Issues

UKSA's Policy Team has focused on a range of issues, including:

Shareholder rights: Shareholder rights will include cases where we believe shareholders have legal rights, but those rights are apparently being waived or ignored by companies, significant shareholders or other vested interests to the potential detriment of all shareholders; as well as cases where we think shareholders should have certain rights, but do not. An example of the former would be a placing where the company issues a regulatory news announcement before the markets open of the placing of new shares where pre-emption rights have been legally waived. Later, on the same day, the company issues a second regulatory news announcement that the placing has been fully subscribed and therefore closed.

UKSA wrote to the Financial Times to voice concern about the exclusion of retail investors from Severn Trent's recent fundraising.

Dematerialisation: over the years, from its beginning in the 1990s until now, dematerialisation has been eroding shareholder rights. UKSA recently published a position paper that includes ideas on how to reverse this trend.

Non-banks’ impact on investors: we are pleased that the Work and Pensions Committee (WPC) is reviewing “Defined Benefit pensions with liability driven investments (LDI)”. We also identified broader issues within non-banks financial institutions that can impact retail shareholders adversely. We raised our concerns with the Bank of England.

Financial learning: we are pleased that regulators and other bodies are now stating how important financial awareness is. We support the aspiration that each of us achieve control over our finances but we are worried that variety of guidance available confuses rather than educates and can be a soft sell in disguise, encouraging people to buy inappropriate products. UKSA’s wrote to the Financial Times.

Parliamentary scrutiny of the Financial Services and Markets bill: There are two key issues for UKSA: encouraging market competitiveness as a primary objective of the regulatory regime; and giving ministers the authority to challenge financial regulators over decisions they disagree with. The former will create further tensions between the Market’s wants and needs, and Consumer Protection. The latter is a risk to regulatory independence. We are also concerned that proposed parliamentary amendments that add greater consumer protection are being vetoed.

Lack of clarity from company boards on what is material: UKSA has raised this many times, not only with the IASB (see above), but also the ISSB and the FRC. UKSA is now involved with FRC Lab's review of materiality, both as a fundamental concept embedded in accounting frameworks and as a practical tool companies should use to focus reporting on what matters.

UKSA and ShareSoc wrote a joint letter to the Financial Times. Our concerns are about increasing the risk in pension investments for the chance of a greater return whilst ignoring unintended consequences of the proposals being put forward by the Treasury, the DWP and the FCA for the future of defined contribution pensions. The impact on pension funds, arising from the mini budget, revealed that even experts were unaware of the extent to which pension funds were investing speculatively in equities, private equity and hedge funds using disguised borrowings or leverage.

UKSA’s concern about the lack of investor protections surrounding the implementation of the Secondary Capital Raising Review. The FCA is supposed to be looking after this issue. However, despite a request for a meeting, the FCA is not wanting to engage. Our concern is that these changes could leave the door wide open for advisors and intermediaries to push unlisted investments at people who have little idea what the true risks are of investing in these things. And, connected to the subject matter of our FT letter above, we are also concerned about the lack of ‘joined-up thinking about the DWP's proposals on 'Enabling Investment in Productive Finance' (our joint response with ShareSoc is here). This would enable pension funds to invest in much more risky assets than at present.