Picking one key theme for 2017 after such a roller-coaster year is a tough ask, but I’m putting my stake in the ground: It’s going to be transparency.
This push for openness and clarity will come from multiple directions: consumers, companies themselves, and certainly from the regulator.
Let’s start with the good news, why I think things will generally get better, before we turn our gaze on several areas in need of rapid improvement.
Nutmeg finally dropped its transparency anchor yesterday; after years of people trying to take educated guesses at what and who is on its books, it has now begun regularly publishing asset under management and customer numbers.
The FCA’s asset management study is proposing introducing an all-in-fee that would force disclosure of transaction costs in a fund’s total costs, while the regulator also looks set to force annuity providers to tell customers how much they can gain from shopping around under new plans.
Even internally, part of the FCA’s new Mission document has a transparency bent so it can make sure the regulated community properly understands why it chooses to take action when it does.
The bad news
Unfortunately, that’s where the good omens end, and where the real work needs to begin in 2017.
There is opaqueness in many parts of the market, including consolidators’ acquisition values, balance sheets and client transition processes.
Last month, we called on St James’s Place to be clearer on its exit charge policy, given it was adamant its early exit charges of up to 6 per cent are compliant with a 1 per cent cap due to be introduced by the Government, but declined to tell us why that was.
How providers implement the cap in practice will be vital to ensuring consumers get a good deal. If there is a technical workaround they – and the FCA – deserve to know about it.
More generally, the interaction between each service level of vertically integrated businesses such as SJP, Old Mutual and Standard Life could be made clearer by the firms, putting to bed rumours around in-house fund targets and clients shoehorned into under-performing propositions.
There is an incentive for all firms to open up to more scrutiny. Much like with Nutmeg, one can’t help thinking that if a company’s offering really was the best on the market, it would be willing to share as much information about it as possible.
Its part of the reason many advisers remain sceptical of buyout offers from the giants of the industry; you just can’t be sure what you are going to get.
Transparency aligns well with the FCA’s new competition objective too, in that it should, in theory at least, empower customers to vote with their wallets and drive out suspect practices.
Its partly why the FCA is so reluctant to impose caps on either fund management or advice fees; as long as the consumer knows what they are getting, they should be able to pay for the better service.
Advisers need to keep up the good work on transparency though, otherwise they risk giving back the hard-fought gains in professionalism made since the RDR.
As the regulator and consumers demand more openness, we can only hope greater transparency can be delivered next year from all sides of the market.
Justin Cash is news editor at Money Marketing