Response to the Law Commission, Intermediated Securities Call for evidence (August 2019)

This is a response to the Law Commission's call for evidence for its Intermediated Securities project (2019-2020). This submission sets out (1) the concentration of voting power in the hands of asset managers and banks, (2) the way that votes on shares are appropriated from other people's money, particularly the true investors in pensions, life insurance or mutual funds, (3) the conflicts of interest that asset managers and banks have, by voting in companies to whom they sell financial products, (4) the market failures and competition law problems when a small number of asset managers and banks take other people's votes, and (5) how the law can remove these problems, and make capital accountable to the real investor, by requiring asset managers or bans vote only based on a policy set by elected or accountable representatives of the true investors, or their instructions. Currently UK asset managers are uniformly refusing to follow any instructions of the people to whom the money belongs, often with an unfounded excuse that this is difficult when funds are pooled. This is an untenable position. It warrants intervention by the Financial Conduct Authority, the Competition and Markets Authority, or both. It explains models and proposals in other countries, such as Switzerland or the US, which face the same problems.