Just a quick post on one of the things from CP10/29 that hasn’t picked up so much coverage in amongst all the hoohah on rebates, admin payments and so on.

Later on in the CP, our narrator says “We are proposing new rules to ensure that investors who access authorised funds through intermediate unitholders receive the same information as they would if they had invested directly.” (CP10/29, 5.17, p.33)

Yes, very nice, you say, thumbing through looking for the good bits. But hang on there. Let’s read that again. All investors using a nominee (now called an intermediate unitholder, that’s cleared that up) should get the same amount of info on corporate actions as if they held the fund directly?

The lang cat has spent some quality time in and around corporate actions, and the sheer weight of them is enough to stun a team of a dozen donkeys. Investors struggle under the weight of paper (or e-paper) they receive at the moment. Are we going to increase that load? Do we think this will increase investor engagement or, er, do the opposite?

The truth is that many notifiable and even significant corporate actions are technical in nature and do not impact the underlying integrity of the investment in any meaningful way. Investors, other than the really, really engaged ones, just don’t need to donate valuable brain real estate to them.

The FSA’s proposal to send secure e-messages to an investor’s password protected area won’t work because most investors a) aren’t currently given access by their IFAs and b) don’t go to the sites even if they are. So we’ll soon be back into belt-and-braces flurries of incomprehensible paper, scratching our heads and wondering where it went wrong.

One of the benefits of nominee investing is that investors don’t have to deal with all this stuff. Let’s find a more practical solution.

The title for this post, incidentally, is a quote from a client of one of the bigger wrap platforms to his IFA when he got what can only be described as a suitcase full of unit statements after setting up an admittedly quite large portfolio. He shoved it all at the IFA and said a fairly impolite version of the above.

I think we’ll all be hearing that a bit more if this proposal goes ahead.