The financial services industry has a bad name and a lack of transparency. Insider Gina Miller is trying to do something about that.
Here, she talks about the True And Fair Campaign, and about what she hopes will come of it. It remains to be seen if the powers-that-be will be as enthusiastic about it as she is.
Alexander Baron: Your True And Fair Campaign was launched about 3 months ago. Can I ask you what made you come up with it?
Gina Miller: We experienced a number of issues in relation to our own money; as well as friends and family during the autumn crisis of 2008. These included being invested in high risk products that were sold to us as low to medium risk, locked into funds that were supposed to be liquid, finding out that our costs had eroded returns to shocking levels, as well as a general disrespect and appalling customer service.
We could not find a company that ticked all the boxes we were looking for so we decided to run our own money as a family office and invite others who felt confident enough to join us.
Our backgrounds and experience gave us the skills and experience to establish SCM Private — www.scmprivate.com. In seeking to be competitive we sought to analyse other managers’ fees and were shocked at what we found in terms of opaqueness and basically malpractices. We launched in June 2009 and have been highlighting these issues ever since.
SCM Private embodies what we are calling for in the True And Fair Campaign. Since launching we have produced a number of reports exposing issues such as Stock Lending, hidden fees, closet tracking and active under-performance. But no action appeared to be happening. We came to the conclusion that nothing would change as there is no regulatory or commercial incentive that would drive behavioural change; and there appeared to be very little recognition that consumer protection needs to be improved. With our experience and knowledge we felt we were well placed to create a storm that would bring about change.
AB: What exactly are you, a voluntary group? How are you currently funded?
GM: True And Fair, and SCM Private are two brands in the SCM Group of challenger brands. Through all our businesses and projects we are focused on treating all clients / customers with respect and operate via three pillars of trust, honesty and integrity. The lion’s share of profits from SCM Private are directed into our foundation - www.millerphilanthropy.com and www.goodwillexchange.co.uk. In terms of the campaign, this is entirely funded by us.
AB: Your main demand is for transparency, in particular you ask that funds publish details of all their fees and charges. Without naming names, can you give our readers some examples of what these fees and charges are?
GM: In the attached report – pages 22 to 27.
AB: You’ve had a fair amount of press coverage but your YouTube video hasn’t had even a hundred hits. A cynic might suggest with that level of apathy, investors deserve everything they get. How are you going to get people to wake up to your message?
GM: The industry is depending on this inertia but I would make a couple of analogies. If the legal or medical professions were behaving unethically or fraudulently, it would be their associations, politicians and regulators that would be demanding higher standards and greater consumer protection; this has not been the case in financial services. It would not be up to the consumer to challenge the industries’ practices. That said we are seeking support and encouraging investors to make their voices heard. Facebook appears to be the better medium for doing this.
AB: Have you lobbied Parliament or individual MPs, and do you think that would do any good?
GM: The most support is coming via lobbying. We have met with The Treasury, Cabinet Office, all party MPs — and have secured the tabling of a parliamentary debate around fees and transparency. We have also met with a number of Lords and have had support from several who have fed in two amendments we proposed into the new Financial Services Bill which has not been well received by the industry. The most forceful support we have had has come from Brussels. Our code and True And Fair label have been incorporated into MiFID 11.
AB: In October 2010, the BBC Panorama programme investigated managed funds. One woman who took early retirement went to her bank, gave them £11,000 to invest, and they turned it into 5,000 for her.
To me that suggests that the so-called professionals don’t have a clue what they’re doing. Wouldn’t people be better off managing their own portfolios, as some choose?
Alternatively, perhaps they could invest it in a central, government pool, at least that way they wouldn’t have to pay any charges? Where do you personally draw the line between investing, and what has been called casino banking? Is there a need for safeguards to prevent these funds from simply churning the money of the people who entrust them with their life savings?
GM: We wholeheartedly agree that the financial services sector has forgotten the human face of looking after people’s money. We do need the industry as no government or political party will be able to provide for the aging population. But we need to deconstruct the industry, have more rigorous safeguards against self-interest and basically fraudulent practice, and in our view the key is transparency.
The rebuttal we receive is that we are irresponsible scaremongers, but in my view if people see the truth and decide that it is either too expensive or risky for them and decide to either do-it-yourself invest or keep in cash, well that is the right decision for them. People need to be able to make fully informed decisions PRIOR to purchase.
AB: Anything else you’d like to add?
GM: The report sums up most of our thoughts, as does the True And Fair Code.
AB: Gina Miller, thank you very much.
[The above op-ed was first published July 28, 2012. As the reader will see from the linked Third Sector article, that was as good as it got for True And Fair.]
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