Separating the Wheatley from the chaff

Martin Wheatley is to head the FCA.

On Wednesday Martin Wheatley, who will head up the FCA (the new incarnation of the FSA), made a stirring speech championing the consumer.  At last there appears to be someone with the guts to challenge the "weeds" that have propagated at the FSA.  The biblical reference "to separate the wheat from the chaff" from Matthew 3, means to separate things of value from things of no value; and the serial failings of the FSA has proven they have no value when it comes to consumer protection.

But let us not rejoice just yet, for while Mr Wheatley's speech is excellent news, the FCA will be judged on its actions, not just its words. We have now seen years of procrastination and dithering from various regulators, including the IMA and the FSA and we urgently need statutory guidelines to ensure full transparency that will lead to vastly improved investor and saver outcomes.

Whilst his comments suggest he intends to show strong leadership and tackle hidden charges and fund fund fees at the FCA, Martin Wheatley is not going to have an easy job and is going to be heavily interventionist if he is to succeed. The industry is only just beginning to step reluctantly in the direction of giving greater transparency.  There are very mixed messages still circulating in the industry, causing yet more confusion for savers and investors. The most recent example being the IMA’s Annual Asset Management Report, issued this month, which stated that “investment clients are paying fund fees of a fraction over 0.3 per cent across the board”. This completely ludicrous claim puts efforts to regain consumer trust in financial products and the financial services sector back several years.

In my view, strong, clear leadership, a single industry standard on transparency of fees and charging, and a standardised method of reporting all costs and fees via one single total cost of investing number are essential steps to ensure consumers know the full price they will pay for investment products prior to purchase. 

However we also need to address other anti-consumer practices (which we have been highlighted by the True and Fair Campaign) including the failure to give full disclosure to consumers on where their money is invested; closet index tracking by active funds; fund mislabelling and mis-classification and conflicts of interest in stock lending.

There is much to do to improve the shockingly low standards of investor and saver protection in the UK.  Change is long overdue and must come soon, otherwise we risk further alienating savers and investors and damaging the financial services industry, and the UK economy. Martin Wheatley’s comments are extremely welcomed but we urge stakeholders to keep a watchful eye out for early action from the FCA to honour this pledge to give genuine transparency.

Gina Miller is the founding partner of SCM Private LLP and spearhead of the True and Fair Campaign.


Martin Wheatley. Photograph: Getty Images

Gina Miller is the founding partner of SCM Private LLP and spearhead of the True and Fair Campaign.

Photo: Getty Images
Show Hide image

The future of policing is still at risk even after George Osborne's U-Turn

The police have avoided the worst, but crime is changing and they cannot stand still. 

We will have to wait for the unofficial briefings and the ministerial memoirs to understand what role the tragic events in Paris had on the Chancellor’s decision to sustain the police budget in cash terms and increase it overall by the end of the parliament.  Higher projected tax revenues gave the Chancellor a surprising degree of fiscal flexibility, but the atrocities in Paris certainly pushed questions of policing and security to the top of the political agenda. For a police service expecting anything from a 20 to a 30 per cent cut in funding, fears reinforced by the apparent hard line the Chancellor took over the weekend, this reprieve is an almighty relief.  

So, what was announced?  The overall police budget will be protected in real terms (£900 million more in cash terms) up to 2019/20 with the following important caveats.  First, central government grant to forces will be reduced in cash terms by 2019/20, but forces will be able to bid into a new transformation fund designed to finance moves such as greater collaboration between forces.  In other words there is a cash frozen budget (given important assumptions about council tax) eaten away by inflation and therefore requiring further efficiencies and service redesign.

Second, the flat cash budget for forces assumes increases in the police element of the council tax. Here, there is an interesting new flexibility for Police and Crime Commissioners.  One interpretation is that instead of precept increases being capped at 2%, they will be capped at £12 million, although we need further detail to be certain.  This may mean that forces which currently raise relatively small cash amounts from their precept will be able to raise considerably more if Police and Crime Commissioners have the courage to put up taxes.  

With those caveats, however, this is clearly a much better deal for policing than most commentators (myself included) predicted.  There will be less pressure to reduce officer numbers. Neighbourhood policing, previously under real threat, is likely to remain an important component of the policing model in England and Wales.  This is good news.

However, the police service should not use this financial reprieve as an excuse to duck important reforms.  The reforms that the police have already planned should continue, with any savings reinvested in an improved and more effective service.

It would be a retrograde step for candidates in the 2016 PCC elections to start pledging (as I am certain many will) to ‘protect officer numbers’.  We still need to rebalance the police workforce.   We need more staff with the kind of digital skills required to tackle cybercrime.  We need more crime analysts to help deploy police resources more effectively.  Blanket commitments to maintain officer numbers will get in the way of important reforms.

The argument for inter-force collaboration and, indeed, force mergers does not go away. The new top sliced transformation fund is designed in part to facilitate collaboration, but the fact remains that a 43 force structure no longer makes sense in operational or financial terms.

The police still have to adapt to a changing world. Falling levels of traditional crime and the explosion in online crime, particularly fraud and hacking, means we need an entirely different kind of police service.  Many of the pressures the police experience from non-crime demand will not go away. Big cuts to local government funding and the wider criminal justice system mean we need to reorganise the public service frontline to deal with problems such as high reoffending rates, child safeguarding and rising levels of mental illness.

Before yesterday I thought policing faced an existential moment and I stand by that. While the service has now secured significant financial breathing space, it still needs to adapt to an increasingly complex world. 

Rick Muir is director of the Police Foundation