Here are some thoughts that I have shared with Darren and Nico.

Firstly, this is the right project at the right time, the DWP are due to launch a consultation on this subject any time.

Secondly, the British public are confused by versions of value for money being touted by various  groups, all of which are touched by vested interest.

• Those who want to focus purely on money, have already done good work in making us aware of efficiency through transparency. Thank Chris Sier and many others for that.
• Those who have focussed on value include entrepreneurs working in private market, I give as an example Edi Truell who offers access to areas of growth in the world economy that cannot be tapped from public markets.
• And if we look at quality of service, we can go to organisations where the people who buy into the services on offer, rate them most highly. Pension Bee and St James’ Place come to mind.
• And most importantly , there are people who listen – people like Jannette Weir of Ignition House who listen to what the people on the buy side are asking for , what their measure of value for money is.

My personal view is that people are starved of information to tell whether they are getting value for money. When Tesco staff were shown what their pension costs, they replied, “what’s it worth?”. People don’t use price as the sole measure of value , they measure value by what they get. It’s silly to label this purely in terms of the size of the pot or the amount of pension , because what people get along the way is important too.

Pension Bee and SJP could both argue that the savings outcome is dependent on “money in” as well as “money out” and investment performance. “Money in” happens when their is confidence in what is going on – and marketing and customer service do matter along the way. Even if the destination can be measured financially, the journey matters too

So VFM – the holy trinity of Cost-Performance- Service, cannot be dominated by any of those three factors and people need to make up their mind on where they can get VFM by juggling their perception of each and weighting their importance according to what they think,

And of course that is impossible for most of us. We struggle to make financial purchases and we’ve known about this for a decade . This is the Office of Fair Trading in 2013.

What can be done?

In Australia, their pensions regulator now requires providers to report costs, performance – even quality of service – explicitly to the consumer and that information is assessed and converted into consumer friendly league tables showing who are delivering value and who aren’t. The losers tend to get swallowed by the winners (which may create its own problems over time)

People are free to support those at the top of the charts , stick with middling performers (no nasty shocks). They can even choose to put money with providers who have done lousily, based on “mean reversion”.

This way of displaying value for money in terms of outcomes is brutal and meets with plenty of opposition in Australia (as it would do here). But it is the way that the Australian Government has chosen to put information in the hands of consumers and I think it beats “price comparison” or “fund factsheets” or “trust pilot” as the comparisons have been taken away from the pension industry and put in the hands of a Government who (while I am sure  is occasionally reviled) is better trusted.

I think there is a strong case for taking VFM measurement out of the hands of trustees, IGCs and those doing value assessments within the funds industry. I suggest that we set standards that measure cost, performance and service independently and that we use the immutable technology of distributive ledgers to guard against manipulation of data.

Standards are easier to create than legislation and a lot cheaper to maintain than the regulation of VFM as it is done now. The public needs a simple way to assess the quality of the product they are using and a way to compare it with alternatives, whether that product be for retirement saving or for the product that returns savings in retirement.

Here the Government has the key role, it must become the standard setter and the monitor of the measurement of cost, performance and service. And it must find a way to measure, that is consistent across the piece, whether you save with Nest of AJ Bell.

This can be done and can be done by the end of the decade. It will almost certainly not be delivered by this Government and maybe not by the next, but delivered it must be – as an essential deliverable of the pension dashboard.

And this project is a step along that road.

Darren Philip