The regulator raises the same concerns again and again but decades on fails to do anything
Fresh back from my Easter break, I plunged into the Financial Conduct Authority (FCA)’s Sector Views report. And what a depressing read it was.
This report could have been written 10 or 20 years ago and come up with the same list of concerns, yet regulators and industry fail to address core issues that result in consumers facing high charges, receiving poor value and potentially inappropriate advice.
Take this comment on investing: “Opaque and complex charging structures often make it difficult for consumers to compare providers, which can result in consumers being charged more than they had expected.”
And then this: “Risks remain regarding the remuneration of individuals, especially within vertically integrated firms where customer-facing employees could be incentivised to sell in-house products and services.
“Firms offering advice may make unsuitable recommendations because of conflicts of interest or insufficient competence.”
Long in the tooth observers of the industry will recognise that these as concerns have been raised again and again.
So my question to the FCA is: what are you going to do about it?
It is one thing to raise issues in a report and another entirely to go out and act upon them.
Some firms in this industry – in fact many as far as some issues are concerned – need to be forced to toe the line.
For example, the FCA says: “Relatively few advisers are transparent about their pricing before they sell advice. This does not incentivise advisers to compete on price and may result in limited pressure on them to reduce their charges.”
So stop talking and do something about it, FCA.
It is not only advice that comes under attack. We are told that “limited comparability and ineffective disclosure can also lead to non-advised consumers buying products that are not appropriate for them, or that they do not fully understand”.
Well, disclosure is FCA territory – so if it is not happening, and the practice is widespread, then why are we just reading about it in the depths of a 63-page report?
There are further references to complex charging structures – a persistent complaint by financial observers for decades, yet it continues in 2017.
How many people could tell you what they paid for their investments last year? I bet the number is about 0.00001 per cent, although that could be on a TER, DVD or UPVc basis for all I know.
The likes of me might berate the financial industry for its opaque and complex charging structures, but it is the FCA that allows you to get away with it.
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April showers bring May snap general elections
A General Election might bring stability for the Conservatives, but it could spell rough times ahead for the self-employed and pensioners.
The party can rip up the promises made in the 2015 manifesto, unleashing increases to VAT and National Insurance.
It will also be goodbye to the state pension triple lock.
Since becoming party leader, Theresa May and her robotic sidekick Philip Hammond found their hands tied by frivolous promises made in the runup to the 2015 election, a race that was much closer than this one is likely to be.
They can cast off Manifesto shackles and Mr Hammond will be free to raise taxes wherever he sees fit.
I doubt very much that Theresa May will be manipulated into making rash pledges, unlike David Cameron a couple of years ago.
So prepare for some belt-tightening if you're in Mr Hammond’s sights.
On the other hand, Ms May could dump him after the election. Now wouldn’t that be nice?
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Your pension is an asset, not a hassle
There has been a plethora of pensions data, research and surveys in the past few weeks.
As usual, we are told people’s pension pots are too small, with the natural conclusion being that they are not saving enough.
It never seems to occur to those who pay for these surveys that there is more than one way to skin a rabbit. If they reduced their charges it would help increase the size of investors' pension pots. Improving performance might go some way to helping, too.
One point that did leap out from an Aegon survey was that one in five of those with multiple pension pots thought they lost track of one or more pensions.
That seems a huge number to me and suggests that there is much to be done in educating and informing people of the value of their pension and of the need to treat it as a valuable asset.
Tony Hazell writes for the Daily Mail's Money Mail section
