved of late under the editorship of Rosie Carr. Whether she has a bigger budget or is just picking better writers I do not know but she certainly deserved the job after working for the magazine for many years.

I’ll pick out a couple of interesting articles from the latest edition:

“What does it cost to be an effective private investor” by Stephen Clapham. He comments that “private investors are, in my experience, not nearly willing enough to invest in tools and education to improve the performance of their portfolios”. I would agree with that. They tend to rely on broker/platform recommendations, newspaper articles, or tips from bulletin boards instead of doing their own research using the tools that are available.

Stephen mentions services such as SharePad, Stockopedia, VectorVest and Sentieo. I am not familiar with the last two but I use both SharePad/Sharescope and Stockopedia as they provide slightly different functionality. Plus I use spreadsheets to record all transactions and dividends and to monitor cash. This enables me to manage several different portfolios held with multiple platforms/brokers comprising 80 different stock holdings with some ease. I have been doing this since my portfolios were much smaller and less complex so I would recommend such an approach even to those who are starting to invest in equities.

As the article mentions, half the members of ShareSoc have a portfolio of over £1m and may be representative of private investors so they may be making profits of well over £50,000 per year from their investments, particularly of late. A few hundred pounds per year to help them manage their portfolios and do research should not be rejected if it helps them to improve their portfolio returns by just a fraction of one percent, which it should surely do.

Altogether the article is a good summary of what a private investor should be using in terms of services to help them.

The other interesting article is entitled “The Generation Game” by Philip Ryland. It highlights the declining performance of UK stock markets since the 2008-09 financial crisis. He shows graphically how the FTSE-100 has fallen way behind the S&P 500 and the MSCI World Index. It makes for pretty depressing reading if you have been mainly investing in UK large cap stocks in the FTSE-100.

It reinforces the message that if you want a decent return from your equity investments you need to include overseas markets in your holdings and small and mid-cap companies in the UK. That is what has worked in the last few years and I expect it to continue to be the case.

Why? Because the growth is present in those companies while the FTSE-100 is dominated by dinosaurs with no growth. Technology stocks are where growth is now present when there are few in the FTSE-100. In fact the market cap of Apple now exceeds the whole of the FTSE-100.

The UK has become particularly unattractive for technology stock listings due to excessive regulation and over-arching corporate governance rules that divert management time. Meanwhile the UK economic environment still relies a great deal on cheap labour provided often by immigrants while our education system fails to encourage technical skills.

The Government has taken some steps to tackle these issues but not nearly enough while politicians have spent time on divisive arguments about how to deal with the Covid epidemic and about trivia such as Christmas parties and redecoration of the Prime Ministers apartment.

There are of course bright spots in this economic gloom and generalising about the state of the country is always going to lead to mistaken conclusions. We are probably no worse than most countries if you examine their politics and the UK economy does seem to be relatively healthy.

But the key message is that if you want to make real money investing in equities you need to be selective and not just follow the crowd, i.e. don’t just rely on index trackers.

Those are my thoughts for investment in the New Year.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Bulb Collapse, Telecom Plus Results and FCA Globo Action

Yesterday energy supplier Bulb collapsed and was put into Special Administration. Bulb has 1.7 million customers and is the largest of 20 alternative energy suppliers to go bust recently. Most of their customers have been taken on by other suppliers but apparently nobody was willing to take on Bulb’s so effectively the company has been nationalised.

These companies have all been hit by the rapid rise in gas prices while the price cap imposed by Ofgem meant they could not raise their prices to their customers. Established suppliers such as Telecom Plus (TEP) consistently complained that the newer energy suppliers were building a customer base by selling at less than cost and the irrational price cap proved to be their undoing. Forcing businesses to fix their customer prices when input prices are based on market whims is a recipe for financial disaster in any market.

Coincidentally Telecom Plus, which I hold, published their half-year results this morning. They are a likely beneficiary from suppliers disappearing from the market. They reported “Net customer growth in October of over 15,000 and they are expecting around 10% growth in customer base during H2 with double-digit annual percentage growth thereafter”. There is always someone who benefits from financial disasters.

They also made these comments: “Over twenty energy companies have ceased trading since the summer, leaving over two million customers dependent on the safety net provided by the market regulator, Ofgem, to maintain their supplies and protect their credit balances through the Supplier of Last Resort (SOLR) mechanism.  These corporate failures take the total number of suppliers that have exited the market in the past five years to over 50, with further failures expected over the coming months.

Whilst primarily blamed on rising wholesale prices, this catalogue of failures, and the associated billions of pounds of costs that will ultimately be borne by consumers, reflect a regulatory regime that encouraged a clearly unsustainable ‘race-to-the-bottom’ approach to competition.  The resultant price war has eroded consumer trust and caused significant financial detriment, as the cost of these failures will need to be recouped through higher energy bills over the coming years.

Ofgem’s recent open letter to energy suppliers is therefore a welcome statement of intent to reform the regulatory framework towards one that genuinely fosters sustainability, investment, good service and fair competition amongst properly resourced and differentiated suppliers.

It is clear that the retail energy market has undergone a paradigm shift, bringing an end to the unsustainable practices which had become widespread over the last seven years of selling energy below cost to attract new customers, using customer credit balances as working capital, and failing to accrue for regulated renewable obligation payments.

In that environment, it stands to reason that an established, well-capitalised energy supplier benefiting from a sustainable cost advantage that is derived from bringing consumers a highly differentiated ‘all your home services in one’ proposition, should thrive.   As the dust settles on the prolonged energy market price war, we believe we are better positioned than ever to grow our market share significantly over the coming months and years”.

Other news today is a report in the Financial Times that the FCA have filed an action in the High Court against the former CEO and CFO of Globo (GBO). That company collapsed in 2015 after the accounts were shown to be a complete work of fiction with the claimed cash on the balance sheet non-existent and revenue also fictitious. It was a similar case to the more recent one of Patisserie Valerie also audited by Grant Thornton. The FRC declined to take action over the audit of Globo but it is good to hear that after so many years the FCA is finally taking some action.

As a former shareholder in Globo I have an interest in this matter and did provide some information to the FCA but there has been no contact from them since 2019. I am trying to find out more about the nature of the legal action now pursued (there is nothing on the FCA web site).  

Globo well demonstrates the weakness of UK audits, the poor enforcement by the FRC and FCA, the lack of transparency over what they are doing and the length of time it takes for those bodies to take action.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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COP26, Regulatory Arbitrage and Greenwashing

COP26 finished last week and many readers may have lost interest in the issues it discussed long before it closed. There is just so much one can take from the scaremongers of global warming when most of us have more immediate concerns about health and wealth. But there was one announcement by Chancellor Rishi Sunak that could be seriously damaging to your wealth in the next few years.

This was his announcement that the UK will be the world’s first net zero financial centre. This will not just be political gestures but he is proposing the following to quote from his Treasury statement: “Under the proposals, there will be new requirements for UK financial institutions and listed companies to publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards to a net zero economy by 2050”.

“To guard against greenwashing, a science-based ‘gold standard’ for transition plans will be drawn up by a new Transition Plan Taskforce, composed of industry and academic leaders, regulators, and civil society groups”.

In other words, this will not be another “greenwashing” exercise but impose specific obligations on companies. The fact that meeting net zero carbon is an impossible task for many companies in any realistic timescale it seems is likely to be ignored. Even attempting to meet that target will impose enormous costs on companies even those who are not big generators of carbon emissions. If you extend it to Scope 3 emissions (those include all indirect emissions that occur in a company’s value chain) then the reach will affect all sectors of the economy.

This will certainly put the UK in the lead in the attempt to restrict global warming whether you believe it is practical or not. But if such regulations are introduced in the UK one can imagine exactly what will happen as it seems unlikely that other major economies will follow that lead. China, the USA, Russia and India are very unlikely to impose such draconian measures. As many UK listed companies have an international focus they have no great need to be listed in the UK. They could just as easily be listed in the USA or other countries with more friendly or easy-going regulatory frameworks.

You might think this is just an attack on oil/gas and mining companies but it will have a much wider impact in reality. For example, one of the big consumers of oil are ships transporting goods around the world so anyone importing products for sale, such as retailers, would need to persuade the shipping companies to avoid using oil.

One thing is certain. Companies such as BP and Shell may simply consider that it is easier to move their listing to another jurisdiction or accept a bid from a private equity player who does not have concerns about their environmental credentials.

This is what Jeremy Warner had to say in the Daily Telegraph: “However much we might wish it otherwise, oil and gas will long remain our primary source of life enhancing energy. And yet the industry is being driven underground by politicians and regulators too cowed to stand up to the hysteria of the climate change activists. The enemy within is almost as bad as the holier than thou pressures from without; oil company boards, together with those of their bankers, are these days stacked with well meaning do-gooders more focused on bowing to the campaigners than the demands of shareholder value”. If you are a shareholder in BP or Shell (I am not) you may sympathise with such comments.

Such moves of listing may already be evident from the decision of BHP to move to a single listing in Australia rather than the dual listing at present.

Unfortunately with such companies being the bedrock of the dividend paying FTSE-100 companies there are few alternatives for some investors such as big pension funds to choose.

Personally I have been investing in alternative energy generating companies and battery companies because the latest announcements from the Government tell me that the hysteria over achieving net zero is now so widespread that it will have a big impact on the financial world. In addition the Government plans to spend many billions of pounds in financing green initiatives and not just in the UK. We have already contributed £2.5 billion as the biggest donor to Climate Investment Funds. Such funding imposes a heavy burden of taxation which will add to the above woes of companies domiciled in the UK.

The irrationality of the general public over climate change in the UK has no bounds. For the last 30 years the young have been taught in schools an extreme agenda which has also been promoted by the national media, particularly the BBC, and politicians are now pandering to the mood of the public. This scenario is going to make the UK a poor location for investment funds in comparison with other countries. Private investors should surely rebalance their portfolios to have less emphasis on the UK. At least that is the case while the mania continues.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Open Letter re New FCA Chairman

An open letter to Rishi Sunak, Chancellor, has been created by the Transparency Task Force concerning the appointment of a new Chairman of the Financial Conduct Authority (FCA). That body has clearly been ineffective in recent years in protecting retail investors from fraud and scams. The letter calls on any new appointment to be not another City insider but someone with true independence.

You can read the letter here: https://www.transparencytaskforce.org/wp-content/uploads/2021/11/Open-Letter-regarding-regarding-replacement-to-the-Chair-of-the-FCA-3.pdf

I ask you to support the letter by adding your name to it as I have done. Just send an email to the contact person at the foot of the letter confirming your support.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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ShareSoc Woodford Legal Claim Seminar

There are several legal firms who are mounting cases to try and gain some redress for the investors but ShareSoc is backing Leigh Day who presented at the seminar. They are focussed on a claim against Link Fund Solutions, the Authorised Corporate Director (ACD) for the fund and which is part of a large financial group (Link).  Leigh Day’s investigations lead it to believe that Link allowed WEIF to hold excessive levels of illiquid or difficult-to-sell investments, and that this caused investors significant loss. In doing so, they consider Link breached the rules of the FCA Handbook and failed to properly carry out the management function of the Woodford Equity Income Fund. They have already issued a letter before action and received a rebuttal response from Link so have now filed a case in the High Court, i.e. the case is progressing – see https://woodfordpayback.co.uk/ for more details and how to join the claim.

A representative of Leigh Day presented the facts and the basis for their claim against Link, but as usual when lawyers present cases, this might not have been exactly clear for the average person. Lawyers seem to want to display their intelligence and knowledge in such presentations which might impress corporate clients but is inappropriate for the general public. Those who invested in the Woodford fund might not have been the most financially sophisticated individuals with many of them relying on recommendations from brokers such as Hargreaves Lansdown (HL).

It seems that Leigh Day cannot identify a good case against Neil Woodford himself, against his management company or against HL. This is unfortunate. Link and the FCA might have fallen down on the job of regulating WEIF and monitoring what Neil Woodford was doing but in essence it was his actions that eventually brought about the collapse. Not only did he invest in companies that were inappropriate for an “equity income” fund but many of them were high risk. Liquidity evaporated when fund performance was poor and negative publicity hit the fund at which point everyone wanted out.

The Leigh Day claim is certainly worth supporting in my view but they have only managed to sign up about 11,000 claimants so far. Why is that? No doubt the first problem is that they do not have access to a register of investors. Both Link and HL have rebutted such requests which is morally indefensible. The FCA should surely step in to ensure that happens if the required information cannot be obtained using the normal disclosure responsibility in legal cases.

Indeed the FCA could take much tougher action by enforcing compensation if they had a mind to do so, but as usual they are proving toothless.

One point I was not aware of before that came out in the meeting was that Grant Thornton were the auditors of the WEIF fund and should surely have queried the low liquidity. Another black mark against that firm.

Apart from the problem for Leigh Day getting through to investors there are a number of other difficulties in obtaining supporters for such legal actions. These are: 1) Investors are often elderly and suffer from sloth – repeated reminders are necessary to get them on board; 2) Investors are keen to forget their own mistakes in investing in the fund; 3) The time to likely obtain a judgement which is several years puts people off; 4) The legal case appears complex and the contracts between investors and the lawyers can be complicated – investors might also doubt that they are not facing risks of costs. The way the case is communicated to investors needs to be handled very carefully to ensure investors understand what is being done and why they do not face risks from the legal action.

Another issue is that ShareSoc and Leigh Day have pointed out that another approach might be to complain to the Financial Ombudsman. From my experience of that organisation, it would be a long and tedious process with little certainty of satisfaction. I would personally prefer to rely on an aggressive law firm to obtain some redress.

Leigh Day certainly seem to have acted competently so far in pursuing their legal action and have moved relatively quickly. I would also encourage you to write to your Member of Parliament to request that the Government ensures that the FCA (Financial Conduct Authority) takes much stronger action over these events.  

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Roger Lawson

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Scrapping Share Certificates and Clive Sinclair Obituary

The Government is to push ahead with the scrapping of paper share certificates. An announcement yesterday by Lord Frost included this in a bonfire of regulations which also included plans to scrap driving licences (i.e. making them digital only). The dematerialisation of shares was long ago committed to by an EU directive with no new paper certificates to be issued by 2023 and all existing ones replaced by 2025.

There are many share certificates still held by investors – for example I still hold a few, mainly for VCT companies which I have never bothered to dematerialise. A paper share certificate at least ensures you are on the share register of a company and hence are a “member” with full shareholder rights. A replacement system which ensures you retain those rights rather than shares being held in a stockbroker’s nominee system is required but plans for implementation of such a system have been slow in appearing.

See https://www.gov.uk/government/publications/brexit-opportunities-regulatory-reforms for the announcement.

Inventor and businessman Sir Clive Sinclair has died at the age of 81. He developed early calculators, digital watches and the ZX81 and Spectrum personal computers. The latter were the first popular home computers in the UK sold at a price almost everyone could afford (less than £100). I fondly remember playing video games on a Spectrum but they were not much use for anything else. The keyboard was a single sheet of rubber and not fit for much at all.

Despite these short-lived commercial impacts, he never developed these businesses into long-term successes and even proceeded to destroy his reputation with the Sinclair C5 electric vehicle.

He provided a very good example of how in Britain we have good technology innovators but not good businessmen who can develop a company and conquer the world with superior sales and marketing.

Sir Clive seemed to always want to move on to new inventions rather than concentrating on making money from existing ones and doing the boring work involved in developing existing products and markets. Therefore in essence a flawed personality in many ways.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Diversity – But at What Cost?

The Financial Conduct Authority (FCA) have published a public consultation on “Diversity and inclusion on company boards and executive committees”. This summer I seen to be spending a lot of my time responding to FCA consultations and this one seems to yet another that will impose costs on publicly listed companies with no clear benefit while diverting management time. As I pointed out in my response to the Primary Markets Effectiveness Review, the imposition of more corporate governance regulations is one reason why public listings are falling as company management decide that it’s easier to remain private. That is the negative outcome of over-regulation.

What’s the latest consultation proposing? They propose to change the Listing Rules so as to “require companies to disclose publicly in their annual financial report whether they meet specific board diversity targets relating to gender and ethnicity on a ‘comply or explain’ basis”.

They also propose that companies publish standardised data on the composition of their board and the senior levels of executive management by gender and ethnic background; and to encourage a broader consideration of diversity at board level, they are also proposing to amend the corporate governance rules to expand reporting requirements to wider diversity characteristics. This could include ethnicity, sexual orientation, disability and socio-economic background.

They may also “seek to widen the scope of the targets to levels below executive management”, i.e. This means not just the board and top management will be covered in future.

In the short term the rules will require:

  • At least 40% of the board should be women (including those self-identifying as women).
  • At least one of the senior board positions (Chair, Chief Executive Officer (CEO), Senior Independent Director (SID) or Chief Financial Officer (CFO)) should be a woman (including those self-identifying as a woman).
  • At least one member of the board should be from a non-White ethnic minority background.

Although there is wide acceptance that more diversity on some boards may be preferable. By avoiding the all-white, male and elderly boards that were so common in the past, one can ensure more understanding of the modern world. And it is certainly the case that there may be some social justice in avoiding unfair discrimination against some characteristics. But is there any evidence that more diverse boards actually improve company performance?

The FCA report covers this issue in Section 3.27 onwards where they review the evidence. The evidence is not clear so they say: “Our own literature review of academic and other research published alongside our DP concludes that, overall, the empirical evidence for the impact of diverse workforces and boards on financial performance is inconclusive”. In essence the imposition of more regulation in this area may have no benefit while the disadvantages of loading management with extra responsibilities is ignored.

What concerns me most is that instead of picking the best candidates for board or senior management positions, they may be selected based on sex or ethnicity, i.e. there will be discrimination against others, which is of course illegal.

There is also a rather peculiar focus on factors that have no obvious relevance to fitness for a role. One of the oddities of public companies is that anyone with no qualifications or experience can be appointed. There is no requirement to have a business or accounting qualification. No requirement to know the basics of company law or to have had any training for the role of being a company director. Is this not most perverse?

For example I have attended several General Meetings of companies in the past where it was clear that the directors did not understand the basics of company law.

You also get peculiar results at present where the keenness to appoint more females results in some directors with little obvious qualifications for anything. They tend to end up chairing remuneration committees for example where they are dominated by executive management.

Would it not be preferable to regulate to ensure directors had basic competence in law and finance rather than happening to have the right skin colour? That is likely to be much more effective in improving company performance.

One of the most laughable aspects of the proposed new regime is that to meet the new rules on gender diversity all that needs to be done is for a current male member to “self-identify” as female. Will management be required to inquire into the details of sexual orientation when recruiting?

If we are going to start regulating management composition based on their characteristics, should we also not be ensuring a balance of ages, heights, physical fitness (no fatties allowed) or other relevant characteristics?

There are better alternatives to improving the diversity of boards other than using quotas. Education and structured experience programmes are more likely to produce a better outcome.

In summary I suggest this proposal is a complete nonsense and should be withdrawn. Readers should submit their own responses to the consultation to avoid responses being biased by the thoughts of those who wish to be politically correct.

You can see my detailed responses to the consultation questions here: https://www.roliscon.com/Diversity-Consultation-Response.pdf  

FCA Paper: Diversity and inclusion on company boards and executive committees. Consultation Paper CP21/24: https://www.fca.org.uk/publication/consultation/cp21-24.pdf

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Comments on Primary Markets Effectiveness Review

The Financial Conduct Authority (FCA) have launched a public consultation on potential changes to the regulations regarding the listing of companies on public exchanges (see link below). This is in response to concerns about the fall in the number of companies listing (the number listed is down by 40% since 2008). There is particular concern that the UK regime is tougher than other international markets and particularly deters certain types of companies from listing.

You only have to read the consultation document to understand how complex the rules on main market listing are and they are surely due for simplification. Over complex rules not just deter companies from listing but add to the costs of doing so and those costs fall on investors.

A survey by PWC in 2018 indicated that regulatory burdens and costs are the main reasons for not listing as opposed to raising finance by other means. A fall in the number of listed companies particularly affects private investors who want to invest directly in companies and wish to have a direct connection with where their money is invested.

Other factors are also involved such as the low cost of debt at present and the ability of private equity firms to act quickly and provide a less onerous corporate governance regime. But it would certainly be a retrograde step if public stock markets fell substantially in size.

Among the proposals to make listing more attractive in the UK are 1) allowing dual class structures where some shareholders can have disproportionate voting rights; and 2) relaxing free float levels required. But there is also a proposal to increase the minimum market capitalisation substantially from the present level, which surely would not help.

There are also proposals to alter the primary segment qualifications or remove segments altogether which I favour.

I support the relaxation of free float levels but am opposed to dual class structures. Dual class structures enable founders to retain control but that is not necessarily a good thing. In practice there are other ways that founders can retain substantial influence – for example by retaining significant shareholdings and board seats. I do not see that permitting dual class structures (DCSS) is necessary to make listing in the UK more attractive.

What will make listing more attractive is a simplification of the listing rules and a reduction in cost plus a reduction in the regulations such as onerous corporate governance regulations (such as the recently proposed climate disclosure regulations I commented negatively upon).

You can read my detailed responses to the FCA consultation here:

https://www.roliscon.com/Primary-Markets-Effectiveness-Review-Response.pdf

The FCA Consultation is here: https://www.fca.org.uk/publications/consultation-papers/cp21-21-primary-markets-effectiveness-review

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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