Hidden charges: the next big scandal for banks?

The high cost of banks' lack of transparency.


If there’s one thing that the banks have probably had enough of, it’s talk of transparency. After all, their recent run-ins with transparency have been largely unwelcome and revealed some hideous schemes – LIBOR-rigging, for example, and the mis-selling of PPI and interest-rate insurance. No wonder they fear daylight.

In many senses, they’re not in the clear yet. Banks and investment management companies are mysterious, opaque and occasionally downright deceptive about the fees they charge to wrangle your money. One woman is as mad as hell about it and isn’t going to take it any more.

Gina Miller, who with her husband, Alan, runs SCM Private, a wealth management firm, has commissioned a survey as part of her True and Fair Campaign, which shows that 92 per cent of people think that investment managers should be legally obliged to provide information about charges.

Gina has spoken out angrily: “It is completely indefensible that two-thirds of people buying investment products do not know how much they are paying in fees and charges.

“But what is worse is the fact that while we call for transparency and 100 per cent disclosure, the industry continues to hide under a thin rhetorical veil promising more disclosure, not full disclosure, and wraps itself in opaque, ill-defined guidelines.”

The government has already gone to certain lengths to try to ensure transparency with its Retail Distribution Review. Investment managers no longer get paid by the people whose products they sell (a clear inducement to favour those who pay more, not whose products are better) but rather by clients. Clients should never not know what they’re paying.

Yet Gina Miller goes beyond this, to hidden fees and charges from the manager: half a per cent to use foreign currencies here, vastly inflated fees to execute trades there.

This may seem like an issue affecting the few – and who has more sympathy for them? As the True and Fair website points out, however, anyone with savings or a pension is likely to be subject to these sneaky fees, too.

Could fees and charges be the next big scandal for the banks? It’s unlikely – the behaviour is bad, not criminal – but they certainly hurt many people and the more light shone on them, the better for us all.

Fee-fi-fo-fum: banks' fees remain opaque and confusing. Photograph: Peter Macdiarmid/Getty Images

Josh Spero is the editor of Spear's magazine.

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Lord Geoffrey Howe dies, age 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.