I enjoyed reading the Hargreaves Lansdown IGC report but for all the wrong reasons. It begins with an Executive Summary and ends with a strong of awards listed for the benefit – presumably – of the executives who appointed the IGC.
In case we are in any doubt, let’s remember what an Executive Summary does. Wikipedia describes it
It is intended as an aid to decision-making by managers and has been described as the most important part of a business plan
An executive summary has no place either as a phrase or a concept in an IGC report which is aimed at the members of workplace pensions.
Similarly an IGC report has no business advertising the marketing awards picked up by the product provider. Putting aside the validity of these awards, advertising the merits of a product is the last thing a governance document should be doing.
What went wrong?
I was really looking forward to reading this document and really disappointed when I had. Corporate Vantage is highly rated by First Actuarial and is a prime buy for employers with good funding buying a workplace pension on http://www.pensionplaypen.com .
I don’t know the members of the IGC but I suspect that they have not been properly briefed about what they were supposed to be doing.
I am not sure that this document really counts as a Chair Statement at all. As Sam Brodbeck asks on twitter
Hopefully this embarrassing document will be put down as a false start and Tom McPhail will pop downstairs and have a quiet word.
But if he doesn’t – here are a few questions I’d like the IGC to be asking Hargreaves Lansdown.
- Can you assure Vantage SIPP holders that what they are paying for funds is what Hargreaves Lansdown is paying for funds with a clear and transparent pricing structure for the funds platform and the additional functionality of Vantage’s corporate facilities?
- Can you assure us that you are actively looking out for closet tracking among the fund managers you admit to your platform (and you’ll be warning your policyholders of such practices when you find it).
- What Stewardship are you exercising on behalf of your policyholders to improve the social purpose of the funds on your platform?
- How are you measuring the efficiency of the funds you put in the Hargreaves Lansdown 150 to make sure no risk is left on the table in terms of transaction charges, over-sized spreads and poorly negotiated fees?
- Do you monitor the fees retained by fund managers from stock-lending?
These five will do for starters though there are literally hundreds of tests that can be applied by those really interested in fund governance to make sure that a SIPP platform offers value for money.
I see no evidence that HL are doing any monitoring on this stuff. Any policyholder reading the IGC report should not be fooled by Executive Summaries or lists of awards. This IGC report is an embarrassment to Vantage and to Hargreaves Lansdown, now a FTSE 100 company with serious governance obligations of its own.
Rubbish – rubbish -rubbish
I won’t go on, the report should be ripped up and the Chair either re-write the report or hand over the reins to someone who can differentiate between governance and marketing.
To cut a long assessment short , the tone of this document is friendly but wrong – it works for a corporate brochure but not as a Governance report and for tone it gets a red.
The value for money assessment is a joke- it needs to be totally rewritten even to make syntactic sense, but even if the grammar was sorted, the IGC needs to come up with a completely new way of assessing value for money for me to give this section anything other than the straight red it gets today.
Finally, the document is totally ineffective on any level (other than to reassure the Executive that it’s got another easy year ahead, untroubled by any challenge from the IGC. This document is totally ineffective and gets a third red as a result.
The FCA should not admit this as a proper report and if Hargreaves Lansdown harbour ambitions of being featured among the contract based QWPS featured in future on the Pension Regulator’s website, then it will be no thanks to this!
I enjoyed reading this – but for all the wrong reasons- and governance shouldn’t be about having a laugh.