Dividends paid by cheque to shareholders are being axed by Abrdn – in latest move towards a cashless society
Dividends paid by cheque to shareholders are being axed by fund manager Abrdn – in the latest move towards a cashless society.
Instead, any dividends will be paid directly into shareholders’ bank accounts. About a million will get hit by this change at the Edinburgh-based investment giant. Many obtained their shares after Standard Life demutualised 16 years ago. Five years ago, Standard Life and funds group Aberdeen merged before being renamed Abrdn.
Derek French, a former executive of bank NatWest and founder of the Campaign for Community Banking Services, is among those to have received the letter from Abrdn explaining the move.
The future: Abrdn will pay dividends directly into shareholders’ bank accounts
He says: ‘This is just another blow for those who want to use cash and bank cheques in a high street branch.
‘Banks and other financial institutions, such as Abrdn, tell us we all want to bank online – but this is patently untrue. It is vital that people are given choice.’
The MoS has long fought for the right of customers to have choice over how they receive and make payments. Five million people in Britain currently rely on cash for their budgeting.
Lord Lee of Trafford, the country’s first Isa millionaire and patron of retail investor campaign group ShareSoc, says: ‘It is not just older people, but also youngsters who need to appreciate the value of money and might like to have a cheque arriving in the post when a dividend payment is due.
‘There is no doubt dividends paid by bank transfer are more convenient for many people, but it should not be mandatory. Investors must be given the choice.’ Dropping the option of dividends payment by cheque will save Abrdn money when the change is implemented next May, reducing administrative costs.
Abrdn says: ‘More shareholders prefer the convenience of payments direct to their bank account and it takes away the worry of misplacing – or forgetting to bank – cheques.’
It adds: ‘There is also the cost and environmental impact of posting thousands of dividend cheques that we have to consider.’
Most investment trusts and UK companies already automatically pay dividends via electronic transfer to those shareholders who hold their stakes on an investment platform such as Hargreaves Lansdown.
But Annabel Brodie-Smith, communications director at trade organisation the Association of Investment Companies says a minority of investment trusts still pay dividends to shareholders by cheque if requested – but only if the shares are held with them directly (not through a platform). They include (surprisingly) trusts managed by Abrdn such as North American Income, Murray International and Shires Income.
Brodie-Smith says: ‘Choice is good and it is commendable that some trusts still allow investors to receive dividends by cheque if this is what they want.’
It is not just dividend cheques that are being phased out, but also physical share certificates.
There was a time when if you purchased shares in a company, you would automatically be issued with paper proof of the investment. These are now increasingly rare.
Hargreaves Lansdown has blamed the coronavirus for ditching the option for investors to trade paper shares through its platform from next month. It states: ‘Certificated share dealing was suspended in March 2020 in response to the pandemic due to the administration required to operate the service.
‘We have reviewed the situation and found that certificated share ownership is becoming less common. We now want to focus more on providing our clients with a better electronic share dealing platform.’
