The financial services industry does not generally enjoy high levels of trust despite it being an integral part of everyday life. There seems to be a self-perpetuating cycle of suspicion caused by nefarious conduct being compounded by public redress of this conduct. The last few years have seen issues arise with Libor, the foreign exchange market and Payment Protection Insurance just to name a few. The perceived lack of trust is backed-up by more robust assessments such as the Edelman Trust Barometer.
A grass-roots group, the Transparency Task Force (“TTF”), emerged earlier this year with the aim of building trust in financial services. The cornerstone of the TTF’s strategy, as its name suggests, is to bring greater transparency to financial services and build trust in that way. Over a century ago, the U.S. Supreme Court Justice Louis Brandeis wrote that “publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman” in his series of essays ‘Other People’s Money—and How Bankers Use It’. Both the issue and the proposed remedy are clearly not new!
The TTF is working on bringing light to five distinct, but related, areas:
- Data (verification, reporting, standardisation, benchmarking & communication);
- Transaction costs & charges;
- Rationale for decision-making;
- Stewardship (environmental, social, governance, asset holdings, irresponsible & unsustainable investing, voting behaviour & remuneration issues); and
- Contractual terms & conditions.
The TTF has been most active in areas outside of Government thus far. However, why should the initiative stop there? The UK Government already has atransparent approach to consultation. The rationale for some of the consultations, such as the current consultation on “strengthening the incentive to save”, is not always clear though. This lack of clarity also applies to the reasons behind some of the Government’s decisions. There would be widespread benefit from the Government adopting a more transparent approach too.
David Pitt-Watson concluded his opening talk to the TTF’s initial Transparency Symposium with Margaret Mead’s words that the audience should “never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has”. I am looking forward to working as a part of the TTF to try and bring more transparency to the financial services industry. I believe that this transparency will result in a better deal, and consequently better outcomes, for savers. If you have a similar view, how about supporting the Transparency Task Force too?