CITY AND SUBURBAN
Alack, A-Day, what a muddled way to be the plain man's friend
CIIR I STOPHER FI LDES
Avery happy A-Day to all my read- ers, and congratulations to those few who can work out what they ought to do about it. Friday, 29 April is A-Day, the A standing for Authorisation, and from that day on anybody carrying on an investment business without due authority is breaking the Financial Services Act, and can be put out of business and fined or even sent to prison. As A-Day neared, so did the jolly prospect of mass arrests among the mana- gers of unit trusts. The Life Assurance and Unit Trust Regulatory Organisation was supposed to regulate their territory, and membership of Lautro was expected to count as authority under the Act. It doesn't, though. For Lautro to have that Power, its rule-book needed to be approved by Lord Young, and Lord Young has been formally told by Sir Gordon Borne at the Office of Fair Trading that the Lautro rule-book is bad for competi- tion and bad for the individual saver or investor. Lautro has now been forced to back down. The unit trust managers have prudently joined another club, Imro, whose rule-book has got through, and so they will keep their businesses legal — they hope. If they are right, Lautro appears to be surplus to requirements, and may as well wind itself up and save its members their subscriptions. They will find sym- pathy from some of our biggest companies, household names, which are not in the investment business but are in the invest- ment markets — hedging currencies, rais- ing money, buying or selling shares. What Should they do on A-Day? Their expensive advisers differ. The whole tangle of regula- tion, deriving from the Act, has become far removed from its original purpose — to be the plain man's friend and protector against dishonesty and incompetence in the management of his money. The Securities and Investments Board, the Act's principal Instrument, has made bad law worse. That can be expected to change, under the SIB's new chairman, but he cannot change the law. He can, though, ask for it to be changed and say how it should be changed, and I expect him to do so.
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