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March 17, 2015updated 11 Jan 2016 2:36pm

The best things the chancellor can do for the wealth management industry

By Spear's

This week, the chancellor is expected to announce his final budget before the general election. With the UK being home to one of the largest financial services centres in the world, the City is eagerly waiting to hear how the government is planning to help businesses to thrive and grow in fiercely competitive market conditions.

Ahead of this week’s key announcement, the Wealth Management Association (WMA), the trade body for the investment community, sets out their key recommendations that they would like to see implemented by the government, in order to help the financial services and wealth management industry retain its global leadership status.

Ensuring the Financial Markets Enable Growth

The UK’s growth businesses talk of their funding options in terms of a spectrum, ranging from loans from friends and family at one end to a full stock market fundraising at the other.

Crowd funding, peer-to-peer lending and business angels are all possible solutions for smaller companies, and all are possible stages on that funding spectrum. Reviewing the process for bringing SMEs to the stock market would complement the work the Government is currently doing on helping growth businesses gain access to finance. We believe flotation as a public listed company is the most desirable outcome: not only does it help the company to raise the funds at the most efficient price, but it also imposes market discipline on a company: a greater plurality of owners; a codified standard of governance; and greater scrutiny by market authorities.

We propose a Government-led industry review of the process of bringing companies to market (both SMEs to the Alternative Investment Market (AIM) and larger companies to the main market of the London Stock Exchange) to establish whether anything more can be done to help growth businesses raise the capital they need.

This could look at a number of areas including:

– The role of corporate advisers, in particular understanding why equity issues which would be attractive to retail investors are only made available to institutions. The float of ScS, the furniture retailer is a recent example.

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– The role of nominated advisers (nomads) on AIM, to better understand the processes by which they decide whether to proceed with institutional placings or full flotations.

– Particularly on AIM, individual investors provide much of the liquidity but are shut out of too many flotations and have to purchase shares in the secondary market, often at a considerable premium.

– The role of the UK Listing Authority (UKLA), in particular whether UKLA’s listing requirements and guidelines are disincentives to marketing equity and bond issues to retail investors.

– Existing and proposed EU legislation, in particular MiFID II, to consider whether it imposes barriers on the ability of companies to raise equity capital from retail investors.

Encouraging Investment in UK Companies through Tax-Efficient Savings

Successive governments have used tax-efficient investment schemes – from TESSAs to PEPs to Individual Savings Accounts (ISAs) – as their chief device to try to encourage a long-term savings culture among the public. ISAs have been particularly successful because they have also helped businesses, as people have been encouraged to invest directly in UK companies. More recently, this concession has been extended to shares in growth companies on junior markets such as AIM.

We believe the ISA is not only the latest but also the best of the schemes designed to encourage people to build their wealth incrementally over months and years, along with its predecessor, the PEP. It has always been a tax concession designed to encourage people to save or invest gradually. The introduction of the Junior ISA affords families the opportunity to extend this benefit to their children, and has been a welcome development.

The ISA could in time become a more versatile policy tool, helping the Government to achieve other goals while always ensuring it encourages direct investment in UK businesses. The stamp duty exemption on AIM shares could be extended usefully to equity purchases in tax-efficient long-term investments such as equity ISAs and Self-Invested Personal Pensions (SIPPs), with negligible impact to the Exchequer but providing a further boost both to investors and to the companies in which they invest.

ISAs already serve as a more flexible complement to personal pensions. This flexibility could be extended to enable individuals to occasionally deposit cash windfalls into ISAs. A brief investment window could be opened for individuals every 10 years or so – a period of a few weeks in which the individual could invest any larger cash sums such as inheritances or other lump sums, subject to appropriate limits.

Homebuyers Accounts

Given the length of time it now takes for individuals or families to save for a deposit on a property, the WMA believe that it would make sense to have an equities based homebuyer account, separate from ISAs, that allows individuals to save in shares and/or funds, tax free, so long as they used money to buy their first property.

Compulsory Quarterly Reporting

To reduce and prevent secret briefings to large fund managers or shareholders, the WMA calls for a level playing field for small investors via the Government or regulators enforcing the public quarterly reporting of funds.


The members of the Wealth Management Association fully support the Government’s commitment to sustaining the UK’s economic growth. Our member firms support companies at all stages of their development in ways that are beneficial to both, and which contribute to the consequent rise in the UK’s GDP growth.

Liz Field is chief executive of the Wealth Management Association

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