No pain, No Gain: Small fish are being caught out by net 'revolution'

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The Independent Online

I am growing increasingly concerned about the remorseless campaign to force all shareholders to embrace computers. My anxiety has nothing to do with the inevitable desire of stock market firms – as well as fund managers and professional investors – to adopt all the various aspects of hi-tech trading now open to them. After all, it is more than two decades since eyeball-to-eyeball floor trading was replaced by "Big Bang" and the consequent perils of the world wide web.

Clearly this electronic age is a windfall for the professional player. Costs have been slashed, trading is much faster and truly global. It is often unwise to stand in the way of progress... yet is it fair to impose it on unwilling participants.

I suspect many small, buy and hold shareholders – the investors this column hopes to accommodate – would go along with the old quotation: "When it is not necessary to change, it is necessary not to change". But such sound sentiments are ignored in these crazy days.

The City – and, indeed, most of the media – seem convinced that the world and its dog is logged on. But many people are not online. They are prepared to forsake the joys of screen gazing. Some, but not all, are elderly. And many of them are small investors, often drawn into the stock market by past privatisations and demutualisations.

I have on a number of occasions complained about the campaign to abolish paper share certificates; so-called dematerialisation. Such a sacrifice is totally unnecessary. Paper certificates should be allowed to continue, in tandem with electronic recording. It should be a matter of choice. If shareholders want to retain the long established right to hold certificates they should be allowed to do so. After all, certificated shareholders – I am one – pay extra for the privilege.

Now, the fashion is to replace paper communications with online messaging. Stagecoach, a company that has made a resounding contribution to the No Pain, No Gain portfolio, is, as far as I am aware, the first to attempt to inflict e-messages on its shareholders.

I say "inflict" because the transport group has adopted the inertia approach. Shareholders who are happy to go online need do nothing. But those who want to keep the postman calling have to contact the group's registrars. I would have thought it would be more appropriate for shareholders that want to change from paper to email to have to make the effort. After all they are the ones switching.

The group's company secretary, Ross Paterson, has an interesting way of describing his methodology. He tells shareholders: "Website communication with shareholders will now be the default position. If you do not respond to this request in 28 days, the company will take that as consent from you to receive communications from the company via its website". The letter is dated 2 July. So the 28 days are already up. However, in another paragraph, 10 August is given as the deadline.

Although Stagecoach is retaining the postal option, I would not be surprised if, in the fullness of time, it – and others – attempt to inflict the internet on all shareholders. I hope not. Yet the campaign to force investors to log on appears unremitting. After all, the Institute of Chartered Secretaries and Administrators, the organisation striving for the abolition of paper certificates, has made no secret that its eventual aim is that only electronic versions are available.

Should paper certificates be killed off, shareholders not prepared to convert to online replacements will have to be content with a paper communication, something resembling, it seems, a bank statement.

The electronic brigade, including Stagecoach, say their endeavours reflect environmental considerations. And, of course, there is a cost-saving element. Yet the paper chase will continue.

Bank statements may be poor substitutes but, until annihilated, will arrive courtesy of the postman. And Stagecoach says that when it contacts shareholders via its website it will notify them "by post or by e-mail". Indeed, any shareholder that fails to opt out will receive a posted notification that an announcement has occurred. So no one will be cut off.

Even so, democracy is being undermined. Small shareholders, although unpopular in the City, are an integral part of the investment scene and their position should not be eroded by this electronic charge.

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