Listed Investment Companies (Classification etc) Bill [HL]

Baroness Altmann Excerpts

2nd reading
Friday 15th November 2024 Lords Chamber

[Baroness Altmann (Non-Afl)]

My Lords, I too congratulate the noble Baroness, Lady Bowles, on bringing the Bill forward. I also thank Ministers and Bill team officials who have worked so hard on this issue, and the many industry experts, and Herbert Smith Freehills’ legal team, who have made such contributions to this Bill and to my previous Private Member’s Bill, which received support from all sides of this House in the last Session and from which this Bill follows on.

The aim, as we all know, is to protect and revive a success story of the UK’s financial markets—a global leader. Although some may perceive this to be a higher-risk investment, for most consumers it is a lower-risk method of achieving exposure to sustainable growth or real estate investments than buying an individual company’s shares. This is a diversified spread, managed expertly, of a number of companies, so the overall risk should be lower, yet the current regulations and legislation treat these as if they are much higher-risk.

It is very good to see that we have laid the PRIIPs and CCI statutory instruments, and that the Treasury has issued its own statement. The Government seem to have encouraged or enabled the Financial Conduct Authority to issue emergency forbearance that states that the current practice in the markets, which this Bill aims to correct, is inappropriate and should not continue.

Currently, closed-end listed investment companies and their investors, or potential investors, are still not being treated fairly. Were the Bill to be adopted immediately, or as quickly as parliamentary time allows, that would solve the problem. The forbearance was supposed to do that. I will ask the Minister about this. The CCI legislation intended to replace the current system seems still to want to cover listed closed-end investment companies, even though there are clear reasons for them to be treated as an independent sector—they are not like open-ended funds.

Indeed, a highlight are the real estate investment trusts, about which I would be grateful if the Minister could speak today or write to me on. Will the new legislation the Government have proposed include companies such as British Land and Landsec as listed investment companies under the CCI regime? Currently, that seems to be what is implied: they will be classed as CCIs, which would be a significant issue in the market. Does the Minister know of any other country that treats its investment companies, such as REITs, as if they were consumer composite investments?

The CEO of the FCA said, in his reply to the House of Lords Financial Services Regulation Committee:

“Under the Consumer Duty, platform firms should be determining value and listing for retail consumers on a holistic basis, rather than any single data line in the EMT”.


That means that the current practice in the markets is not working for the consumer. I ask the Minister to respond to us with the Government’s attitude to what is happening, as the retail platforms seem to be deliberately not complying with the Government’s wishes.