Falling out of love with the market.

market economy


The most startling thing about the conservative manifesto is that it advocates Government intervention as a way of improving those just about managing in Britain. This is a very different approach to that of previous Governments that relied on competition within markets. From labour markets, through energy, telecoms and pharma to financial services, the message is the same, strong regulation and price controls are in – free market economics are out.

Operating as we do , in financial services, me and my cronies have got used to timid regulators backing off in the face of concerted lobbies – provided the lobbies are top down (Investment Association, PLSA, ABI) and not bottom up – (WASPI, TTF). The unions have an uneasy place in this – having a foot in both camps , while there is nothing in the manifesto that attacks unions, there is no attempt to strengthen them.

What May seems to be appealing to are the new voices of the consumer that we hear on social media and increasingly pester parliament through on-line petitions , Facebook campaigns and viral videos. The consumer no longer needs Which to argue that fixed-line telephones are too expensive, Ofcom is now reactive to the direct users of digital media.

Financial services are slightly different, we still don’t get the way our financial services are priced, proof positive being a recent NMG survey commissioned by IGCs which found people wanted good financial outcomes from workplace pensions but weren’t bothered what they paid for them. We may be increasingly tech savvy but we are not so savvy with our money.

Much as the fund management industry may delight in the ignorance of most people about what they are paying and how, both the FCA and the Pensions Regulator, are showing signs of empowerment. They are no longer being faced down by the financial lobbyists (a friend who works in the IA reported to me that what he proposes , the FCA opposes and his best tactic is now to agree with the FCA -which puts doubt in their minds).

The Asset Management Market Study and much in the various costs and charges reviews shows no respect whatsoever for the views of asset managers and investment consultants. The DWP’s Green Paper openly opposes the PLSA’s proposals to aggregate the liabilities of small defined benefit schemes. It is not just the tone of the Conservative Manifesto , but the tone of Government that is changing.

Which is why I am more comfortable that change will come. I have been talking in the past couple of weeks with Independent Governance Committees of insurance companies and with Trustees of Master Trusts and those who want to speak to me are showing a perestroika that I hadn’t expected. They acknowledge that the Non Disclosure Agreements that stand between the consumer and an understanding of what he is buying must go. They want to see league tables showing relative performance on what we pay and what we get. They even recognise that they do not represent the organisations that set them up but their policyholders and members.

But there are master trusts and IGCs I am not talking with, not because I don’t want to speak with them, but because they don’t want to speak with me. They are quite explicit about it, they don’t share my views. “Don’t convince me with your facts, my mind’s made up”.

The reluctance of these hard-liners to listen to new ideas and voices is hard to square with the prevailing winds of change both within politics and regulation. But it is increasingly looking the attitude of a world that is being by-passed.

Nobody wants financial services companies to fail, no-one wants to undermine their profitability so that they fail to deliver on their long-term promises, but people like me want to redress the asymmetry of information so that those on the buy-side can argue with those on the sell-side as informed and engaged consumers.

We are falling out of love with markets that are failing and putting pressure on regulators to do more to help us. We are going to the FCA on 31st May with the views of those who use Pension PlayPen and the views of the IGCS and Trustees I am speaking with, they are aligned.

You can read the Conservative Manifesto here ; https://www.conservatives.com/manifesto

About henry tapper

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