Friday (11/3/2016) saw the publication of a sound article by Investors Chronicle under the headline “Choose the right way to hold your shares”. It reported on the recently published BIS research paper on shareholding in the UK upon which we have previously commented. It quotes me extensively on the subject including these comments:
“The UK Individual Shareholders Society (ShareSoc) said the report showed “the need for reform”. Roger Lawson, deputy chairman of ShareSoc, says brokers have an incentive to keep investors ignorant of alternatives to the pooled nominee account system as it is in their commercial interest to do so. ‘Stockbrokers are really keen on nominee accounts because if you’re on the share register the dividends go directly to you, but if you’re in the nominee account, they go into the nominee account and typically they stay and the broker gets interest on them,’ he says. ‘People keep a large amount of cash in their stockbroker’s account typically. The other big commercial reason they have is locking the clients in and making it difficult for them to move elsewhere.’
Stockbrokers are reported as saying their clients are not interested in receiving shareholder rights and that nominee accounts are cheaper to run – which incidentally is not true. But it quoted me as responding: “But Mr Lawson believes the low take-up is due to a lack of investor awareness not demand. ‘The problem is that they don’t know what they’re missing because stockbrokers aren’t telling them that they’re losing the rights to vote and have a say in the way the companies they’re investing in are run,’ he says. ‘And they’re also losing the right to receive information or attend an AGM, and they don’t know this.'”
This will no doubt not improve my standing in the eyes of some stockbrokers but the truth must be revealed on why we have got into the current dubious situation where private investors are effectively disenfranchised.
The full article is well worth reading and Investors Chronicle subscribers can read it on-line here: http://www.investorschronicle.co.uk/2016/03/10/your-money/financial-planning/choose-the-right-way-to-hold-your-shares-7D1oPIlJUSD0z6UJHb8PTM/article.html