GMB Call On Labour Party To Outlaw “Legalised Looting” Of Workers Savings By Pensions And Investments Industry
Report confirms that many pension providers and investment funds are operating like licensed thieves operating in plain sight, with not one, but both hands in pensioner’s and savers pockets says GMB.
GMB commented on the report from the “True and Fair Campaign” report entitled 'Legalised Looting' which calls for OFT Investigation of Retail Investment Industry. See notes to editors for copy of press release from True and Fair Campaign.
Paul Kenny, GMB General Secretary, said “This report confirms GMB view that many pension providers and investment funds are operating like licensed thieves operating in plain sight, with not one, but both hands in pensioner’s and savers pockets.
GMB members have had enough of the pirates who are charged with delivering the UK's retirement but who refuse to offer best value and transparency for hard working people.
Despite all the scandals of the financial services industry that has stolen hundreds of billions from savers, this new report proves the government has failed to protect the public from the greed of their City mates.
The accumulated charges hidden in ordinary investment funds sold to the public remain a scandal that regulators must act on or step aside.
This report comes ahead of the Government's long awaited response on charging and provides further evidence that a cap on charges is needed now. But Government must go further - GMB cannot have confidence in a system unless it has a legal duty to prioritise the interests of scheme members.
This means full transparency of costs and investment returns and allowing workers a say in selecting workplace pension providers and to play a full part in their governance structure. Anything less will simply serve to continue the piracy.
GMB call on the Labour Party to propose new measures to turn the lights on in these dark corners of the pensions and investment industry, and demand a fair deal for British workers, savers and pensioners."
Contact Phil McEvoy 079187 68773 or Brian Strutton 07860 606 137 or Maria Ludkin 07956 632657 or GMB press office 07921 289880
Notes to editors
True and Fair Campaign Report 'Legalised Looting' Calls for OFT Investigation of Retail Investment Industry
LONDON, March 26, 2014 /PRNewswire/
New report finds UK investors are being cheated on a like-for-like basis compared to US investors by paying 58% more on their investments
1/3 of investors are unaware of the fees they are being charged by fund managers
Post RDR, unbundling of fees has resulted in overall charges increasing by 28%
Campaign claims annuity shakeup is only a partial fix without total cost transparency
UK investors are paying 58% more for investments on a like-for-like basis, than those in the US, according to the True and Fair Campaign. The findings, published in a new report entitled Legalised Looting to mark the second anniversary of the True and Fair Campaign (http://www.trueandfaircampaign.com), also reveals that US investors benefit from economies of scale that are passed on to them, receiving a discount of 33% on charges when investing in the largest funds, compared to just 6% in the UK. Furthermore, a lack of competition and cartel-like pricing costs UK investors £1.14 billion more per annum compared to US investors.
The report provides a quantum of evidence that reads as a damning dossier of anti-consumerism which provides clear and compelling evidence that the UK investment industry is operating against the public interest, and as such warrants a full OFT investigation.
After the Chancellor's radical shake up of the annuities and ISA markets, millions of UK investors will be weighing up the options of new savings and wider investment choices for their hard earned money. Whilst this increased choice is a positive step for savers, these new measures completely ignore the endemic crisis of fee transparency that is crippling the returns of pension and investment products, according to the True and Fair Campaign.
Gina Miller who spearheads the True and Fair Campaign and is a founder of SCM Private said, "After reading this report, savers should be up in arms and demand to know why successive governments and regulators have allowed these scurrilous practices to continue. For over 10 years US investors have had a much fairer deal, and benefitted from an investment industry with higher standards and ethics. The US regulator and politicians have ensured their investors benefit from much greater transparency, a more competitive industry, less conflicts of interest and considerably lower charges. The question is why have the UK regulator and politicians been dragging their feet for so long?
"The Budget illustrates that the Government has finally woken up to the scandalous treatment of pensioners in respect of annuities. However the annuity pensions' shakeup is only a partial fix. If pensioners choose an investment fund rather than an annuity, they can still be ripped off as they will not know the true total cost. Instead they will be jumping out of the frying pan into the fire.
"Without fundamental change across all pension and investment products in terms of total cost and fee transparency, millions of people will end up simply being fleeced by another part of the investment industry, and possibly the insurance industry who are bound to develop new products with incomprehensible charging structures."
"Instead of just lancing the boil, there needs to be practical but fundamental changes in terms of transparency of cost and holdings to ensure the anti-consumerism operating across the pensions and investment industries is surgically removed."
Highlights from the report, 'Legalised Looting' include:
In UK retail funds alone, double charging and 'cartel-like' pricing together costs savers £2.6 billion pa
UK investors are paying 58% more than US investors
Post RDR - unbundling of fees has resulted in overall charges increasing by 28%
Layers of charges likely to erode over ½ overall returns after inflation
29% of UK investors don't know their charges
45% don't know their overall returns
73% of UK investors are demanding to see just ONE cost number and more than a quarter would save more if UK industry provided this
Worryingly, 26% of UK consumers do not intend to invest anything in 2014
Gina Miller continues, "The UK investment industry operates an Alice in Wonderland existence where nothing is as it seems. Even senior investment insiders admit they cannot understand what the costs are. In a stock market likely to continue producing single digit returns, there is no place for complacency, lengthy consultations and passing the buck. The Government needs to intervene and encourage a full OFT investigation."
Notes to editors:
Based on an independent online survey conducted by Research Plus Ltd on behalf of SCM Private for the True and Fair Campaign. A total of 2,046 UK adults aged 18 and over, were surveyed between 31st January - 5th February 2014.