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Lord Myners: Financial services rich at private investors’ expense

Lord Myners
Lord Myners

Former City minister Lord Myners has criticised the financial services industry for its successful lobbying of the Government, claiming fund managers and intermediaries have been made rich at the expense of the companies they set out to help build.

According to a report by The Times, Lord Myners made the claims while giving evidence from the Kay review of UK equity markets to the Business, Innovations and Skills Committee.

Lord Myners, who was previously chief executive of Gartmore, argued he had witnessed first hand Gordon Brown’s Government being heavily lobbied by the financial industry so it could get preferential treatment – at the expense of private investors.

He points out that during this time, despite 90 per cent of unit trusts underperforming the FTSE 100 index over five years, the Government had been “persuaded that maximum charges on unit trusts should be lifted”.

Lord Myners was heavily critical of the behaviour of both institutions and institutional investors, declaring that business is being “destroyed by short-term gain”, as big institutions sell out of failing businesses rather than trying to turn them around.

He also accused the public company ownership model of “failing its primary economic purpose”, with thousands of “ownerless corporations” created as a result of institutional investors being too big and too passive when steering the companies in which they invest.

Lord Myners suggested that the “agglomeration of ownership among a few very large investment institutions” is of greater concern than the internationalisation of ownership and also argued that “too many companies are being publicly quoted and would be better off privately owned”.

Lord Myners concluded that the recommendations from the Kay review would not adequately solve any of these issues.

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. “Rich”, now there`s a word with various meanings!!

  2. Rather like politicians getting preferential treatment while the people they represent are saddled with the Government credit card debt.

    Put your own house in order first

  3. So here is the former chief executive of one of our larger fund managers saying WE were paid too much money…

    The average IFA earns I guess c £60k. This in exchange for lifelong unlimited liability and the unbelievable stress (for many at least) of the last few years.

    Fund managers and banks have screwed the system but IFAs have not and it is time someone started to challenge these numpties.

  4. Lord Myners was chairman of Aspen Insurance Holdings for 5 years, a Bermuda-based insurance company, that managed to avoid more than £100M a year in tax. On top of that Myners was also chairman of Liberty Ermitage, an offshore fund based in Jersey. For good measure, Gartmore, the fund management company that Lord Myners chaired for 15 years, also ran a Jersey-based offshore business.
    http://hmrcisshite.blogspot.co.uk/2012/11/lord-myners-talks-bollocks.html

  5. Terence P. O'Halloran 15th February 2013 at 12:32 pm

    And this (reported comment) from the man who is one of the main architects of the destruction of the financial services sector.

    One thing about devout socialists they never own up to their own shortcomings and seldom observe objectively the chaos they distribute.

    This man will go down in history alongside Gordon Borrie, another socialist and ideological noble Lord, destroyer of the Maximum Commission Agreement (co incidentally; just when the banks had got themselves into trouble in the early 1990s). Remember 230% commission payments to banks. That was Borrie!

    Hypocrisy is a byword for Lord Myners – best ignore his obfuscation lest he does more damage.

  6. His comments hit the nail on the head – capitalism isn’t working when the owners of the capital (individual savers and pension fund owners) have minimal influence over how the capital is employed and don’t reap the profits. Value is sucked out of companies by the executives running them (unchecked by the institutions who are supposed to act in the interests of their clients) and further eroded by fund management groups who see their investors’ money as something to milked for all its worth in terms of fees and charges – even to the extent of lending stock to short sellers (further suppressing the value) but keeping the stock lending fees for themselves rather than allocating it to investors.

    The quickest resolution would be for the government to clarify best practice for the percentage split of company profits allocated to executives vs shareholders and companies that complied would be eligible investments within pensions and ISAs (attracting tax relief for investors) those that didn’t comply wouldn’t be eligible. Investors could then make a decision to benefit from the “superior” management of a company without the tax benefits, or invest elsewhere and benefit from the tax benefits. Simple legislation that would be additive to the treasury and benefit investors.

    As for stock-lending where profits don’t go to investors, supposedly being addressed at the moment, but not holding breath.

  7. When Myners says the Financial Services Industry lobbied the Government, presumably that of Tony Blair & Gordon Brown, what he really means are the banks and fund manager groups.

    Financial advisers and insurance companies were not given an audience and got a right shafting with a bank created global crisis, the 2008 budget, IHT and CGT changes as well RDR. It was Banks not financial services.

  8. His comments about overseas owners of financial institutions coming and going, leaving many investors in an unattractive position is something that we have all witnessed and tried to flag up to the powers that be over the years (to no effect).

    However, judging from the above comments, maybe the business innovation and skills committee would have been better served in carrying out a little more due diligence before asking him about financial injustices.

    Yet another person having his last hurrah as he rides off into the sunset, with his considerable wealth no-doubt acquired from the industry he chastises so readily!

  9. Lord Myners told the joint committee on human rights that the “long stop” issue was discussed and considered by parliament, when in fact, there appears to be no record of any such discussion.
    Lord Myners believes there is no justifiacation for a long stop and believes advisers should be liable for their entire life.
    Why listen to anything this guy has to say?

  10. Let us not forget that Mynders was the chap who lie…(oops mustn’t say that) wrote untruthful statements to the Joint Committee on Human Rights so that they would drop their enquiry into the lack of a 15 year longstop

  11. Newsflash

    Lord Myners opts for Marxist economics model in spectacular volte face.

    You could I suppose argue that anyone who acquires wealth at the expense of other people for wealth is not created by spontaneous combusiton.

    Some one provides goods and services at a profit and f they are successful enough then they will become wealthy.

    How one ascertains the true value of the goods and services is of course far more difficult to assess. I suspect that Lord Myners opinion is no more trustworthy than any otyhers.

    From where I’m sitting my value to my clients (who make me a little more weathy than I would otherwise be) is far greater than the value offered to anyone else by Lord Myners, the Head of Goldmann Sachs, the CEOs of failed banks, the failed execs and other oppos at the FSA etc etc

    Myners’ opinion is of zero value and only minimal interest quite frankly.

    Ian Coley
    Partner
    Medical Investment Services

  12. I seem to recall that this was the man who approved Fred Goodwin’s enourmous pay off, and then the Government ran around like headless chickens to get a face saving refund. Also, according to the previous posts, he has made his own fortunes by taking too much out of financial services. Talk about a hypocrit!

    However, he does have a point, many senior people in financial services are raking in the money at the expense of the investor, perhaps if Mynors were to repaid the share that he has already pocketed then more people will listen to him. At the moment it is as if Bob Diamond was arguing against Bankers Bonuses.

  13. Another Champagne Socialist. That is presumably how he managed to buy his Italian holiday home.
    That he was mainly responsible for running Gartmore into the ground is of course entirely beside the point. There were numerous sharp practices at Gartmore under his watch.

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