No Pain, No Gain: Millions to suffer this draconian modernisation
Saturday 28 October 2006
Nine million private shareholders, the Cinderellas of the investment world, are set to suffer more humiliation unless the self-appointed powers that dominate the City indulge in a little common sense.
The battle to retain paper share certificates, for years the accepted proof of share ownership and favoured by most small buy-and-hold investors, is not going well. Two recent surveys have favoured the introduction of some form of electronic registration. I remain convinced that the abolition of certificates would be a retrograde move. It would ignore the needs of the nine million certificates supporting small shareholders, many owing their stock market presence to high-powered Whitehall privatisation campaigns.
The continuing advances in online systems and perceived cost-savings for the securities industry are behind the campaign to consign certificates to the dustbin. It is appropriate that online registration is known as dematerialisation - an awful word that only internet nerds would embrace.
The Institute of Chartered Secretaries and Administrators (ICSA) is the driving force behind the attempts to kill certificates. Earlier this year, it carried out one of those consultations for the Government. The result - predictably - was heavily in favour of electronic registration.
But the whole exercise seems flawed. It was not structured for private investors - the main casualties - and only 206 views were received. In many walks of life, such a small sample would be treated with utter contempt. But no. The fevered dematerialisation brigade is undaunted and pressing ahead.
The 206 replies came not only from shareholders but also from such interested parties as stockbrokers, issuers, nominees, trade organisations and professional groups. I could have told the ICSA that the City likes dematerialisation. Indeed, I would be surprised if any of them voted for certificates.
Yet, even allowing for the heavyweight contingent, 31 per cent favoured the retention of certificates. A further 3 per cent declined to "give an opinion". Others gave qualified responses. So, the 66 per cent in favour, with its strong City element, is hardly a resounding shareholder endorsement. Even online supporters admit it is the small investor in the firing line. Many would face huge difficulties.
Certificates back around 15 per cent of shares - there are some 10,000 paper trades a month - with institutional investors representing the major force in electronic registration. And nullifying City moans that certificates are too costly is the fact that investors who require certificated trades pay extra for the privilege.
TD Waterhouse, the major private client stockbroker, has also conducted a survey that could threaten the continuation of certificates. It polled what it calls a cross section of 750 of its execution-only customers and no fewer than 80 per cent favoured the end of the paper chase "if the new system were to offer the same benefits and rights of ownership that certificates currently offer".
I wonder about the relevance of Waterhouse's contribution. Before the poll, it would have been aware of its customers who like certificates. I know, because I am a Waterhouse-certificated customer and, like others, pay for the privilege. Needless to say, my views were not sought.
Holding shares online is fraught with danger. As systems get more sophisticated, so do the crooks. And there are doubts, as Waterhouse seems to acknowledge, whether shareholder rights will be reduced. It also emerged there could be problems with some PlusMarkets shares. And what about unquoted companies?
With the extra charge for certificates, paper trades must at least wash their face, even if they are more troublesome for the securities industry. Otherwise, they would be banned or priced out of reach. Many small shareholders are buy-and-hold investors. They are not day traders; most would regard a deal a month as overtime. And with approaching half the population not online, it is likely that many would be cut off from their investments.
Dematerialisation advocates should also consider that there is, for example, no pressure for all bank accounts to be online. So why not let paper and electronic share registration continue in tandem? Compulsion is unnecessary and draconian. Surely a nine million-strong army does not deserve such callous treatment?
Donald MacInnes: 'I have to have £500 a month spare from now until at least 2035'
HSBC becomes first bank to offer five-year fixed rate mortgage with interest rate under 2%
Are finance apps stealing your personal data?
Crippling PFI deals leave Britain £222bn in debt
Pension freedoms: How to deal with cold calls from scammers
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 3 Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...
Day In a Page
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000