Abrdn’s Interactive Investor urges UK plc plain English

Abrdn-owned platform Interactive Investor (ii) has written a ‘Dear CEO’ letter to FTSE 100 company chairs and the UK’s 20 most-held investment trusts on the ii platform by value, urging them to improve communication with retail investors.

ii is the UK’s second-largest investment platform for private investors.

“At a time when the government is looking to boost ownership of UK shares, it is the right time for UK plc to look at how it speaks to private shareholders …” said ii.

“The platform is to launch a good practice ‘AGM Experience’ scorecard that will measure how well UK plc engages with private investors in the lead up to, during, and immediately after AGMs.

“It will focus on FTSE 100 companies and the 20 most-held investment trusts on its platform by value.

“The importance of retail shareholder engagement and participation is an issue gaining momentum, and ii recently became the first UK investment platform to introduce voting on its app.

“But ii believes even more retail investors would engage with their shareholdings if their shareholder communications were written in ‘plain English’.

“The platform has today written an open letter to UK plc to forewarn that it will be shining a light on their shareholder communications, and will be calling for improvements.”

The methodology has been created by Interactive Investor in partnership with financial services consultancy The Lang Cat, which will be conducting the research on ii’s behalf.

It has been peer reviewed for relevance and fairness by ShareSoc and UK Shareholders Association.

As well as looking at companies that could do better, it will also aim to celebrate good practice.

Interactive Investor Richard Wilson said: “With the clock ticking on Consumer Duty, it’s curious that the shareholder notifications we pass on to our customers are a world away from the standards investment platforms are held to.

“It matters, because badly written shareholder notifications are a barrier to engagement, lead to poor decisions and create stress.

“Resolutions like the environment, pay, pre-emption rights, or investment trust continuation votes can really matter, and they can also have an impact on our customers’ wealth.

“While companies are regulated in the way they speak to shareholders, let’s do more to engage in a retail friendly way.

“As well as looking at companies that could do better, we will also aim to celebrate good practice, highlight which companies are going above and beyond in a particular aspect of engagement, and encourage all firms to continue to do better.”

Lang Cat director Steve Nelson said: “There’s a lot of momentum and a lot of goodwill around shareholder democracy at the moment and we need to seize that opportunity.

“We’re excited to be launching this benchmarking scorecard to celebrate good practice and encourage all firms to continue to focus on the important topic of shareholder democracy and to invest in improvements.

“It’s clear from AGM attendances and voting data that we face a huge challenge in getting shareholders to fully understand and exercise the very tangible rights that come with having a shareholding.

“Direct-to-consumer platforms have been doing their bit and have been making great strides in helping facilitate these rights for their customers, but that can only go so far.

“We believe it’s time to shine some light on which companies are making it as easy as possible for their shareholders to engage. Who is communicating best? Who is going above and beyond? Who is making their company as accessible as possible?

“These are some of the questions we’ll be asking as we go through this assessment process. For whatever reason, it’s clear that the majority of customers do not fully understand or engage with the very real collective power that they have as shareholders. It’s time to do our bit to help put this right.”