We need better buying – not smarter selling #TransparencyTF

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On top of Unison’s mighty Euston Rd tower block, took place the 3rd Transparency Symposium and every bit as good as it was as Symposium #1 and #2.

Days of talks often crystallise around one key insight. To me this came from Tony Filbin who observed that the explosion of master trusts over the past five years suggested some easy money from flabby margin pressure.  In short, the market has seen the potential for some poor buying.

Tony has always been a force for good, andy by coincidence I bumped into the big boss of L&G (where Tony did so much good work) yesterday evening. We talked about who, in the absence of the IFA, was progressing good buying in auto-enrolment.

We talked about the issues of engagement I’ve referred to in a recent blog and then about regionalism and the importance of his native North East (he and his wife were born in the same village outside Newcastle).

They say there are only two four letter words in payroll (and the other one is IRIS) and it didn’t take long for our conversation to turn to Sage and what they could do to help better buying (not least of workplace pensions).

A clear view from good buyers makes a perfect market

The market for business services (accountancy and payroll) is competitive and buyers of business software some of the most astute I have come across.

There is a direct and immediate alignment between the purchaser (typically an accountant or book-keeper) and the vendor (Sage, Iris, Moneysoft, QTAC, Star,Xero, Intuit etc)

Not so in workplace pensions where the outcomes are distant in time and in terms of employer engagement (the marginal improvements in other people’s pensions is not aligned to current business performance metrics).

So it is that employers make bad buyers , unless incentivised to be good buyers. So how do we make better buyers?

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There were a number of themes from the conference and most of them were in a speech by Vince Cable at the opening of the day.


All the improvements resulting from greater transparency in Government result in the empowerment of those outside Government to better understand political decision makers.

Transparency makes better buyers of us all and this theme was reiterated though out the day.

And Tony’s point?

Tony’s point (as I thought about it) was this. The flabby governance of master trusts allow those who run them to make a lot more money than we imagine. Recently Barnett Waddingham explained how it is possible to charge advisory fees to a master trust without these fees appearing in the AMC, you pay for them from reduced fund performance but they remain hidden. I suspect that Tony knows this only too well.

But Government doesn’t understand this, as I could prove if I were to publish correspondence with the DWP over the charge cap for workplace pensions which is openly being abused by some advisory master trusts.

Those who run workplace pensions can pay themselves what they like so long as they can justify it to their consciences and compliance officers as a legitimate business expense, and many can do so out of the net asset value of the funds within the trust (without touching the AMC).

This is why the review of the charge cap (which should be happening now) and is due to be completed for April 2017) is so important.

Because the pensions of 6 million “hardworking” members of workplace pensions who have just been enrolled and a further 6 million awaiting enrolment could be seriously eroded by the hidden charges which can be taken from workplace pensions with impunity.

Transparency now

Unfortunately, Steve Webb’s prediction that the funds industry would kick this degree of transparency (like a can) down the road, is proving correct.

Jonathan Lipkin of the Investment Association told us of its plan to set up an advisory group that could allow the funds industry to deal with transparency in one great go. This sounds alright until you realise that this means waiting for PRIPS and MIFID, and that means no movement till at least 2018 and – knowing Europe – not for some time later.


But of course these charges are being taken out of our pensions now, and we can be sure that as and when the IA and FCA and tPR get round to getting the Treasury and DWP to create law to ensure that we see what we are paying for when we invest in a workplace pensions, much of our money will have been lost.

Which was why I was rather more interested in hearing from the Conservative MP Tom Tugendhat and shadow pension minister Angela Raynor who seemed to be thinking in terms of the consumer of financial services and not the vendors.


We cannot wait another five years to get rules in. Whether those rules come from the industry as a code (as Tom would have it) or from the Regulator (as Angela would have it), we need transparency now.

The Zeitgeist at work.


In a recent blog, I talked about the need for the Zeitgeist for transparency to pervade the FCA’s asset management market review.

The very good news from the Conference is that early in July, the data team from the Transparency Task Force (headed by our columnist Ralph Frank) will be meeting representatives of the FCA, tPR, FSCS and the DWP to present its research into the 100+ sources of leakage from our pensions.

As Andy Agethangelou pointed out, never before has a single issue group managed to create such a unified level of interest from such a range of Governmental organisations.

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Andy’s genius, as Tom Tugendhat pointed out, is to get us all behind that single word “Transparency”.


It is my hope that Transparency will make better buyers of us all!


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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