City regulator 'incapable' of protecting investment firms from takeovers
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The City regulator is 'incapable' of acting quickly to protect the UK's investment trust sector from overseas predators, a leading peer has warned. It comes as seven London-listed trusts face a showdown with US hedge fund Saba Capital, which aims to oust their boards and replace them with its own nominees, saying leaders have 'failed shareholders' and made poor decisions.
Baroness Sharon Bowles, a Liberal Democrat peer and board member of the London Stock Exchange, told The Mail on Sunday that the corporate raid on the investment trust industry had been encouraged by the Financial Conduct Authority (FCA) being too slow to respond to problems in the sector, causing trust share prices to suffer, making them prime targets for takeover swoops.
She highlighted leftover EU rules that had made it seem more costly to invest in UK trusts than was the case. This double counting, revealed by The Mail on Sunday last year, has discouraged savers from turning to investment trusts, depressing their share prices.
Action to resolve the issue was promised by Labour and the FCA last year, but only after a campaign by the industry, and has still not been fully implemented. 'I think the slowness of response by the authorities to the cost issue and their lack of understanding going right to the top has led to Saba's campaign and it will be the end game for more investment trusts unless they take fast action now,' Bowles said.
