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 Direct and spearhead of the True and Fair Campaign. www.trueandfaircampaign.com

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Why Angela Merkel's comments about the UK and US shouldn't be given too much weight

The Chancellor's comments are aimed at a domestic and European audience, and she won't be abandoning Anglo-German relationships just yet.

Angela Merkel’s latest remarks do not seem well-judged but should not be given undue significance. Speaking as part of a rally in Munich for her sister party, the CSU, the German Chancellor claimed “we Europeans must really take our own fate into our hands”.

The comments should be read in the context of September's German elections and Merkel’s determination to restrain the fortune of her main political rival, Martin Schulz – obviously a strong Europhile and a committed Trump critic. Sigmar Gabriel - previously seen as a candidate to lead the left-wing SPD - has for some time been pressing for Germany and Europe to have “enough self-confidence” to stand up to Trump. He called for a “self-confident position, not just on behalf of us Germans but all Europeans”. Merkel is in part responding to this pressure.

Her words were well received by her audience. The beer hall crowd erupted into sustained applause. But taking an implicit pop at Donald Trump is hardly likely to be a divisive tactic at such a gathering. Criticising the UK post-Brexit and the US under Trump is the sort of virtue signalling guaranteed to ensure a good clap.

It’s not clear that the comments represent that much of a new departure, as she herself has since claimed. She said something similar earlier this year. In January, after the publication of Donald Trump’s interview with The Times and Bild, she said that “we Europeans have our fate in our own hands”.

At one level what Merkel said is something of a truism: in two year’s time Britain will no longer be directly deciding the fate of the EU. In future no British Prime Minister will attend the European Council, and British MEPs will leave the Parliament at the next round of European elections in 2019. Yet Merkel’s words “we Europeans”, conflate Europe and the EU, something she has previously rejected. Back in July last year, at a joint press conference with Theresa May, she said: “the UK after all remains part of Europe, if not of the Union”.

At the same press conference, Merkel also confirmed that the EU and the UK would need to continue to work together. At that time she even used the first person plural to include Britain, saying “we have certain missions also to fulfil with the rest of the world” – there the ‘we’ meant Britain and the EU, now the 'we' excludes Britain.

Her comments surely also mark a frustration born of difficulties at the G7 summit over climate change, but Britain and Germany agreed at the meeting in Sicily on the Paris Accord. More broadly, the next few months will be crucial for determining the future relationship between Britain and the EU. There will be many difficult negotiations ahead.

Merkel is widely expected to remain the German Chancellor after this autumn’s election. As the single most powerful individual in the EU27, she is the most crucial person in determining future relations between the UK and the EU. Indeed, to some extent, it was her intransigence during Cameron’s ‘renegotiation’ which precipitated Brexit itself. She also needs to watch with care growing irritation across the EU at the (perceived) extent of German influence and control over the institutions and direction of the European project. Recent reports in the Frankfurter Allgemeine Zeitung which suggested a Merkel plan for Jens Weidmann of the Bundesbank to succeed Mario Draghi at the ECB have not gone down well across southern Europe. For those critics, the hands controlling the fate of Europe are Merkel’s.

Brexit remains a crucial challenge for the EU. How the issue is handled will shape the future of the Union. Many across Europe’s capitals are worried that Brussels risks driving Britain further away than Brexit will require; they are worried lest the Channel becomes metaphorically wider and Britain turns its back on the continent. On the UK side, Theresa May has accepted the EU, and particularly Merkel’s, insistence, that there can be no cherry picking, and therefore she has committed to leaving the single market as well as the EU. May has offered a “deep and special” partnership and a comprehensive free trading arrangement. Merkel should welcome Britain’s clarity. She must work with new French President Emmanuel Macron and others to lead the EU towards a new relationship with Britain – a close partnership which protects free trade, security and the other forms of cooperation which benefit all Europeans.

Henry Newman is the director of Open Europe. He tweets @henrynewman.

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