We need a more holistic, customer-driven approach to regulation of costs and charges. We need to join up our thinking.
For example, Mifid introduces fund-based investment disclosure in January 2018, yet in October 2018 the IDD introduces more investment disclosure for insured investments.
Mifid demands quarterly disclosure. The IDD and pension regulations are annual. Some investment ‘products’ require illustrations and others, essentially performing the same function, do not.
Taking a piecemeal approach to disclosure creates cost, confusion and inconsistency.
Instead of illuminating, the information provided obscures and distracts. We really need to work with the regulator on this. None of us can be satisfied with the lack of customer understanding and the only way to address this is collectively.
The FCA, platform providers, investment providers and advisers need to get together and listen to customers.
As a platform market, we have eschewed opaque bundled fee arrangements and have embraced transparency. Sadly, however, other parts of the long-term savings and investments markets are regulated differently and to lower standards of transparency.
Sometimes, however, transparency itself can be the challenge. The relentless pursuit of ever increasing detail just surfaces even more confusing charges.
It also does not guarantee good behaviour. Where is the best place to hide a tree? In a forest, of course.
The challenge with ever increasing itemisation is highlighted in the review, with the FCA expressing concern about the complexity of charges incurred by some customers. And I have some sympathy.
When we go beyond the three to four big charge categories - adviser, platform, DFM and funds - there would seem to be diminishing returns from further unbundling.
In truth, delivering a tax wrapped investment solution to a customer involves hundreds of processes each with associated cost. But I don’t think anyone is proposing this level of itemisation.
For me, Mifid crossed a line in demanding disclosure of charges that the customer has no discretion over. While returning to a fully bundled model is not a good outcome, neither is providing ever more detail.
Beyond the myriad of paper flooding through consumers’ letterboxes and inboxes, we need to think differently across the industry.
In the past six years much of the platform industry’s time has been devoted to keeping up with the latest regulation rather than enhancing the experience for platform users.
This is where the regulator can really help; by providing businesses with the space and time to innovate and evolve, by proactively removing barriers to doing so, and, by working with the industry and customers to rationalise and align the disclosure regulations we already have.
