Good Articles in Latest ShareSoc Informer Newsletter

Are you fed up with reading about the antics of media personalities in the national press? I know I am. For some more intelligent and useful material, ShareSoc has just published its latest Informer Newsletter on stock market events.

It does include a couple of short articles from me which is not unusual but other interesting ones cover:

  • Can AI give me an edge by Marcus Breese. His conclusions seem to be similar to mine, i.e. probably not as AI cannot be relied upon to give the right answers.
  • A report on the “digital only” AGM of Marks & Spencer by Cliff Weight. Amusing to see my former colleague Gavin Palmer turned up physically regardless. It’s clear that digital-only meetings are unsatisfactory in several regards. Hybrid events are surely preferable.
  • Some comments on the Flint Interim Report on digitisation which is quite rightly called “a betrayal” as the recommendations therein might remove shareholder rights and defeat shareholder democracy.
  • A note on the threat to investors in SIPPs if the manager goes into administration based on events at the Hartley Pensions manager. This certainly needs pursuing.

In summary, an exceedingly useful newsletter and shows how ShareSoc is doing a great job at representing retail shareholders’ interests.

Roger Lawson (Twitter  )

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A Political Manifesto

A few years ago I penned some policy suggestions for a new political party. I just had a clear out of some of my old files and thought it was worth publishing as it’s still very topical.

Reference Policy Suggestions My suggestions for policies in those areas and others are below:


1.       The personal taxation system is way too complicated and needs drastically simplifying. At the lower end the tax credit system is wide open to fraud while those on low incomes are taxed when they should not be. The personal tax allowance, both the basic rates, and higher rates, need to be raised to take more people out of tax altogether.

2.       The taxation of capital gains is also now too complicated, while tax is paid on capital gains that simply arise from inflation, which are not real gains at all. They should revert to being indexed as they were some years ago. For almost anyone, calculating your own tax that is payable is now way too difficult and hence requiring the paid services of accountants using specialist software.

3.       Inheritance tax is another over-complex system that wealthy people avoid by taking expert advice while the middle class end up paying it. It certainly needs grossly simplifying, or scrapping altogether as a relatively small amount of tax is actually collected from it.

4.       The taxation of businesses is inequitable with the growth of the internet. Small businesses, particularly retailers, pay a disproportionate level of tax in business rates while their internet competitors often avoid VAT via imports. VAT is now wide open to fraud and other types of abuse such as under-declarations, partly because of the EU VAT arrangements. VAT is in principle a simple tax and the alternative of a sales tax would create anomalies but VAT does need to be reformed and simplified.

5.       All the above tax simplifications would enable HMRC to be reduced in size and wasted time in form filling by individuals and businesses reduced. Everyone would be a winner, and wasted resources and expenditure reduced.  

6.       The taxation of company dividends on shares is now an example of the same profits being taxed twice – once in Corporation Tax on the company, and then again when those profits are distributed to shareholders. This has been enormously damaging to those who receive dividends and the lack of tax credits has also undermined defined benefit pension funds. The taxation of dividends should revert to how it once was.

7.       The regulation of companies and financial institutions needs very substantial reform with much tougher laws against fraud on investors. Not only are the current laws weak but the enforcement of them by the FCA/FRC is too slow and ineffective. Although some reforms have recently been proposed, they do not go far enough. Individual directors and senior managers in companies are not held to account for gross errors or downright fraud, or when they are, they get off too lightly. We need a much more effective system like they have in the USA, and better laws.

8.       Shareholder rights as regards voting and the receipt of information have been undermined by the use of nominee accounts. This has made it difficult for individual shareholders to vote and that is one reason why investors have not been able to control the excesses in director pay recently. The system of shareholding and voting needs reform, with changes to the Companies Act to bring it into the modern electronic world.

9.       The pay of directors and senior managers in companies and other organisations has got wildly out of hand in recent years, thus generating a lot of criticism by the lower paid. This has created social divisions and led partly to the rise of extreme left socialist tendencies. This problem needs tackling.

10.     Governance of companies needs to be reformed to ensure that directors do not set their own pay, as happens at present, but that shareholders and other stakeholders do so. Likewise shareholders and other stakeholders should appoint the directors.

11.     Insolvency law needs reform to outlaw “pre-pack” administrations which have been very damaging to many small businesses. They are an abuse of insolvency law.


1.       Way too much money is spent on rail transport and trams which cannot be justified on any cost/benefit analysis. HS2 is just one extreme example of this. Meanwhile the road system does not receive enough investment – this has resulted in traffic congestion, wasted time which is damaging to the economy and lots of poorly maintained roads (e.g. potholes). Only 25% of direct tax on vehicles is spent on the roads.

2.       Public transport should generally pay for itself. In London alone there is a subsidy of £1 billion per year on buses which is totally unjustified. Many of these subsidies are given to people who could afford to pay for their travel, even when they are receiving social security benefits.

3.       Road safety has flat-lined due to an excessive focus on speed reduction and the perversion of the law by the use of police waivers to force people to take useless “education” courses. Policies have been distorted to enable the police to make money from drivers, while improving the roads, better education and other policies to reduce road casualties have been ignored.

4.       Charging of drivers via road pricing to reduce congestion should be opposed (as it does not work and is just a money-making taxation scheme). Likewise Clean Air Zones where drivers are taxed for driving some vehicles, all of which were legal when purchased, should be stopped and the whole focus of environmental legislation should be reviewed. EU regulations in this area have made illegal air pollution levels when there is no real evidence of danger from them. ULEZ and CAZ schemes are just a way to raise taxes with little real benefit on health grounds and no cost/benefit justification.

5.       Likewise the EU has mandated speed limiters (ISA – Intelligent Speed Adaptation) for all vehicles in future which will delay vehicles and not contribute to road safety, while generating millions of speeding fines on innocent drivers. There should be a commitment not to follow the EUs lead on such legislation.


1.       Education should be free for all those who can justify they will benefit from it. At present too many people go to university who will be unlikely to benefit from it and they should be redirected to lower cost vocational courses.

2.       Loans to support students taking courses should be interest free.

3.       There needs to be a much stronger focus on technology education in the UK as only people with such education will contribute positively to the economy.

4.       There needs to be more emphasis on the use of technology in teaching to improve the productivity of that profession which has basically not changed in hundreds of years. The use of on-line resources can assist and would enable teachers to be more productive and hence be paid more.

Environmental, Climate Change, Population and Housing

1.       There should be more attention paid to the real science of environmental impact rather than the hysteria of left-wing campaign groups.

2.       Mrs May’s commitment to a zero-carbon economy, which is financially unaffordable, should be scrapped because there is no practical way to achieve it and it is based on very dubious scientific analyses.

3.       The population of the UK needs to be controlled, if not reduced, to improve living conditions and ensure a healthy economy. This can be achieved by tougher limits on immigration (along with better enforcement of existing rules), and encouraging the population to procreate less.

4.       Housing costs, and the inability to find suitable accommodation, are major problems for the young. Controlling/reducing population would help but other measures need also be considered including the financing of more social/rented housing.

Local Councils and London

1.       The funding of local authorities, and some of their important functions such as providing social care, needs to be reformed. At present they are too dependent on central Government funding which means obligations are often put on them without the funds to cover the cost.

2.       There are wide variations between the efficiencies of different local councils with many being wasteful. They should have guidelines and limits on how they spend their money, laid down by central Government, to avoid waste.

3.       London is a particular problem where it has become dominated by populist Mayors (both Labour and Conservative) and where elections are driven by national politics rather than local issues. The most recent Mayor, Sadiq Khan, has been pursuing a “gerrymandering” policy of increasing immigration to gain more people that are likely to vote for him, thus making London even less acceptable as a place to live than it has been for years. Crime, transport and housing are all in a major crisis. I suggest the position of the Mayor, and the Greater London Authority be scrapped as Mrs Thatcher did with the GLC when Ken Livingstone became so damaging. In other words it should revert to central Government control, with the local boroughs having more control over their own affairs. That would no doubt be popular with London borough councillors.

4.       Transport for London should be taken out of the control of the Mayor be made an independent body with an objective of making it a profit centre rather than a consumer of enormous subsidies. They should also lose control of the road network (the TLRN) where they currently have a perverse incentive to make the road network unfit for purpose so that more people use public transport from which they gain income.

I hope you find the above useful.

Yours Roger W. Lawson, M.B.A., M.B.C.S. ++++++++++++++++++++++++++++++++++++++

Roger Lawson (Twitter:  )

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Digitisation Task Force Proposals

Sir Douglas Flint has published his Interim Report from the Digitisation Task Force – see This covers many important issues for private investors such as the use of nominee accounts, the scrapping of paper share certificates (dematerialisation) and many other important issues. You can read the comments I have submitted here:

I would encourage all private investors to send in your own comments.

Roger Lawson (Twitter:  )

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You Can’t Replace Striking Staff

The High Court has ruled that allowing agency staff to replace striking workers is unlawful. This is yet another example of legal challenges to decisions by Government.

The High Court has ruled that Government legislation introduced last year which said employers can use agency staff to fill in for striking workers during industrial action is unlawful. The Government decision was challenged by a judicial review from a number of trade unions. So we now have a situation where doctors or nurses, that are required to keep patients alive, but who have gone on strike cannot be replaced. Likewise for other essential workers such as railway staff.

The challenge was based on lack of public consultation, but this is surely madness. I hope the Government attacks this little publicised decision. Workers may have a moral right to withdraw their labour but employers should also have a right to replace them when it is essential to maintain a public service.

See: for more details of the legal decision.

Roger Lawson (Twitter:  )

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Banking Made Difficult and Savings Rates Inadequate

Having a bank account into which you can pay money, or from which you can pay money out, is essential in the modern world. You can become a non-person if a bank closes your account. You can be cut off without notice and effectively instantly impoverished by a bank even if you have been a customer of theirs for many years and have a perfect credit record.

This has been happening to many people lately and not just to Nigel Farage. If you are judged to be a “Politically exposed person” (PEP) then you might have great difficulty opening a bank account and will certainly have to answer many questions about your activities and sources of funds. Just being related to a PEP is enough it seems to raise eyebrows and start an inquisition. Simply being involved in politics or having the wrong opinion on controversial subjects is enough it now seems to cause difficulties and result in a Kafkaesque proceeding.

In addition banks are closing accounts without giving clear reasons and without notice, although they dispute this. These problems have arisen recently because banks have become paranoid in adhering to FCA rules about “knowing your customer”.  

You may think this problem is not a common one. But it is. For example I am related to a Member of the House of Lords and she had this to say:

“Yes. Total nightmare with Nationwide, They just sent a rather ill spelt text about a year ago to say they were going to cut us off If we did not give them a huge amount of information in 24hrs. They wouldn’t say why, after to-ing and fro-ing for 6 weeks or so it was all sorted out and got profuse apology but meanwhile I removed all our cash immediately because of the threat to freeze the account. There’s been a great stink in the Lords because we’re all in the same position and finally the banks seem to have started to behave slightly better.

Nationwide had set up a new unit to pursue anybody with any likelihood of being a politically exposed person, It seems to be full of teenagers who couldn’t read or write so we thought it was spam. It wasn’t. Eventually sorted out but it was a year before I put any money in Nationwide again.

But it’s been dreadful for some people, totally unjustified”.

The other complaint about banks recently is that they raised mortgage rates in line with changes in interest rates but have not improved their savings rates on instant access accounts. The FCA have published a note on tackling this issue – see

It urges people to change banks to improve competition but will people do that if the process of opening an account is subject to tedious scrutiny and subsequent risk of closure?

The Treasury is apparently looking into this issue but bearing in mind this problem has been known about for many months, don’t expect any action soon.

Postscript: The latest news is that even Chancellor Jeremy Hunt was denied a Monzo account.

There surely needs to be some regulation of banks’ actions in this area.

Roger Lawson (Twitter:  )

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FCA’s Mistaken Policy over Long-term Asset Funds

The Financial Conduct Authority (FCA) have released a “policy statement” containing proposals for new long-term asset funds and their regulation. See PS23/7 ( ).

The plan is that distribution of these open-ended funds will be extended to mass market retail investors. Self-select DC pension schemes and Self-Invested Personal Pensions (SIPPs) will be able to invest into an LTAF. 

The LTAF is a new category of authorised open-ended fund specifically designed to invest efficiently in long-term, illiquid assets. Illiquid assets include venture capital, private equity, private debt, real estate and infrastructure. The FCA claims that they can provide a useful alternative investment opportunity for consumers able to bear the risks of such investments. They also say that “an ability to invest in long-term illiquid assets, through appropriately designed and managed investment vehicles such as the LTAF, is also important in supporting economic growth and the transition to a low-carbon economy”. But don’t private equity investment trusts already provide this?

This is surely an accident waiting to happen, particularly as it is proposed to exclude such funds from the Financial Services Compensation Scheme (FSCS).

The FCA also states that “While these investments can have a higher risk of loss than diversified portfolios of listed equities or bonds, they can also potentially deliver higher long-term returns in exchange for less liquidity”. Where is the evidence for this? Selling illiquid investments to retail investors via open-ended funds is a recipe for mis-selling claims and significant losses as we have seen with some property funds for example.

The AIC has come out strongly opposed to these proposals – see their press release here: . To quote from it: “As the underlying assets are hard to sell investors run the risk of being trapped in the fund in stressed markets. It could cause significant hardship if investors cannot access LTAFs held in pensions. The additional measures proposed by the FCA do not go far enough to secure reliable redemption and prevent these problems emerging”.

Has the FCA consulted experienced private investors before proposing these measures? Or is it being supported solely by financial institutions wanting to sell more such funds?

The proposed regulations of LTAFs are very complex and are unlikely to be understood by private investors while it is not even clear that they will qualify for ISAs.  

Private investors should respond to the FCA’s public consultation on these proposals – available from the first link above.

Roger Lawson (Twitter:  )

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Should Pension Funds Invest More In Equities?

This article was prompted by an item in Investors Chronicle entitled “Should pension funds be used to prop up UK markets? I think the simple answer is NO. But apparently City Minister Andrew Griffith said at a conference that “the Chancellor is spending a lot of time looking at how we can better unlock the billions of pounds held in UK pension schemes”.

Certainly one major concern is that the share of the stock market now owned by pension funds and insurance companies has fallen in the last 25 years from 53% to 6%.

Before the last war, pension funds invested almost exclusively in fixed income bonds and shares. But in the 1950s and 60s this situation was reversed as high inflation made fixed income securities less attractive. George Henry Ross Goobey, pension manager of the Imperial Tobacco pension fund, was one of the leaders of this revolution.  In 1955, Ross Goobey persuaded the trustees of Imperial Tobacco’s defined-benefit pension fund, one of the largest pension funds in the U.K., to adopt an idiosyncratic investment policy investing exclusively in equities. Due to the subsequently stellar performance of the pension fund, Ross Goobey acquired a reputation as “one of the most successful professional investors of all time” and, through his public advocacy of equity investment by pension funds, as the “father of the cult of equity – see Reference 1.

But company directors and pension fund trustees have become much more risk averse in the face of tougher regulations and such scandals as the collapse of the BHS pension fund where company directors tried to get rid of their pension liabilities.

We have now swung to the other extreme where pension fund managers are looking to have guarantees that they can match their future pension liabilities with no risk. That typically means buying gilts. But this has meant that investment firms have adopted leveraged Liability Driven Investment schemes (LDIs) which aim to produce higher returns than gilts. This came to a sticky end when interest rates rose sharply and pension funds had to dispose of holdings to match their collateral liabilities.

There is no way you can avoid risk if you wish to get a decent return. Investing in equities is more likely to give a good long-term return that is better than fixed interest, particularly in periods of high inflation which is where we are now.

The cult of the equity may have gone too far in the 1970s but the reversal is just as disconcerting and has led to the lack of investment in UK companies that we now have.

How do you fix the problem of lack of investment? Obviously you could do it by juggling the tax system to provide more returns on risk investments like equities. But the Government needs to look at why pension fund trustees and managers have become more risk averse which has resulted in lower returns. Excessive regulation is certainly one issue to look at.

More direct intervention in what pension funds can invest in is surely a mistake. Bureaucrats always fail to pick the commercial winners and forcing more investment in equities will undermine the market equilibrium.

Ref. 1 Cult of Equity

Roger Lawson (Twitter:  )

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Should ISAs Be Simplified? And AJ Bell Results

This morning AJ Bell announced their interim results. It is one of the UK’s largest investment platform operators and has been very successful at growing its customer base through having low charges and a simple user interface, particularly for SIPPs.

Customers grew by 7% in the platform business and overall revenue was up 37% with profits up 61%.

But the CEO has promoted the idea of simplifying the ISA regime. He says “Over the years a once simple product has fragmented into multiple versions with different rules and benefits. In proposals presented to the Chancellor, we have outlined a system which combines the many current versions into one ISA product that would be easy for people to understand and would encourage more investment”.

I am all in favour of that proposal. The financial world is complex enough and the different ISAs can potentially confuse and discourage new investors.

Roger Lawson (Twitter:  )

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Young People’s Poor Knowledge of Investments

The AIC published an interesting press release last week. It was headlined “Young people more aware of cryptocurrency than any other investment”.

Young people they class as those aged 20-40 but it shows an astonishing ignorance of different types of investment. Even more astonishing is that they rely on web searches, Instagram, YouTube, Facebook and Twitter as sources of financial information.

Some 70% of survey respondents were aware of cryptocurrencies such as Bitcoin, but only 18% of investment trusts.

The fact that most of these media that young people rely on are motivated by the desire to sell something to investors shows how easy it is for young investors to get misled. You can see why new investors are so easily sucked into speculative investments of one kind or another.

See for the full press release.

How to solve this problem? Education is one key and at a young age. But anything taught in school at age 15 will soon get forgotten, and be swamped by clever marketing by financial promoters.

ShareSoc has been working on this issue via their “Investor Academy” (see ) but it does not seem to be having a great impact so far. There is little incentive to learn.

The only way I can see this state of affairs improving would be if investors had to pass a qualifying examination before they could invest in some types of investments. Having “health warnings” on cryptocurrency investment schemes is not enough.

Roger Lawson (Twitter:  )

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IBPO Delisting – A Bloodbath for Investors

There was an interesting discussion last night at the Mello meeting on the recent announcement of a delisting from AIM of iEnergizer (IBPO). IBPO is controlled by 83% shareholder EICR (Cyprus) Ltd whose major shareholder is Anil Agarwal. So he will have no difficulty passing the required 75% votes for delisting.

Unlike common practice, there is no offer to take out the smaller shareholders at a fair price. The share price dropped precipitately on the announcement but has bounced back this morning. This seems to be on the hope that the dividends will be maintained and just one year’s dividends might pay for the shares.

I personally would not bet on that because there are many ways a controlling shareholder can take out value from a delisted company.

I have been a holder of delisted AIM shares in the past and one such case did end happily after a few years but others did not. The key is to avoid investing in companies that could put you into such difficult positions. Prevention is better than cure (the company is registered in Guernsey so should be subject to the Takeover Panel Code which might help but trying to block a dominant shareholder from doing what they want to do is very difficult).

I covered some of the warning signs in my book Business Perspective Investing. These are a couple of extracts from it:

Large or Small Director Share Stakes

Common abuses of corporate governance codes happen when one or more directors have a controlling stake in the business, i.e. own more than 50% of the equity. Even owning 40% usually means they can win any vote and effectively have control.

One danger of such large stakes is that they might be tempted to take a company private if they think the shares are undervalued or they are simply fed up with sticking to the rules required of public companies.

On the other hand, it is important for directors to have a significant interest in a company’s shares so as to align their interests with that of other shareholders. Having a substantial interest provides a powerful incentive to promote the success of the company.  This particularly applies to executive directors but even non-executive directors should have a non-trivial shareholding. It’s even better if the directors acquired their share stakes by purchasing shares in the market rather than simply being a beneficiary of nil-price share option scheme awards.

Share stakes of directors should be big enough to be meaningful and to provide good incentives but not so large that they can dominate the board and other shareholders.

Company Domicile

Where a company is registered is definitely worth checking because it affects the laws under which the company operates. Even in those more developed countries with stronger traditions of protecting investors, e.g. the USA, you may find that there are differences between states. Delaware is generally viewed as more friendly to companies and their management than to their investors.

UK listed companies whose operating base is overseas may not be subject to the Takeover Panel Code (an important protection for minority shareholders), and can often create legal difficulties when wrong-doing needs to be pursued.

It is unfortunately a fact of life that some countries are viewed as protecting investors better than others. For example, when problems with Chinese AIM companies arose in recent years, many investors found it was difficult to enforce their rights in law or take action against errant directors.

In general, for UK listed companies, any domicile outside the UK adds to the risk of investing in a company. Domicile in the Channel Islands or Isle of Man is also not ideal [because company law is different and any shareholder meetings are likely to be held there thus discouraging attendance].

You might ask yourself why did this company register in the Channel Islands? There may be tax reasons why property companies/trusts do so but IBPO is not one such.

Another big question to ask is “do you trust the directors to act in the interests of all shareholders rather than just their own interests?”. Their recent actions clearly answer that question.

Roger Lawson (Twitter: )

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