CITY AND SUBURBAN
Stocks and shares a nice little business if it weren't for the customers
CHRISTOPHER FILDES
Here is a message for people who want to own shares or pensions of their own. They are cluttering up the systems and making themselves a nuisance. They are upsetting established arrangements all the way from the Stock Exchange to the Inland Revenue. This message is not, of course, official. If it were, it would be hard to square with Nigel Lawson's message in his Budget speech this year: The central theme and purpose of the Government's policy is the creation of a genuine popular capitalism. That means wider home own- ership, wider share ownership, and wider pension ownership.' It is no more consis- tent with his plan to widen share ownership on an unprecedented scale by offering more than £7 billion of British Petroleum shares next month, available to the man in the street from his neighbourhood branch of N. M. Rothschild's. Here we are, say the big securities traders, up to our eyes in paper. Most of us cannot cope with the business we have already undertaken. We have brought back every retired clerk to work round the clock through the weekends, and by the autumn we might be just about straight. Then what happens? BP happens. Millions of allotment letters, millions of share certificates, millions of contract notes, uncounted millions of bits of paper, every one of which has to be handled and sent to the right address, every one of which represents money, but nothing like enough money to cover our costs in handling the paper. New custom- ers? They are uneconomic. Who needs them? It is an attitude worthy of a national- ised or recently privatised industry. To the City, which supposedly lives by the effi- ciency and innovation of its markets, it is a disgrace. The Stock Exchange and, specifi- cally, its chairman, Sir Nicholas Goodison, has been lobbying for wide individual share ownership, year in, year out. Sir Nicholas likes to say, and justly, that public own- ership ought to mean ownership by as many individual members of the public as possible. Now the Exchange's prayers have been answered. The number of its custom- ers has been quadrupled, from less than two million to something like eight million, with the most active encouragement, finan- cial and political, of the government of the day. Other industries — the cotton trade, shall I say? — would have been so sur- prised and pleased that they might have said so. This indeed is an opportunity which is being missed right across the City and beyond. The new system of share dealing is in place. Almost everything else to do with share ownership is as it was when the number of investors was a quarter of what it is now. A share certifi- cate, changing ownership, still has to pass through nine pairs of hands . The Ex- change is lumbering towards a new com- puterised settlement system, but I expect that one of the high street banks deploying better systems, more money, more branches and more personal custom- ers — will get there first. Other obstacles to wider share ownership are unconsidered or taken for granted. There was a classic example at the shareholders' meeting of British Gas. The proposal to elect Sir Ian MacGregor to the board prompted Sir Denis Rooke in his wrath to write to his shareholders. This, he told them, cost £700,000. So what does it cost British Gas to comply with all its other obligations to shareholders, to mail out the report and accounts, to pay the dividend? How right is the market, in believing that the British Gas meeting pre-occupied National West- minster registrars for the previous six weeks, so that other customers found themselves in the pending tray? Which will be the first company to pay its dividends by direct debit? How will the Trustee Savings Banks get on with their plan to offer shareholders the chance of a less paper- ridden relationship? Who can, similarly, offer the holders of Personal Equity Plans, Nigel Lawson's prized creation, a cheaper service with less mailing out of documents? What about a new issue whose advertised prospectus need not occupy page after costly page of newsprint, sub-clause after sub-clause? Some of the obstacles are built into company law, and some were put there for the protection of an earlier generation of shareholders. We shall need new law for today's new shareholders. The proven wrong answer is to leave it all to the Stock Exchange to sort out. If everything had been left to the Stock Exchange, it would still have a cosy monopoly, fixed commissions, and no Big Bang.
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