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Trustworthy

When Sir Robert Sykes delivered the findings of the Restoring Trust report and said it was the financial services industry&#39s last chance to get its act together, he was sending a strong message to the industry. Rather than take such an alarmist view, I would prefer to look at it along the lines of us all having a responsibility to restore trust for the long-term future of the industry.

Sir Robert, along with the report&#39s inquiry team, was calling on each and every one of us – from investment managers, life and pension companies and financial advisers to politicians and the media – to sit up, take notice and deliver change. This can only happen if we start to move away from the finger-pointing blame environment of the last few years.

The report raised some timely and fundamental issues around transparency, responsibility and putting customers&#39 interests first. For far too long we have been hearing about misselling, conflicts of interest and excessive remuneration.

At the same time we have read a number of reports from Sandler to Spitze. This leaves me with concerns that, after reading yet another report, there will be a lack of call to action. If we are to move forward with Sykes&#39s proposals, we need to set some timescales or we will see many more similar reports across our desks over the next five to 10 years.

As a UK fund manager with a wide distribution network and strong institutional capabilities, three main areas in the report struck a nerve – fiduciary responsibilities for institutional investors, product design and the reward and acknowledgement of star performers.

Starting with the first point, if you cast your mind back, you will remember the collective influence and results of institutional investors which helped turn round BT and ITV. Fidelity&#39s Anthony Bolton used his responsibility as a major shareholder to preserve, protect and grow the capital of shareholders.

We regularly engage in dialogue with the companies we invest in through regular updates and face-to-face meetings. However, it is not always possible to predict the downfall of companies such as Enron or Tyco, no matter how strong or committed an institutional investor is to his or her fiduciary responsibility.

Second, I would like to clear up the false perception that products have been created with revenue rather than the customer in mind. As any investment house will attest, significant time, planning, research, testing and investment go into bringing a new product to market.

A team of people from product developers, lawyers, compliance and writers are all involved in what can often be a lengthy process. None of this is done without consultation with advisers, customers, industry groups and, in some cases, our peers.

One example close to home is our UK alpha plus fund managed by Richard Buxton, which came about in response to client feedback. Almost two years since inception, it has attracted over £450m and been one of our most successful funds, even during a volatile market period.

While over the last few years we have seen a plethora of new products come to market, we have also witnessed significant consolidation. Some of these products were developed during the biotech surge or particular market trends but a number were outdated and superseded by newer, more efficient products. We continually review our product range by speaking to our customers and advisers, ensuring that we have them in the right product for their investment objectives and risk profiles.

While I tried to refrain from talking about sport until the very end, you simply cannot overlook the superstar qualities of England&#39s Wayne Rooney. Everyone from Sven Goran Eriksson to the Spanish and Chinese press have been applauding his star qualities. So, I ask, what is wrong with this?

What is wrong with creating a culture and environment which encourages and rewards performers? Rooney is being recognised for his ability to create value for his team, country and fans. Most important, we should not lose sight of the fact that investment management is about adding real growth and value to our customers&#39 underlying investments. Achieving this growth is a difficult task and, when fund managers do create value for investors&#39 funds, they should be rewarded for their skill.

So while some elements of the report ring true for advisers, fund managers, politicians and industry observers, there are areas which need further consideration and a common perspective before we can collectively drive an initiative to restore trust.

As Sir Robert acknowledged, the financial services industry has recognised that we all have a role to play in restoring trust, instilling confidence and ensuring the longevity of the whole savings industry. No one group can do it on its own.

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