A LEADING adviser to the Government will set out a “last-ditch” campaign today to attract panicked investors back to the stock market in an effort to stem the mounting savings crisis.
Sir Richard Sykes, former chairman of GlaxoSmithKline and now Rector of Imperial College, will call on insurance companies, banks and listed companies to sign up to a new code of practice to restore floundering public trust in the financial services industry.
Sir Richard told The Times last night that a code of good behaviour, similar to the Hippocratic oath that new doctors are asked to swear, was the industry’s “last hope”. He said: “My best hope is that the industry sorts itself out. The worst fear is that nothing happens, regulators come in and the whole thing gets more regulated and more complex.”
Sir Richard will also call on all the main political parties to make a commitment to encourage savers, who have been put off from making adequate savings because of government tampering with taxexempt schemes, means testing and company scandals, including those of Marconi and Enron.
“The big issues in life are health and wealth. People are starting to worry about their health, but if they want to live until 85, they have to realise that they have to have money to live on,” he said.
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The report, Restoring Trust: Invesment in the 21st Century, is the culmination of two years’ work by Tomorrow’s Company, the business-led think- tank, which says it has tried to look at the whole invesment system rather than single aspects, such as pensions or corporate governance.
Sir Richard also gave warning that Britons were saving far too little for their retirement, due to ignorance over how long-term investments worked.
“There’s a lack of understanding of what people really need to save to have a reasonably good income in their old age. It’s not 10 per cent of your income, it’s more like 30 to 35 per cent,” he said.
The Sykes report, which will be endorsed by Patricia Hewitt, will also contain a damning indictment of institutional investors who, Sir Richard believes, have abdicated their responsibilities to savers by preferring to sell shares rather than to intervene in company strategy.
Lack of public trust in the equity markets and investment products was also helping to fuel soaring house prices, as ordinary people sought security by spending more of their income on bricks and mortar, Sir Richard said.
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“We need to get investor confidence back in the industry because if we don’t, the consequences are severe. If we don’t get people investing again, the State will have to look after them. People will be paying higher and higher taxes. People should be encouraged and incentivised to save for the long term. They deserve to know what the rules are and not have the rules changed on them by some kind of means testing,” Sir Richard added.
The report’s parameters were drawn up by a 20-strong team, picked from across finance and government, and including representatives from leading companies such as BAA, Cadbury Schweppes and Man Group.