The stock market needs to move closer to simpler times by cutting the number of go-betweens dividing investor and company, a government-sponsored review into equities will say today.
The 40,000-word report by leading economist John Kay, which was a year in the writing, will urge the market to return to the days when an average person looking to invest could go to a stock broker, who would select a company and buy shares.
The Kay Review will say the complex chain of intermediation – which includes fund managers, companies, pension trustees, investment consultants and independent financial advisers – increases costs and undermines market efficiency. “The financial crash of 2007-08 was in part caused by an intermediation process where computers and rating agencies replaced branch managers in assessing who was offered loans,” he says.