Treasury invites 100 to act as BT share shops: Brokers will use scheme to find new clients

THE TREASURY has invited 100 stockbrokers, banks, building societies and financial advisers to become share shops to sell the third tranche of BT shares in the summer.

Stephen Dorrell, Financial Secretary to the Treasury, this week told potential participants that the share shop arrangements would give them a chance to build lasting relationships with a wider range of investors.

The idea of involving a large number of financial advisers in the sale - including Fimbra members that are able to handle client funds - follows a share shop scheme for only eight firms during the second BT sell-off in 1991. Private client stockbrokers were also able to act for their clients but felt they were pushed out into the cold by the prominence of the eight - banks, building societies and Sharelink.

The new plan has received a positive initial response from private client brokers.

The public will still be able to register with a central share information office. But those who register with a share shop will get priority if the offer is over-subscribed.

The share shops will be able to use a specially designed logo and to market other services to investors registering for the BT offer.

The firms will be paid 1.1 per cent of the fully paid price with a minimum of pounds 12.50 for each successful application. Investors will make out their cheques to the share shop, which will send in a single cheque for bulk applications.

John Cobb, chairman of the Association of Private Client Investment Managers and Stockbrokers (APCIMS), said the share shop scheme would work in harmony with existing services and systems. 'We consider it an important advance for the retail share dealing market.'

Matthew Orr, of Killik & Co, said: 'It's all quite good news for private client stockbrokers. The mailing costs should be about pounds 2, and if we can get a better conversion rate than one in six then it will work. We will use it as a marketing exercise to get new clients.'

But Keith Loudon, senior partner at Leeds-based Redmayne Bentley, is concerned about some of the fine print of the proposals.

For instance, the document setting out the terms for becoming a share shop states that selling commission might be withheld if share shops have encouraged investors to buy shares with a view to a quick sale, or have 'facilitated such a sale otherwise than by providing normal share dealing services'.

But share shops are expected to provide special offers such as cheap dealing for a limited period, along the lines of the formula used for the second sell-off.

A personal equity plan may be linked to the issue - possibly a single company PEP.

One of the original eight, Abbey National, has already said that it does not want to participate this time. A spokeswoman said: 'BT2 was not a massive success. Share dealing is not one of our priorities at the moment.'

But Waters Lunniss, which acts for Norwich & Peterborough Building Society, another of the eight, and for the Co-Operative Bank, is keen to take part again.

The publicity blast for the issue is likely to start in May for a sell-off after the middle of July.