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.