City bosses tell Chancellor: Our investments are crippled by the EU’s £7bn savings bombshell

City bosses have this week written to the Chancellor demanding he scrap bizarre European Union rules that are harming savers.

Sir Douglas Flint, chairman of investment firm Abrdn and one of the most respected figures in finance, is among more than 130 money managers to sign the letter to Jeremy Hunt.

They argue the controversial EU regulations mean Britain is missing out on £7 billion of money every year that could be ploughed into green energy, fixing roads, rail and building hospitals.

The controversial rules are being applied – despite Brexit – to British investment trusts.

Trusts have a long history in the UK dating back to the Victorian era when they funded railways and other engineering projects. Trusts today continue that tradition by investing in areas such as renewable energy, transport and other infrastructure.

Looking for a new dawn: The controversial rules are being applied – despite Brexit – to British investment trusts

Sir Douglas Flint, chairman of investment firm Abrdn and one of the most respected figures in finance, is among more than 130 money managers to sign the letter to Jeremy Hunt

There are 361 investment trusts on the stock market. Between them, they control £267 billion of assets.

Flint and his fellow executives argue that the trusts are being put at risk because of rules that make it look as though the costs of investing are far higher than is really the case.

Flint, previously chairman of banking giant HSBC, told The Mail on Sunday the rules were ‘a barrier to getting money for the infrastructure we desperately need.’

He added: ‘We need to make it attractive to invest in the UK and for people to fund infrastructure through their retirement plans.’

Justin Dowley, chairman of the FTSE 100-listed Scottish Mortgage Investment Trust, also wants Hunt to act because investment trusts are being subjected to rules cooked up by the EU. Despite the UK voting to leave the EU – which means there is no need to apply them at all – City watchdog the Financial Conduct Authority (FCA) is imposing them on firms in draconian style.

As a consequence, trusts are in a bizarre situation where many of their costs are being double-counted. Campaigners say this situation is unique to the UK.

It has caused a sell-off of investment trusts leaving them starved of cash and vulnerable to foreign takeovers as many of their share prices have tanked. In their letter, published this weekend, the City bosses warn Hunt the rules are ‘cutting off’ vital funding. 

Campaigners say the regulations threaten to choke the flow of money into areas the Chancellor hopes to boost, such as renewable energy, science and biotechnology.

The letter says: ‘This is having adverse effects on investment in the UK and is driving British investors’ capital into companies listed overseas, contributing to the poor performance of the UK stock market. This surely cannot be allowed to continue. The UK’s interpretation is flawed. Fixing the problem by doing the same as the rest of the world could restore over £7 billion per year of lost investment – with no cost to the taxpayer.’

It continues: ‘We call on the Government and the Financial Conduct Authority to take action now to end this situation immediately and return the UK to a competitive position.’

More than 130 money managers have signed a letter to Jeremy Hunt demanding he scrap bizarre European Union rules that are harming savers

The campaign has been backed by AJ Bell, one of the UK’s largest investment platforms.

Senior politicians including ex-pensions minister Baroness Altmann also want an overhaul.

Altmann, alongside other peers including Lib Dem Baroness Bowles and Labour’s Lord Davies of Brixton, is trying to push legislation through Parliament that would remove investment trusts from these rules.

A Treasury spokesman said: ‘We recognise industry’s concerns and are working at pace with the FCA to reform the UK’s retail disclosure regime, including for investment trusts. We’ll set out further details on these reforms soon.’

This post first appeared on Dailymail.co.uk