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AIC writes to FCA about Saba investment trust action

The Association of Investment Companies has written to the FCA to express concerns about US activist investor Saba Capital Management’s requisition of general meetings at 7 investment trusts. The AIC is concerned about how retail shareholder interests may be affected. Its letter addresses the role of platforms under the Consumer Duty and the importance of board independence for investment trusts. It says shareholders must have their say on the radical proposals Saba has made to replace boards and investment managers and change investment strategies. It has called on platforms to help get the message out and says they have been broadly supportive but that the FCA cannot merely rely on people doing the right thing. It says the Consumer Duty obliges platforms to support customer understanding so they must ensure shareholders understand the proposals and that investors should be automatically opted in to get communications on corporate actions. Platforms should actively contact client to encourage voting when significant change to investment trusts are proposed.

It is also concerned about the effectiveness of the board independence part of the Listing Rules if a significant shareholder can effectively select board members who may then go on to appoint that shareholder as asset manager.

Michael Lewis