What kind of transparency would that be- Sir?


This from the BBC

MPs on the Energy Committee have written to the new business secretary to demand no change to the current rules on price comparison websites.

As part of its recent report on the energy market, the Competition and Markets Authority (CMA) said that such websites would no longer be required to show all the deals on offer.

But the MPs said that would undermine consumer trust, and harm competition.

The CMA rules will allow sites only to show deals on which they earn money.

This reverses a decision by the regulator Ofcom. In January 2015, it ruled that comparison sites should show all the deals available – including those on which the site did not earn any commission.

The websites include Moneysupermarket, Uswitch and Comparethemarket.

Now of course, what’s at stake here is not just the profitability of these websites, which is reduced when people transact with non-commission paying providers, but a more general principle.

“Price comparison websites must do what they say on the tin,” said Angus MacNeil, the chair of the Energy and Climate Change Committee.

“Consumers expect price comparison sites to shine a light on the whole market, not keep them in the dark and push them into commission earning deals.”

Keep the internet clean, open and transparent

My view is simple; these sites rely on the internet, a public utility designed for the public good and not for the commercial purposes of those who run commercial websites. At some point the consumer has to expect trusted information. Take http://www.moneysavingexpert.com which has always been clear that it will either do the job properly or not at all.

These comparison websites are abusing the internet and offering “limited transparency”, in excluding potentially good deals, they are not only being untransparant but uncommercial. They are destroying trust not just in their own sites but – over the long term- they diminish our trust in the internet.

Can there be such a thing as “limited transparency”.

Take this sentence

To advise on the form and content of disclosure to UK pension scheme trustees and IGCs

and compare with this sentence

To ensure the requests of UK pension scheme trustees and IGCs are met both in form and content.

The first sentence describes the function of an advisory board as I would expect a trade body to run one, with disclosure to the consumer being controlled by an advisory board acting in the interests of the trade body’s members.

The second sentence describes the function of an advisory board set up with the public interest as its primary driver.

Put more succinctly, the first statement seeks to serve fund intermediaries, the second those whose money is being managed.

Limited transparency doesn’t exist, transparency either is or isn’t, you may have 50 shades of opacity but as soon as you start presenting information in a way that suits the people you are working for, you have lost the plot.

So , were the terms of reference for an advisory board on cost and charge disclosure to include as an objective for its work

that the IA can steer the work of the technical groups in a direction that delivers an output that satisfies client expectations

We would have to ask whether the client’s expectations were as one with the consumer’s . The clients would want high fees and charges (being the intermediary between the consumer and his gross return), the consumer would want as little charge as possible and a clear view of the money – before estimating value. Quite clearly the expectations of the consumer and the “client” are different and the two cannot be satisfied without compromise.

If you are aiming to provide a consumer service, you have to be 100% on the consumer’s side. There is no such thing as limited transparency. There is no compromise of intent.

Dreams and imaginings

I can only speculate on the terms of reference under which the Investment Associations Advisory Board is operating. That’s because the Board has chosen not to publish them.

Were these terms of reference to be published, I would expect that they would focus on the needs of the consumers – the IGCs and trustees, and not the needs of the Investment Associations Clients, for to focus on anything but the consumer would be to distort transparency and therefore provide no transparency at all.

I would further expect the Advisory Board to focus on the Investment Association’s primary task which is solving implementation issues for cost and charge disclosure under the new regulations. I would not expect the scope of the terms of reference to include any steering other than in the direction of (total) transparency.

But of course I am in the land of dreams and imaginings.  For the terms of reference for and the activities of this Advisory Board are secret and the wordings I’m thinking about are purely imaginary.



About henry tapper

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