Let's put an end to investment gobbledegook

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The Independent Online
RETURNS nudging 20 per cent - why should we complain? It has been a vintage year for stock market investment. Many private investors may have done even better, given the takeover fever that pushed up the prices of shares in the regional electricity companies (Recs) especially. But I am still going to be a grouch.

It has taken 15 years of strenuous effort to develop wider and deeper share ownership in the UK. More than 11 million of us now own shares directly - overwhelmingly as a result of privatisation issues.

But despite strong returns this year, there have been some worrying developments for small investors:

q If ever there was a subject that the private investor rightly highlights as a failing of the investment world, it is clarity of language. Stockbrokers and investment people nod sagely when this question is raised, but all too often, given the slightest excuse, revert to ancient terms and hieroglyphics. This year has seen inches or even feet of bumf blocking our letterboxes, mainly thanks to the takeover fever that has infected most of the Recs. These papers, while no doubt full of legal requirements, put comprehension beyond the reach of us mortals. Unfortunately, there was valuable information in them.

q The operational changes of the stock market throughout the year provided another opportunity for the goblins of confusion to play havoc. Some stockbrokers used a shortening of the time allowed for settling share trades to pull investors into administratively convenient arrangements called nominees. The well- organised can still ensure that investors get annual reports, vote freely at AGMs and get shareholder perks. But not all stockbrokers have been so enlightened.

q In the UK we can take advantage of a range of tax breaks to help our investment returns. But these have been introduced not out of beneficence but because the Government wants us to save, indeed to start saving a lot. Why? Because the more we save the less they will have to pay to support our ageing population. But these investments have been designed by economic warlocks, and not in a consumer-friendly manner. The whole area of tax-free investment needs rationalisation.

q What demon designed the National Grid flotation? Speak to brokers, financial journalists, bankers and they were all confused. Let alone of course the poor investor. I was particularly annoyed at the changing views coming out about PEPs and Grid shares, and I suspect many investors may have incurred an avoidable extra tax liability.

So is this the last stand of the private investor? Absolutely not. The main drive is coming from two sources: company share schemes for employees, which the Chancellor encouraged in the Budget, and greater understanding as individuals realise that they must take greater control of their financial future. The forces of darkness can be repelled.

q Justin Urquhart Stewart is business planning director at Barclays Stockbrokers.