The FCA has published a speech given by its Head of the UK Listing Authority, Marc Teasdale. The speech is entitled Consumer protection in the listing regime.

In his speech, Mr Teasdale discusses the changes to the Listing Rules that the FCA has proposed in response to recent concerns about minority investor protection, and outlines some of the internal and external debates it had along the way.

When consulting on the changes Mr Teasdale notes that the sell-side had a strong view that there is nothing inherently wrong with the presence of a controlling shareholder in the governance structure of a listed company. The FCA would not seek to challenge this view. The FCA recognises that a significant number of listed companies have large shareholders on their registers, and that the overwhelming majority of them are governed very effectively.

Mr Teasdale also makes the following points:

  • the FCA believes that the correct approach is to read the definition of consumer and therefore investor widely rather than narrowly. Because this definition is so wide, and because the premium listed market serves the interests of such as broad range of investors, the FCA felt that a policy solution focussing purely on one investment model, or on one risk appetite, was unlikely to be fit for purpose;
  • in the FCA’s view, disclosure is the principal (albeit not the only) regulatory tool that it should seek to use in ensuring appropriate investor protection. It is investors themselves, with access to appropriate levels of disclosure, that are best suited to determine whether or not an investment is suitable for their particular circumstances; and
  • the FCA remains very wary of a model that requires the listing authority to make judgements to exclude from premium listing those companies which are eligible for listing but which might not constitute suitable investments for certain types of investor. The FCA sees its role to be to enable investors to make properly informed investment decisions, but not to make those decisions for them. The tracking investment model has at its heart a hole where such judgements and decisions might otherwise be made but it was clear to the FCA that it should not seek to fill that hole through wholesale changes to the listing criteria, or by reserving to itself discretion over the suitability of individual investments.

View Consumer protection in the listing regime, 21 March 2014