Time to make a stand against Crest nominee accounts

'I am appalled at the way private investors are being treated in this internet age'

Is the City determined to eliminate smallish, long-term shareholders? I ask this question because there is a seemingly unstoppable desire to strip them of the shares they own by using electronic Crest nominee accounts.

Once they are submerged into such Crest affairs, usually run by stockbrokers, they could surrender rights that the Stock Exchange has long bestowed on shareholders. For example their names are removed from a company’s share register and replaced by the nominee which becomes, in effect, the dominant power behind the shares. So the small shareholder can be cut off from yearly reports, voting at annual meetings and even rights issues. In addition they are far down the list if take-over action breaks out.

Dividends are paid to the nominee. Some nominees actually charge for the privilege of passing on company information – such as reports – to the investor who paid for the shares.

It is possible to establish a personal Crest account – often at considerable cost – which bypasses the impositions inflicted by the nominee variety. But there is evidence that the City is reluctant to create personal Crest accounts and there have been indications that some shareholders have been more or less forced into nominee situations.

Those resisting such pressure are left with switching to certificated trading, liquidating their holdings or finding a stockbroker who is prepared to handle personal Crest accounts. And quite a few stockbrokers will not entertain personal Crests, or if they do they are not prepared to grant them to newcomers.

So much, then, for the embrace of electronic technology which in some respects provides information that was unavailable in pre-internet days but now traps many into sacrificing basic rights. The squeeze on long-term shareholders may not worry day traders but as a traditional, occasional investor, dating back to the 1950s, I am appalled at the way private investors are being treated in this internet age, particularly as some are not online. True, stockbrokers have long held accounts where the investor has given them carte blanche. But this enforced electronic version seems insidious and should be outlawed.

Even those who retain traditional certificates often find technology forcing them into much shorter trading periods and pay exorbitant amounts for the privilege of demanding share certificates which are due to be phased out by the Eurocrats of Brussels in the 2020s.

Stockbrokers complain about the cost of personal Crest accounts and dealing with bloody-minded certificated investors. In my experience they more than make up for any additional charges by passing them on. The trouble is Crest nominee accounts are profitable and many stockbrokers are reluctant to extend a more approachable attitude to traditional investors. Although some City firms try to alleviate the worst aspects of nominee accounts the days of “my word is my bond“ have disappeared.

Peel Hotels, recruited to the No Pain, No Gain portfolio earlier this year, has produced a satisfactory interim performance. With sales up 4.6 per cent underlying pre-tax profits rose 25.5 per cent to £497,000. Chairman Robert Peel complains about increasing costs, but adds the hotel chain should, over the year, make “satisfactory progress”. The shares, now 102.5p, joined the portfolio at 100p.