Trusts slam £7bn cost of EU regulations the regulator could have already ditched
A joint letter blasted the UK's "flawed" approach to representing investment trusts (Photo by Mike Kemp/In Pictures via Getty Images)
Over 130 of the City’s most influential investment trust managers have signed a joint letter to the chancellor to abandon damaging and antiquated EU regulations.
According to a report in the Mail on Sunday, British investment trusts are missing out of £7bn from a “flawed” interpretation of EU rules that the UK government is choosing to follow, despite not being subjected to them as a result of Brexit,
The letter, signed by City luminaries including Abrdn chairman Sir Douglas Flint, contends that the failure to address this is “driving British investors’ capital into companies listed overseas and contributing to the poor performance of the UK stock market.”
“Fixing the problem by doing the same as the rest of the world could restore over £7bn per year of lost investment – with no cost to the taxpayer,” the letter continues, calling on the government and the Financial Conduct Authority (FCA) to restore the UK’s “competitive position”.
AJ Bell, one of the UK’s largest investment platforms, has backed the campaign, along with senior politicians including Baroness Altmann who also want a new era of financial health for the market.
Currently, institutions and wealth managers must disclose investment trust costs as part of their own costs, making the products look more expensive.
Last week, Abrdn warned that reforms around these cost disclosures are “at risk of stalling” after Jeremy Hunt’s Spring Budget made no mention of broader alterations for the sector.
The news comes weeks after trust expert Winterflood revealed that expected demand for investment vehicles had fallen to the lowest level since the questionnaire began 12 years ago, with only 63 per cent of respondents said they were planning to be net buyers of investment trusts.
The London Stock Exchange has been rocked by exits and a slump in listings over the past year, with nearly 100 firms having left the capital since January last year and only 25 joiners to the market, raising just £1.3bn cumulatively.
