[Estimated time to read: 7 minutes]
There’s a lot to be said for the expat lifestyle – but there is one major drawback.
It’s never really discussed, because there’s nothing expats can do about it.
It’s the fact that we cast ourselves adrift from support when we move abroad.
For the majority of people the majority of the time, it’s fine…
Most of us get good at socialising, and we build up a new support network to help us navigate the complexities of our life abroad.
But occasionally, wouldn’t it be nice to know that someone’s got your back when it comes to serious matters, like money?
What has regulation ever done for us?
Even in countries with regulation, consumers still end up being appallingly treated by the financial industry.
So, in the style of Monty Python perhaps, it’s fair to ask: ‘what has regulation ever done for us?’
Britons have suffered significantly in spite of the existence of the Financial Conduct Authority, the Prudential Regulation Authority and their predecessors for example.
Who can forget scandals like these?
- Personal pension mis-selling
- Endowment mis-selling
- Equitable Life’s guaranteed with profits epic failure
- Split cap mis-selling
- Precipice bond mis-selling
But personally, I believe regulation is about having to start somewhere to protect the public interest.
I also accept that more can and must be done to protect people and their money, no matter where in the world they live, save or invest.
Which is why I want to tell you about the work of the Transparency Task Force.
What’s the Transparency Task Force?
The Transparency Task Force (TTF) is the campaigning community fighting your corner.
It’s dedicated to driving up the levels of transparency in financial services, right around the world.
TTF members believe that higher levels of transparency are a prerequisite for fairer, safer and more efficient markets, which deliver better value for money, and better outcomes for people like you.
The organisation was only established last year, and only held its inaugural public meeting last week, but already it’s succeeding in drawing high level global attention to the opacity in financial services, and the damage a lack of transparency in costs and fees causes consumers.
As the only member of the Transparency Task Force in Europe and the MENA region, I know my organisation has got an awful lot of work to do to promote the fight for transparency for expats like you.
But, together with my fellow members in the rest of the world, we are committed to the cause.
And for the sake of your money, we’ve got your back.
Because we have to start somewhere…
In order to ensure transparency, improving regulation (where it exists) is one of the first items on the Transparency Task Force’s agenda.
To that end we have just published an open letter to the chair of the Work and Pensions Committee, The Rt. Hon Frank Field MP, and I’d like to share it with you (see below).
Whilst it’s focused on the British pensions industry, it gives insight into what we hope will be achievable one day globally.
And until then, for anyone who has to fight their own corner, just keep these two things in mind:
- The costs you pay when you save and invest can have a massive negative impact on your returns.
Simply cut your superfluous costs, and you get a guaranteed improvement in your financial position.
Find out exactly how you can cut all your own costs with a portfolio review.
- The international financial marketplace is under-regulated, leading to increased risk for you.
You can reduce this risk by choosing an ethical, professional Chartered Financial Planner if ever you seek financial advice.
Download this checklist so you can check anyone’s credentials before you trust them.
Our open letter
The Rt. Hon Frank Field MP
Chair, Work and Pensions Committee
House of Commons
London SW1 OAA
Dear Mr. Field,
We are writing to you as a group of independent individuals and organisations, motivated and united by the desire to help protect the interests of the UK’s saving public, through the better provision of transparent, consistent and straightforward disclosure of all the costs and charges they pay.
The issues raised in this letter affect Defined Benefit and Defined Contribution pension schemes and cannot be dealt with fully under the scope of your existing Defined Benefit pensions enquiry.
It is vital that we have transparent, consistent and straightforward costs disclosure because opacity and obfuscation on pension and investment costs leads to:
#1. Decision-makers, including consumers, being unable to exercise ‘informed choice’ properly: They find the market opaque, complex and confusing: It is difficult to identify value for money.
#2. The risk of future litigation: Consumers may argue they are not being treated fairly. Such action would severely damage confidence in the sector and its intermediaries.
#3. Seemingly impotent market forces: In this sector, the ‘invisible hand’ seems unable to work its ‘magic’ to create a healthy, competitive and efficient market.
#4. Poor consumer outcomes: If costs are 2% p.a. and gross market returns 5% p.a., a 20-year-old saving £100 per month until 65 will lose 42.55 % of his/her pension fund to costs.
#5. A marketplace where progressive, innovative and highly cost-effective offerings that do represent good value for money inexplicably struggle to get the market share they should.
#6. The risk that the success of the Government’s pensions policy is jeopardised: Those automatically enrolled might opt out if they are later disappointed by their net of costs returns.
#7. The risk that should the ‘high costs/low returns’ reality continue to prevail, belief in the wisdom of deferred gratification and confidence in long term savings will be undermined.
#8. Investment Governance Committees and Trustee Boards struggle with their duty to manage scheme’s costs properly: ‘You can’t measure, monitor or manage what you cannot see.’
#9. Bad publicity, falling trust and apathy: The public’s confidence in pensions is falling sharply and we want to stop it falling ‘below the point of no return’: This is a serious and systemic risk.
#10. The UK’s savings market, including pensions, not being seen to be well-governed, transparent and trustworthy: That’s a particularly important point in our post-Brexit world.
Furthermore, we believe that savers should not only know what their savings cost; they should also know where and how their money is invested. Greater transparency in investment holdings and the stewardship around those holdings is needed. On the basis that it is hard even for MPs to establish where and how their own Parliamentary Contribution Pension Fund is being invested, it follows that the public as a whole may be similarly challenged.
In general terms, we believe that:
- This is an important and widespread public interest issue; it has parallels with the known shortcomings that are affecting the energy sector’s opaque and complex regime of tariffs.
- Greater transparency on costs and investment holdings will help create the better-served, better-engaged and better-performing savings market we all want.
- There is merit in doing all we collectively can to help sustain the success of the Government’s automatic enrolment pensions policy.
- In a post-Brexit world, we shouldn’t underestimate the value to our economy of the potential for the UK becoming the world-leader in pensions and investing transparency.
- Your Committee is uniquely placed to lead an open enquiry that we are confident would be run in a constructive, forensic, inclusive, robust and non-partisan way, for the long-term benefit of all.
- There is excellent regulatory activity underway by DWP, FCA and TPR; your enquiry would support that work by ‘pulling it all together’, creating an even more cohesive approach.
To conclude: For reasons of social justice, market efficiency, good governance, national reputation and to help protect the ongoing success of the Government’s pensions policy, we would like your Committee to open an enquiry into the matters set out in this open letter.
We look forward to hearing from you.
For administrative purposes please reply to firstname.lastname@example.org
All Transparency Task Force members
Please tell me what you think…
At the TTF I’m representing the interests of arguably the largest yet least represented group – that is, expatriate savers and investors like you.
I have a hope that the work we’re doing, and through the correlation between transparency and trust, the Transparency Task Force will eventually repair the reputational damage that my sector still (rightly) suffers.
But we have a long way to go, and I welcome your thoughts…
How do you think we can further raise awareness of the issues that a lack of transparency causes?
Please let me know in the comments below, how you would like to see your interests best represented by the TTF.