Here I go again, commenting on that feature in last weekend’s “Sunday Times Money.”
The new financial regulator, or watchdog as we have to call them nowadays (just as Train Manager is “Newspeak” for Ticket Inspector), is the FCA. It replaces the mostly-unlamented FSA. When I told a friend about that, he said, very logically, “Why did they have to set up a new body? Why couldn’t they fix what was wrong with the FSA?”
One of the things the newspaper urges for attention is that of “complex” and “harmful” fund charges. It slammed asset managers for making their fee structures unnecessarily complicated in such a way that price comparisons were difficult.
Do they do that? I am reminded of the time-honoured line from British actor Ian Richardson’s most famous character: “You might very well think that. I couldn’t possibly comment.”
Utility companies tarred with same brush
Just yesterday (03.04.13) I was listening to a news item on BBC Radio 4, about the fact that a major gas and electricity provider had been fined for devious practices, one of which was similar to what we’re discussing here; creating confusing numbers of tariffs that made sensible decision-making by consumers difficult. So the financial services industry is not alone; and to the list that includes asset managers and utility providers, we could add mobile phone companies.
The FCA’s first business plan (which must have been written before they opened for business, which is impressive in itself) also slammed asset managers for “downplaying the long-term impact of apparently small increases in annual charges.”
Here’s the strange thing. The rules have changed so that commission for financial advisers is now banned. I thought that would make the market more transparent but, according to the feature, this has made the situation worse. In some cases investors could be paying different charges for the same fund.
What can you do?
The feature says you can save thousands in charges by investing online. Well, yes, provided you get impartial information to guide your investment decisions. The term “caveat emptor” has long-term implications when you have to decide which funds to invest in. It will not surprise you to hear that the intermediaries who manage your funds will sometimes promote those investment products that suit them, not you. The Sunday Times recommended candidmoney.com and that site seems to be full of comprehensive and, presumably, impartial advice.
WANT TO KNOW MORE?
For the Sunday Times Money feature “Our demands for the new consumer watchdog”, click HERE.
For the investment section of the candidmoney site, click HERE.