For a man well known for being vocal in championing consumer rights, The Financial Inclusion Centre founder and director Mick McAteer is surprisingly self-effacing when it comes to his own achievements.
McAteer’s financial services career spans over 25 years and he has a number of board and chairman roles to his name. These include roles as a non-executive director on the Financial Conduct Authority board and chairman of the regulator’s risk committee; chair of the European Commission Financial Services User Group; member of the Catholic charity Caritas Westminster’s advisory board; a trustee of Share Action, formerly Fair Pensions, a charity which promotes responsible investment; and a member of the consumer panel for The Registry Trust, which maintains records of judgments, orders and fines in England and Wales.
But he started out a world away from all this, selling fruit and veg in his hometown of Derry in Northern Ireland. McAteer moved to London working variously as a labourer on building sites and at an Irish pub in Kilburn before, somewhat incongruously, joining Henderson where he worked assessing fund risk and carrying out portfolio analysis. His explanation for the abrupt change in direction is simply that he “was always quite good at maths”.
McAteer then moved to Framlington, stockpicking for the company’s funds, before moving back to Northern Ireland where he worked on a European Union regeneration project aimed at attracting investment into the local area.
Seemingly restless, McAteer came back to London and joined the Consumers’ Association, now known as Which?, in 1993. It was here McAteer made a name for himself, rising from data analyst to investigative reporter and finally becoming the organisation’s principal policy adviser.
His 13 years at Which? saw a number of high-profile campaigns, including pension misselling, with-profits funds and the mortgage endowment scandal.
He says: “It was clear financial services was becoming a priority. We realised the financial sector was in need of a real overhaul in terms of the way it treated customers, and the lack of competition. Better financial regulation became a major theme for us; not just the structure of regulation, but the whole philosophy and approach to regulation which was really not working well for consumers.”
Driven by a desire to focus on access to financial services, McAteer set up The Financial Inclusion Centre in 2007. The not-for-profit company is aimed at helping the “chronically financially excluded”, and those who are underserved.
He identifies fund management as the “stand-out sector” for delivering poor consumer outcomes. He says it is almost impossible and “probably irrational” to try and predict which managers will outperform and challenges advisers who recommend active investments.
“There seems to be no link at all between the price you pay and the value you get. There is almost an inverse relationship between the two. In all likelihood, most managers will underperform compared to an equivalent tracker fund within their sector. You have to have a very strong justification for choosing an active manager whose charges are higher than a tracker.”
It is clear McAteer’s driving force is about getting the financial services industry to deliver value to consumers. He argues the proliferation of products is adding little value to investors and says the shift away from product transparency is “the most dispiriting thing I have seen over the last 20 years”.
“Institutional investors’ interests are not aligned with those of pension scheme members and there is a dearth of knowledge about the financial supply chain. We need to sit down and evaluate whether the activity in the market is actually delivering real benefits for the end user. If there was a reduction of the costs in the investment supply chain, even by a small amount, that would easily amount to more money than people have lost through all the misselling scandals combined.”
McAteer is also concerned business models are so deeply entrenched that companies do not realise they cannot withstand what he calls “the new economic reality” of low growth, low interest rates and low returns.
“A lot of the dominant business models are built around the lifecycle of debt and asset accumulation. For a lot of people, where employment is part-time or temporary and amid the rise in zero-hour contracts, that cycle is breaking down.
“The question is whether the financial sector can respond to that changing world. There is not much sign of it yet.”
He says the answer lies in what he terms “social purpose financial innovation”; products such as social investment bonds, vehicles to fund social housing, and alternatives to payday lenders.
McAteer says firms should look to the not-for-profit sector for inspiration, where debt charities meet complex financial needs through a combination of internet-based, telephone and face-to-face advice.
McAteer believes the RDR represents an chance for advisers to ensure clients are getting the best out of financial products. “The intellectual underpinning of the RDR was to change the balance of power.
It was about putting consumers in the driving seat. One of the potential benefits of the RDR is it allows advisers to stand back and really objectively assess what is best for consumers, because the link between the providers and the distributors is broken.
“It is a great time for advisers to squeeze value out of the asset management industry so that as well as providing quality, suitable advice, advisers start to use their leverage as agent of the client to deliver real value.”
Born: Derry, Northern Ireland
Lives: Hackney, London
Education: St Columb’s College, Derry
Career: 2007-present: founder and director, The Financial Inclusion Centre; 2006-2007: industry consultant; 1993-2006: data analyst, writer, principal policy adviser, Which?; 1992: consultant, European Union regeneration project; 1989-1992: analyst; Framlington; 1987-1989: assistant technical support manager, Henderson
Likes: Being with family and friends, Derry, Donegal, Hackney, Manchester United, Guinness, running, film, books on European history, Radio 4, people with courage and spirit, risk-takers, thinkers, the underdog
Dislikes: Selfish individualism, self-indulgence, bullies, small mindedness, Chelsea
Drives: No car – no point in London
Book: Choice between The Divine Comedy by Dante; The Decameron by Giovanni Boccaccio; The Magic Mountain by Thomas Mann; or Life and Fate by Vasily Grossman
Film: Once upon a time in the West
Album: Rum, Sodomy and the Lash by The Pogues
Career ambition: Financial markets that work for society, not just the few
Life ambition: Keep the faith and make a difference (and be buried in Ireland)
If I wasn’t doing this I would be: Who knows? Possibly an investigative journalist or an engineer