AIRA calls for more transparency around IFs
The Australasian Investors Relations Association (AIRA) has called for greater disclosure of retail shareholder rights when using investment facilitators (IFs), after it was found retail IFs have failed to deliver clients the Full Share Ownership Experience (FSOE).
AIRA has released a commissioned white paper, Retail Investor Investment Facilitators and the Full Share Ownership Experience, to spark discussion and provide recommendations on the topic, especially regarding retail IFs targeting first-time and millennial investors with low costs and ease-of-use services.
AIRA’s paper focuses on these retail IFs that fail to provide the information and opportunities part of the FSOE expected by most clients, which can negatively impact listed companies’ ability to communicate and their long-term relationships.
“There have been instances of criticism towards companies where shareholders believed that they held direct share ownership and were not aware their IF was not providing the FSOE”, Ian Matheson, CEO of AIRA, said.
“They assumed that the information, access and opportunities were selectively coming from the companies but in fact it was the IF and it’s structure that stopped the flow.”
AIRA has appealed for IFs to be upfront and provide investors with a clear statement confirming whether they will receive the FSOE and what they may miss out on if not.
“While low-cost trading platforms, wealth management platforms, SMAs etc. may provide innovative and valuable ways for retail investors to arrange and manage their shareholdings, they should also deliver those shareholders the FSOE”, John Daly, CEO of Listcorp, said.
“If not, they must ensure investors are consciously choosing a lesser experience with the benefit of clear, comprehensive and current information.”
The white paper also reviews the rate of growth in the area and aims to build awareness for regulators, retail shareholders and listed entities on the issue of upfront disclosure from IFs.