For the first time in three years of reviewing IGC Chair Reports, I sensed an IGC that has had enough. Sir David Chapman’s third report concludes that the Virgin Stakeholder Pension is providing “Fair” value for money. But in the context of other reports, “fair” doesn’t sound enough. The report gives Virgin a red for not renovating its Default investment option.

This is not a good looking scoreboard. I have met with Sir David Chapman and he is not a man to be messed with. The value for money scorecard is simple enough for any member to understand and on the key areas that impact outcomes, the IGC finds its provider is failing. Instead of taking it lying down the IGC took the matter to the FCA

When the Provider made the decision that no change would be made in 2017, the IGC felt it necessary to share our view with the Financial Conduct Authority (FCA)

We are not told what the FCA’s response has been. I look forward to hearing more.

The Virgin Money IGC is effective and is doing its job; it gets a green from me – the Virgin Stakeholder Pension now needs the support of the FCA  , while Virgin gets a green for being effective, I worry whether I will be able to say the same for the regulator.

Is the VFM work of the IGC up to scratch?

The IGC have been benchmarking the investment performance of the default fund and now have some meaningful data – taken from Financial Express.

It’s good that the IGC is doing this. However the analysis throws up the fundamental weakness of reporting pure performance stats; even with a tracker fund, the Virgin Stakeholder’s returns are bouncing up and down the league table like a yo-yo. The comparisons cannot be apples v apples, a better measure of comparison is needed.

It is time that a risk-adjusted measure is created that can allow funds to be compared on a  like for like basis.

That the report cannot look at the transaction costs within the funds is a weakness. As with the performance analysis, there is something lacking. I suspect that this is out of under-resourcing rather than negligence, nevertheless , no matter how effective this IGC is , it is not quite cutting the mustard on VFM and i can only give it an amber for its VFM work.

Engaging?

This is a report that deserves to be read. I know that in previous years, the Virgin Money IGC has actually printed and physically distributed its report, I doubt that even a physical copy was read. This is a shame.

The report is extremely easy to read, it is thoroughly engaging and I have no problem giving it a green.

What it needs is publicity and hopefully it may get some if the FCA get involved. Having said that, there simply aren’t enough Virgin Money policyholders for the IGC’s issues to be front page news.

It’s the likes of the Old Mutual IGC, who should have similarly have referred its provider to the FCA – to engage with what Chapman is doing.

In conclusion

I continue to praise the Virgin IGC for its strong, effective approach to doing its job. Good for Virgin for having employed such a good Chair. By the 2019 report, the investment of money will have passed to Aberdeen Standard and we may see an improvement in the value members get for money. However, the real heavy lifting, on that account, is now with the FCA.