May I convey my admiration of the financial services industry for providing the financial journalist with an uninterrupted and secure supply of material for contentious articles?
The provision of the vital ingredients for conjecture is so continual and consistent that the freelance writer is spoilt for choice and can look forward to decades of predictable cash flow and plenty of variety.
We simply blend together three vital attitudes to make a good story:
1: Consumer greed and suspicion.
2: Regulatory arrogance and ivory-tower myopia.
3: Practitioners' and providers' paranoia.
Mix these together carefully and you have an ideal article to stir the readers' indignation. The only dangers to a successful article, given the abundance of subjects, are objectivity and wisdom.
There are many examples but the with-profits debate is a corker. An objective approach would not miss the simple yet profound truth that with-profits has delivered results that exceed the customers' original expectations with security in an environment of turmoil.
It has, to my knowledge, yet to fail. But this is no story worth reading as it does not satisfy any of the three attitudes above.
So much has been said of the past and current, let us leave it for the moment and look at the juicy delicacies ahead, which Mr Sandier is cooking up for us.
His proposals for “smoothed investment funds” look reasonable if read objectively and wisely. He will succeed in increased transparency, ringfencing, removal of conflict of interests between share-holders and policyholders and some guarantees.
He will prevent the provider using the hinds but at the same time will remove their ability to “prop” them up.
Now, let us apply our three golden rules to Ron Sandier s proposals for the annual statement disclosures. The statement will disclose current value at surrender (set yearly in advance), current death benefit: value of the underlying assets (that is, the unsmoothed asset share), current state of the fund, asset allocation, costs charged to the fund, state of the “smoothing account”: the MVA. This is unprecedented availability of information, heart-warmingly open to misinterpretation.
Any self-respecting journalist who cannot make a good story out of the above does not deserve to eat.
He can highlight the “unfairness” of unallocated funds in the smoothing account not being added 100 per cent to the policy during times of boom, the fear when the smoothing account diminishes in value or runs into deficit during slumps, the high charges for the underwriting premiums which provide notional protection, the wickedness of the MVA, the greedy commission, the selfishness of the host company not beefing the fund when it languishes and the poor relative performance when the FTSE is surging upwards.
And to make sure the reader is gripped by the essential indignant attitude, he can spice the article with a lavish and prominent use of the stirring word scandal.
It is open season to hunt down the industry. Unlike most game, however, the industry is more than capable of such a considerable defence that its antagonists could easily be made to blow themselves up on their own bombs. Inexplicably, though, the industry meekly accedes to its own demise.