The Blog

UK ISA Consultation: TEA Advocates for Investor Engagement

Jun 4, 2024 | Corporates, Investors, News

At the Spring Budget, back in March 2024, the government announced the introduction of the UK ISA. This addition to the ISA family will offer an additional £5,000 tax-free savings allowance to the existing ISA allowance, which can be used to invest in UK companies. You can read our analysis here.

The plans for the UK ISA aren’t yet set in stone, with the government holding a public consultation, inviting views on how to design and implement the product.

In our response to the UK ISA consultation we have signalled our support for the new ISA and called on any future government to go further than this to improve the ISA landscape for future generations.  

At TEA, we believe there needs to be a complete overhaul of how retail investors and companies come together.  It’s time for a new conversation on investor relations if we want people to invest in companies.   

We’ve undertaken a detailed examination of the behaviours, preferences, and challenges faced by UK retail investors and it’s vital that the government and companies understand these differences if they want to connect with future generations of retail investors.

For example, Gen Z investors have a very different outlook on corporate governance and AGMs, with less than one in five saying they’re happy to leave decisions to the board. 

To build trust with ordinary investors we’re calling for all the companies listed on the London Stock Exchange and Aquis to sign up to TEA and commit to inclusive investor engagement by December 2025. 


Any government should consider improving the retail investor process in five ways: 


1. Enhance digital engagement 

Companies should prioritise digital platforms for both dissemination of information and for hosting AGMs to cater to the growing preference for online engagement. This includes using clear, jargon-free language to increase accessibility and understanding. Companies should consider providing resources that demystify investment processes and explaining shareholder rights and benefits in straightforward language. 


2. Increase transparency and openness 

As our research highlights, a sizeable proportion of the next generation of investors are looking for greater openness from the companies they invest in. Regular updates that are straightforward and informative can help build trust and loyalty. Transparency not only about financials but also about company challenges and ESG practices can align investor values with company operations. 


3. Facilitate greater involvement for investors  

Companies could explore ways to make participation in annual general meetings (AGMs) more appealing and feasible for young investors. This needs to start with getting the basics right of ensuring investors know when and how to participate in AGMs. It should also include scheduling meetings outside of typical working hours, offering virtual participation options, and ensuring that young investors feel their contributions are valued. Encouraging smaller investors by showing how their contributions matter could also increase engagement. 


4. Enable investors to have transparency and tools to up-skill themselves  

Our research is clear that providing educational resources about the importance of AGMs and the impact of individual contributions will empower more retail investors to participate. There is a clear need for financial education targeted at young adults to help them overcome barriers to investment. Companies can collaborate with educational institutions or utilise their platforms to provide investment education that covers basic financial concepts, investment strategies, and the benefits of long-term investing. Companies need to make available simple explanations of shareholder rights, the AGM process, and how investors can influence company policy. 


5. Promoting ethical and responsible investing 

There is clearly a growing interest in socially responsible and ethical investment options among young people, companies should highlight their commitments to sustainability and ethical practices. Transparency about these efforts can attract Gen Z investors who prefer to invest in companies that reflect their values.  


Joseph Vambe, Education Ambassador, The Engagement Appeal said: “At TEA, our vision is to contribute to the development of a fairer and more financially literate society, beginning with the inclusion of individual investors in ongoing corporate engagement that will result in improved mutual understanding, intergenerational collaboration. 

“As millennials and Gen Z will dominate the future investor landscape, the ISA must offer digital access, transparency, and ethical practices to appeal to these demographics. Additionally, addressing socio-economic barriers in financial education is vital to broaden investment participation across all backgrounds.” 

By addressing these areas, companies can not only enhance their relationships with young investors but also tap into a demographic that is likely to gain significant financial influence in the coming years. This strategic focus on Gen Z could help firms build a loyal investor base that will grow as these investors mature and potentially increase their investment activities. 

Join TEA! Let's shape the financial inclusion agenda together by facilitating inclusive investor engagement. Sign up now for FREE!

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