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. www.trueandfaircampaign.com

 

Martin Wheatley. Photograph: Getty Images

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

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Everyone's forgotten the one issue that united the Labour party

There was a time when Ed Miliband spoke at Momentum rallies.

To label the row over the EU at Thursday’s Labour leadership hustings "fireworks" would be to endow it with more beauty than it deserves. Owen Smith’s dogged condemnation of John McDonnell’s absence from a Remain rally – only for Corbyn to point out that his absence was for medical reasons – ought to go down as a cringing new low point in the campaign. 

Not so long ago, we were all friends. In the course of the EU referendum, almost all of the protagonists in the current debacle spoke alongside each other and praised one another’s efforts. At a local level, party activists of all stripes joined forces. Two days before polling day, Momentum activists helped organise an impromptu rally. Ed Miliband was the headline speaker, and was cheered on. 

If you take the simple version of the debate, Labour’s schism on the EU appears as an aberration of the usual dynamics of left and right in the party. Labour's left is supposedly cheering a position which avoids advocating what it believes in (Remain), because it would lose votes. Meanwhile, the right claims to be dying in a ditch for its principles - no matter what the consequences for Labour’s support in Leave-voting heartlands.

Smith wants to oppose Brexit, even after the vote, on the basis of using every available procedural mechanism. He would whip MPs against the invocation of Article 50, refuse to implement it in government, and run on a manifesto of staying in the EU. For the die-hard Europhiles on the left – and I count myself among these, having run the Another Europe is Possible campaign during the referendum – there ought to be no contest as to who to support. On a result that is so damaging to people’s lives and so rooted in prejudice, how could we ever accept that there is such a thing as a "final word"? 

And yet, on the basic principles that lie behind a progressive version of EU membership, such as freedom of movement, Smith seems to contradict himself. Right at the outset of the Labour leadership, Smith took to Newsnight to express his view – typical of many politicians moulded in the era of New Labour – that Labour needed to “listen” to the views Leave voters by simply adopting them, regardless of whether or not they were right. There were, he said, “too many” immigrants in some parts of the country. 

Unlike Smith, Corbyn has not made his post-Brexit policy a headline feature of the campaign, and it is less widely understood. But it is clear, via the five "red lines" outlined by John McDonnell at the end of June:

  1. full access to the single market
  2. membership of the European investment bank
  3. access to trading rights for financial services sector
  4. full residency rights for all EU nationals in the UK and all UK nationals in the EU, and
  5. the enshrinement of EU protections for workers. 

Without these five conditions being met, Labour would presumably not support the invocation of Article 50. So if, as seems likely, a Conservative government would never meet these five conditions, would there be any real difference in how a Corbyn leadership would handle the situation? 

The fight over the legacy of the referendum is theatrical at times. The mutual mistrust last week played out on the stage in front of a mass televised audience. Some Corbyn supporters jeered Smith as he made the case for another referendum. Smith accused Corbyn of not even voting for Remain, and wouldn’t let it go. But, deep down, the division is really about a difference of emphasis. 

It speaks to a deeper truth about the future of Britain in Europe. During the referendum, the establishment case for Remain floundered because it refused to make the case that unemployment and declining public services were the result of austerity, not immigrants. Being spearheaded by Conservatives, it couldn’t. It fell to the left to offer the ideological counter attack that was needed – and we failed to reach enough people. 

As a result, what we got was a popular mandate for petty racism and a potentially long-term shift to the right in British politics, endangering a whole raft of workplace and legal protections along the way. Now that it has happened, anyone who really hopes to overcome either Brexit, or the meaning of Brexit, has to address the core attitudes and debates at their root. Then as now, it is only clear left-wing ideas – free from any attempt to triangulate towards anti-migrant sentiment– that can have any hope of success. 

The real dividing lines in Labour are not about the EU. If they were, the Eurosceptic Frank Field would not be backing Smith. For all that it may be convenient to deny it, Europe was once, briefly, the issue that united the Labour Party. One day, the issues at stake in the referendum may do so again – but only if Labour consolidates itself around a strategy for convincing people of ideas, rather than simply reaching for procedural levers.