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.

Photo: Getty
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Who will win the Copeland by-election?

Labour face a tricky task in holding onto the seat. 

What’s the Copeland by-election about? That’s the question that will decide who wins it.

The Conservatives want it to be about the nuclear industry, which is the seat’s biggest employer, and Jeremy Corbyn’s long history of opposition to nuclear power.

Labour want it to be about the difficulties of the NHS in Cumbria in general and the future of West Cumberland Hospital in particular.

Who’s winning? Neither party is confident of victory but both sides think it will be close. That Theresa May has visited is a sign of the confidence in Conservative headquarters that, win or lose, Labour will not increase its majority from the six-point lead it held over the Conservatives in May 2015. (It’s always more instructive to talk about vote share rather than raw numbers, in by-elections in particular.)

But her visit may have been counterproductive. Yes, she is the most popular politician in Britain according to all the polls, but in visiting she has added fuel to the fire of Labour’s message that the Conservatives are keeping an anxious eye on the outcome.

Labour strategists feared that “the oxygen” would come out of the campaign if May used her visit to offer a guarantee about West Cumberland Hospital. Instead, she refused to answer, merely hyping up the issue further.

The party is nervous that opposition to Corbyn is going to supress turnout among their voters, but on the Conservative side, there is considerable irritation that May’s visit has made their task harder, too.

Voters know the difference between a by-election and a general election and my hunch is that people will get they can have a free hit on the health question without risking the future of the nuclear factory. That Corbyn has U-Turned on nuclear power only helps.

I said last week that if I knew what the local paper would look like between now and then I would be able to call the outcome. Today the West Cumbria News & Star leads with Downing Street’s refusal to answer questions about West Cumberland Hospital. All the signs favour Labour. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.