As the man who used to be Norman Lamont's press secretary during his reign as Chancellor, Richard Saunders has a wealth of experience in fending off brickbats.
The Investment Management Association chief executive has had plenty of ammunition to fire back over the past couple of weeks following the publication of Ron Sandler's long-awaited and highly controversial report.
Saunders is keen to stress he is comfortable with much of it but does not hold back when it comes to discussing the elements he and his members believe are unjust or just plain wrong.
“We are unhappy with some of his analysis, particularly on active versus passive management. He seems to have misinterpreted some dubious FSA research which takes statements that are true in the whole and applies them to individual funds.”
One of things he is most concerned about is the report's claim that the average unit trust underperformed the market by 2.5 per cent – “it is in defiance of common sense” – but concurs with Sandler's view that IFAs lack investment knowledge.
In fact, the IMA is working with the FSA to devise qualifications more geared towards products and asset allocation than the FPC exams, which from the IMA's point of view are clearly inadequate as they fail to ask a single investment question.
But then getting the correct qualifications has always been important to Saunders, a maths graduate of Trinity College, Cambridge, where he got a first. Although his is not another A Beautiful Mind story, Saunders is one of those people for whom solving ridiculously complex equations is about as challenging as making a cup of tea.
He joined the Civil Service immediately after graduation in 1974 and worked his way to the Treasury where, some years later, he wound up as the press secretary for the beleaguered Lamont. It was some time to take the job – Britain was in the midst of joining the exchange rate mechanism but Saunders says it was “endlessly fascinating. It was quite a challenge to explain and defend Government economic policy”.
It was an experience he would come to call upon in later years as director of City PR agency Cardew & Co, which represented, among other clients, Equitable Life and the Millennium Dome. Saunders says it was “always interesting” but declines to elaborate further, a diplomatic trait he may have acquired during a spell as economic counsellor to the British Embassy in Washington between 1992 and 1994.
This diplomacy has been much in evidence since he was headhunted for the IMA job in May 2001. “The call came out the blue but I am delighted they rang me. The biggest challenge, other than the markets and Sandler, has been overseeing the merger between Autif and the Fund Managers' Association. There was a natural synergy, with Autif's professional reputation and the FMA's clout of £2trillion of funds under management and I think – and most observers agree – that it has worked out.”
The seemingly smooth consolidation appears to be helping Saunders to provide a staunch response to Sandler. The only area in which he seems unsure is the report's recommendation there should be stakeholder products without the need for advice.
“The jury is still very much out. If a sensible suite of products can be devised and regulation on them lifted, then there is an attraction there. But we have been here before with Catmarks and have to be careful not to increase the risk of misselling.”
Saunders neatly sidesteps the apparent contradiction of Sandler pushing the case for tracker funds – which do not require advice – while simultaneously damning investment knowledge of IFAs. But he does say he finds it odd that Sandler failed to make the “blindingly obvious” connection between the percentage of trackers sold by IFAs, around 3 per cent, and the fact they pay no commission.
However, Saunders is keen to point out that he likes some aspects of the report, such as the positions on IFA knowledge, consumer education and separating the costs of products and advice – although not so far as full unbundling. Nevertheless, whether these views will be taken into account the next time that he meets up with the Treasury's chess team, of which he is a member, is another matter.
Although the team plays in the Civil Service league and plays against other departments, Saunders says it is a “pretty poor” standard and points out that most of the Treasury's line-up consists of people who have since moved on to other things.
It may be just as well. Saunders will soon be issuing his response to Sandler and then move on to tackle the problems posed by the FSA's depolarisation proposals. He says one of fund managers' biggest challenges is how to position themselves with the changes to distribution but says he see opportunities if a more level playing field between with-profits bonds and mutual funds is created.
He believes investment houses could also take advantage if the pension regime can be altered favourably but for now Saunders is only interested in homing in on Sandler.
“Taking incremental steps to improve efficiency is not going to make much difference to the savings gap. If the Government really wants to tackle the problem it will have to incentivise people or introduce compulsion. It has to take more radical steps.”
Born: October 4, 1951.
Lives: Forest Hill, South London.
Education: Bromsgrove County High School, Trinity College, Cambridge.
Career to date: Civil Service 1974-1981 (variety of jobs), Treasury 1981-1995 (roles included press secretary to Norman Lamont and head of private finance unit), MAI 1995-1997, Cardew & Co director 1997-2001, IMA chief executive 2001 to date.
Career ambition: “To continue to find new and interesting challenges in what I do.”
Life ambition: “To feel I have done all the things I wanted to.”
Likes: Interesting problems, people, learning new things.
Dislikes: Pomposity, self-important people.
Peers says: “Wears his Treasury past lightly but is still very in touch with how Whitehall and the regulator work.”
Car: Oldsmobile Custom Cruiser. “Five litres of gas-guzzler. Very smooth.”