With the attack by the Government on annuities in the budget and the revelation that the FCA is to look into the treatment of some policyholders such as those in “closed” funds, both investors in these companies and their directors must be somewhat incensed. Indeed the Financial Times reported this morning that half a dozen of the City’s top institutional investors have consulted a leading law firm over alleged “market abuse” in the way the latter review was disclosed. It seems the news came out after officials told a Daily Telegraph reporter but it was not fully and properly disclosed until several hours later. So it is suggested that the market got a misleading view of the scope of the investigation for some time.
Comment: Legal action against the FCA is exceedingly difficult because it generally has legal immunity under the relevant legislation, so this is surely just “hot air”. I can’t say I am very sympathetic to the plight of the insurance companies now that they have suddenly found that the Government is no longer on their side in all matters. Historically the UK financial scene has been distorted in favour of the big financial institutions so the pension, insurance and ISA regimes were seemingly designed more for their benefit than that of the retail investors whose money they are holding. That is one reason why the returns on pensions and other savings in the UK have been so poor, with over-complicated arrangements leading to high charges and poor returns. This has been compounded by regular scandals of one kind and another over such matters as poor advice.
It is surely a healthy change that those in the Government are now taking a more independent view of the merit of the UK financial markets and how they operate.
Kentz Changes Stance on Pay
Kentz has apparently decided to give shareholders a vote on pay at their forthcoming Annual General Meeting according to another report in the FT. They have previously avoided the necessity to do this because they are registered in Jersey and hence are not bound by the relevant regulations requiring such votes.
Last year the company withdrew two resolutions shortly before the AGM regarding bonus schemes, and the Chairman of the Remuneration Committee got considerable votes against his re-election. There is a report on both last year’s AGM and the previous year’s meeting on this page, which make very interesting reading (one written by me in 2012 and one by another ShareSoc member in 2013). I note that at the 2012 meeting, I raised the issue of the lack of a remuneration vote personally with the Chairman and someone else raised it in the meeting last year. So finally we have had an impact it seems.
It’s always good to report on the positive impact of representations by ShareSoc and others at AGMs because some investors think that such meetings have no benefit. But that is not my experience, even if institutional representations behind the scenes also contribute of course.