Economic secretary commits to even playing field for investment trusts

In a Treasury Select Committee meeting today (10 January), the first of 2023, the minister was grilled on the Edinburgh Reforms and the crypto industry.

Committee member John Baron applauded the removal of the PRIIPs regime and the launch of government and regulatory consultations.

However, he went on to say the current consultation from the Financial Conduct Authority remains “woolly” and raised concerns about their proposals about performance and risk analysis. He asked the minister his goals for the reform.

In response Daniel Rusbridge, deputy director, financial services strategy for HM Treasury, said it was a “really tricky area”.

He went on to say the government was considering whether it is “right that we have an aim of a single document to compare every type of investment product”.

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Baron asked the minister to “keep a focus” on ensuring the replacement regime was in the best interest of consumers and in particular its impact on investment trusts.

Griffith gave his “commitment” and also said he would meet with the Association of Investment Companies.

Baron then went on to highlight the need for a “level playing field” between investment trusts and unit trusts, which extended to issues beyond the PRIIPs regime.

In particular, he noted the necessity to pay stamp duty on trusts, which is not the case for unit trusts. He added that trusts have a “much greater track record” when it came to commercial property and infrastructure and therefore should receive more favourable treatment. 

“I understand your point and you are not the first to make the point to me on the huge potential for investment trusts as a vehicle for infrastructure investment, clean energy and I will take that point, including you and I going through this in more detail,” Griffith said in response. “One always aspires to a level playing field, but I am learning rapidly that these things are never quite as simple as we seek.”

Crypto commitments

The select committee also quizzed the minister on his plans and thoughts around the crypto industry.

Chair Harriett Baldwin noted that Prime Minister Rishi Sunak had made a number of comments regarding the UK as a crypto hub when he was chancellor in April last year.

“Since then, there have been many developments within the industry,” she said before asking Griffith his opinion.

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Crypto has been in the spotlight for all the wrong reasons in recent months following the collapse of FTX and the ongoing fallout.

However, Griffith said that while these recent events have “highlighted vulnerabilities” it would be “wrong for the UK not to be forward leaning and not to be looking to take the most of the opportunity”.

He said the government would be producing a consultation “in weeks not months” surrounding crypto assets including its regulation and the production of a sovereign digital currency.

However, he added that his priority was to achieve a financial promotions regime that encapsulated crypto and said this would be achieved by the end of 2023.

Commenting on the meeting, Charles Kerrigan, a crypto and digital assets partner with law firm CMS, said Griffith adopted a “balanced and sophisticated position”.

“Highlighting the potential of the underlying technology to eliminate risk and transaction costs, reflects a desire to find a middle way that keeps UK financial services industry at the front of policy and incumbents in the picture,” Kerrigan said.