13th October 2016
Hargreaves Lansdown’s chief executive Ian Gorham has written to the Prime Minister Theresa May, on behalf of the hundreds of thousands of ordinary investors who have been denied the opportunity to share in the forthcoming sale of Lloyds Bank shares.
The firm argues that the withdrawal of any retail element to the share sale, in favour of an institutional placing, has put the interests of City institutions ahead of ordinary investors. It argues that given the public’s bailout of Lloyds, the decision to restrict the share offer, citing among other things, volatility is “patronising and disgraceful”.
The letter is below
Dear Prime Minister,
On behalf of Sid
I write on behalf of the 374,000 retail investors who have yet again seen City interests prevail over those of ordinary people.
By withdrawing any retail participation in a potential Lloyds PLC share offer, UKFI and the government has denied the people of this country any opportunity to invest in a share offer that would have been of great interest to them.
This government has claimed it will represent working people and stand up to big institutions. Yet when the chance came to engage with working taxpayers willing to invest in our economy, it preferred to snub the small investor in favour of the City.
Money from taxpaying, working people bailed out Lloyds plc. The public therefore owns any stake in it. Not giving them the opportunity to participate in its sale is disgraceful and patronising.
The decision is all the more extraordinary given the success of the 2013 Royal Mail offer, which 690,000 retail investors supported. New share offers are known to encourage the public’s interest in investment, a good thing for our country, economy and building ordinary people’s long term wealth. A substantial number of our interested registrants we have no record of having invested before. This would no doubt be replicated through other stockbrokers. A great opportunity to engage more people with personal investing has been lost.
The government and UKFI stated that it “took advice from experts” and blames “market volatility.” Neither are valid excuses:
Our advice to the Economic Secretary to the Treasury supported a retail share offer and advised that such an offer could be simply delivered. The government has therefore acted against the advice of Hargreaves Lansdown, the leading retail investing expert, in coming to the decision to exclude small investors.
“Market volatility” no doubt sounds suitably official, but is just the technical term for stock markets rising and falling. Stock market rises and falls apply equally to retail and institutional investors alike. Retail investors are equally aware of the nature of stock markets, that investments can rise or fall, and they happily accept this every day in the knowledge investing in funds and shares generates far better long term returns than cash.
The resulting situation is that UKFI will now pursue a cosy private sale through wealthy investment banker institutions.
We urge the government that a rethink of this decision would be a victory for common sense. In order to support a Lloyds PLC retail offer for the public, Hargreaves Lansdown stands willing to provide its services for no fees or commissions payable by UKFI or the Treasury, and with our usual zero purchase fees for investors in share offers.