Listed Investment Companies (Classification etc) Bill [HL]

Lord Altrincham Excerpts

2nd reading
Friday 15th November 2024 Lords Chamber

[Lord Altrincham (Con)]

My Lords, I thank the noble Baroness, Lady Bowles, for all she has done on this topic and for bringing forward the Bill. I also thank the noble Baroness, Lady Altmann, for her work on this.

It is remarkable, as the noble Lord, Lord Hodgson, pointed out, that we need to look at the fees and how they are shown for these kinds of investments. After all, we have a very traditional structure of investing in this country, and they have wound up being compared to exchange-traded funds, which come from a totally different history of regulation, as they come from the mutual fund industry. It is exactly as the noble Baroness, Lady Kramer, said: it is just a mistake how we come to be in this position. We thank the Government for taking things forward.

We discussed the importance of promoting economic growth within the financial regulations as part of the Financial Services and Markets Act last year. The importance of long-term investment is clearly an objective of the current Government. Listed investment companies are of course in part investment vehicles for longer-term investments, like infrastructure. They give investors exposure both to other listed companies and to unlisted investments. They were historically and substantially owned by insurance companies but, over time, have become attractive forms of investment for private client investors. Therefore, the fee comparison issue matters and must be disclosed properly. Some of these disclosures have been attempted in the accompanying information disclosures, but comparison is then difficult. While this may be a technical disclosure issue, it inevitably becomes a cost of capital issue and an example of where regulation weighs on investment.

The Bill will be very helpful in addressing a real issue right now in asset management. The Bill should reinforce the United Kingdom’s financial markets, increase transparency and protect the interests of both institutional and retail investors. The Bill allows individuals, pension funds and other stakeholders to align their investments with their goals, values and risk tolerances.

The UK’s financial sector has long been one of the cornerstones of our economy and an attraction for global capital. This Bill, in creating, clearer guidelines and definitions, will not only protect investors but enhance the credibility of UK-listed investment companies, and strengthen a form of investing that can benefit the UK economy more broadly.