A new report has highlighted the loss of trust in financial services, as savings rates reach a record low.
The Transparency Task Force (TTF) has released a report with RSA and Newgate Communications which calls for regulators to put consumer interests first and pre-empt problems in pensions and finance, rather than dealing with losses after they’ve happened.
The report highlights many ways in which trust can be improved including banning unregulated investments in SIPPs as a means to better protect consumers.
TTF has now established a global network of interested groups to tackle this issue, increase trust and improve consumer outcomes.
Matthew Taylor, chief executive at the RSA said: “There is a crisis of distrust impacting financial services – if you take trust out of financial services you really don’t have very much left.
“It makes sense to bring the key stakeholders together to develop a plan of attack and it makes sense to do that on an international basis. At the RSA we have over 29,000 members around the world and I’m sure many of them feel as I do, that the finance sector needs reforming in such a way that it reconnects with its true purpose, to serve society.”
There is a sense of disillusion and scepticism about the motives of financial firms.
Rogue traders, lax regulation and unregulated products have caused major scandals and losses, feeding the perception that regulators are always behind the curve, rather than pre-empting and preventing problems in the first place.
Alistair Kellie, managing partner at Newgate Communications and a member of the Advisory Board of the TTF, said: “The financial services sector continues to have a reputation problem that needs managing, and it’s going to take a continued effort from all stakeholders to change perceptions by working collaboratively and in the public interest.”
The report highlights how the vast majority of workers are in defined contribution schemes, where the level of contributions, investment returns and charges will determine their future pensions. It suggests that more transparency, fairer charges and improved products can encourage higher contributions.
These efforts were welcomed by Lesley James, director at Simplified Money, who said: “I am actually a member of the TTF – and a big advocate of everything they are doing.
“I agree with the principle of banning, or at least severely limiting, unregulated investments in SIPPs. Pension products attract tax relief to incentivise you to save for a decent future. I am not convinced pensions need to allow such a wild array of options to achieve that decency objective. If a person is rich enough and adventurous enough to want to be in such schemes, they can find other ways.”
Aamina Zafar is one of the UK’s leading financial journalists. She has previously worked as a senior reporter at FT’s Financial Adviser. The award-winning journalist writes regularly on the IFA community, mortgages, pensions and financial regulation.
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