Who owns “value for money”?


We have a lunch on the first business Monday of every month


News from the stalwart Bob Ward that the FCA has dropped the term “value for money” came as a bombshell to participants in yesterday’s Pension Play Pen lunch.

Since it’s about the only term left in the financial services lexicon that ordinary people can understand, we should not have been surprised. According to Investment Week, the FCA board bowed to pressure from asset managers and concluded that for the remedies of the Asset management Market Study

” the same outcomes could be achieved without the use of the term ‘value for money’, which will be removed from the final rules to make it clearer that consideration should be given to whether the charges are justified in the context of the service and value provided”

So “justified in the context of the service and value provided” replaces “value for money” and the fund management industry slips back into the opacity from which it came.

You can read the minutes  here yourself.

Thanks to Bob and Investment Week for bringing this nonsense to our attention. Thanks to the 14 souls who sat down for lunch for exciting such passion! If Chris Woollard and co want to understand the depth of feeling there is in the UK (and Ireland) for greater transparency on value and on money, he should come to one of these events.



We want more ladies to lunch



More than semantics

In my recent blogs, I have been asking how we get back ownership of our money and suggesting that a proper formulation for value for money is crucial to our understanding whether those to whom we give it – are doing.

I am disappointed (and still surprised), that a regulator which is supposed to be on the side of those on the wrong side of the “asymmetry of information” (e.g. Joe Public) are playing second fiddle to the sensitivities of asset managers who don’t like such a common phrase as “value for money” – as its measure.

It sounds to me like the tough stance that the FCA adopted in their asset management study, may be being undermined by a bunch of prissy lawyers (but heh – what do we know?) – We weren’t at the meeting where this was being discussed and that meeting happened nearly two months ago).

If we are going to have transparency let’s have it

  1. in the language we use
  2. from the regulators we employ
  3. in a timely manner.

As an adjunct to point three, we also learn from Investment Week that

In its final policies resulting from the AMMS, published on 5 April, the FCA extended the implementation period for fund managers to explain their products’ value from 12 to 18 months, with the new rules taking effect on 30 September 2019.

So much for the thirty second elevator pitch!

We’ll be the judge of that!

Just why we have to wait for the fund managers to tell us how well they are doing with our money – is unclear. I do not have to wait for Bosch to tell me why my dishwasher is worth £100 more than my neighbour’s Indesit. I can see!

I do not have to justify my extra expense in the context of value and service provided, I can judge that for myself- or with the help of Which magazine.

  • What makes the fund management special?
  • Why can’t I own “value for money” judgements?
  • Why must I rely on the manufacturer’s word for it?
  • Might there not be a conflict of interest putting the asset manager in charge of creating their own verdict on the value of their service and value?

I want to be able to make my own decision on an informed basis. I want the information in a language I understand, from an independent and regulated source and in a timely fashion.

The dead hand of the Investment Association?

The Investment Association, the bunch that described “hidden charges” as like the Loch Ness Monster, seem determined to consign “value for money” to the bottom of that same loch.

Clearly the strategy is to so draw out the discussion, that the hapless consumer returns to the stygian gloom at the bottom of that same metaphorical loch.

Or the shining light of Transparency

Fortunately we had plenty of transparency at yesterday’s Pension Play Pen lunch. 14 souls of a mind to find a measure for value for money that we could all agree on.

We agreed the measure should be as simple as a single number and we kind of agreed how that number could be calculated.

What we couldn’t agree on was whether there was any chance that a single number value for money score could become universal currency in a timely fashion.

Of the 12 of us present for the vote at the end of the meeting, 8 of us thought that there would be no universal measure agreed on by 2020 and 4 of us thought there might be.

Considering we have been moving towards a single measure since the OFT report in 2014, this is a little disappointing (but not surprising)!

This is simply not good enough

We own the money that others manage. As John Kay’s book title pronounces , fund managers make a business managing “other people’s money”.

We do not have to wait for 2020 and the assessments of value offered by the managers. We don’t have to use their and the FCA’s language. We can use our own words, make our own judgements and move our money to the managers we choose without permission from the FCA, advisers – and least of all the asset managers.

The obfuscation of language, the delays in implementation and the granting of licence to determine value to the people under judgement is simply not good enough.

VFM – good enough for the FCA?

The FCA Board minutes have more to say on the use of “VFM”.

The Board was reminded that the organisational approach to value for money (VFM) was set 18 months ago and was consistent with delivering public value. Since that time work had been undertaken to further develop VFM in the organisation in line with the Mission. It was reported that good progress had been made and that VFM now formed part of everyday language and was being embedded with the help of VFM training course alumni.

I have yet to meet a VFM training course alumni – (a happy breed no doubt) – but I’d be interested to know whether they’d be prepared to wait 18 months before pronouncing on whether the FCA’s internal audit suggested it was giving VFM. I wonder if they would be prepared to drop VFM in return for “charges justified in the context of the service and value provided” and I wonder if they expect to be definitive.

In the final estimation, it is not the FCA, but the tax-payer, who is definitive on FCA’s VFM.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in auto-enrolment, pensions and tagged , , , , , , . Bookmark the permalink.

1 Response to Who owns “value for money”?

  1. JHA says:

    Can the FCA be regarded as an organisation which provides VFM?

Leave a Reply