Those words of pensions minister Steve Webb were music to our ears at The Whitehall Partnership, where fees are regarded as the financial equivalent of cancer.
He was talking about proposals to cap the management fees charged by pension providers and put a stop to the wholesale mugging of savers that wipes hundreds of thousands of pounds off the value of their retirement nest eggs.
It is a measure that is long overdue and one that will go a long way towards levelling a pensions playing field tilted much too heavily in favour of pension providers.
But welcome as Steve Webb’s strictures are – he compared fund managers to operators of fleapit hotels and accused them of fleecing their customers with unjustified fees – it is too early to begin celebrating.
To begin with, this “full frontal assault on charges” so far consists of nothing more than the Treasury consulting the industry on proposals for a cap.
That’s like General Eisenhower phoning Erwin Rommel in June 1944 to discuss the terms on which the Allied landings in Normandy might be conducted.
Second, the Treasury is offering insurers the choice of a cap of 0.75 per cent or 1.00 per cent if they care to justify the higher level to the regulators.
Guess which they’ll choose…
Third, the proposed cap would apply only to auto-enrolled workplace funds and would do nothing to stop the pillaging of privately held pension pots.
Still, it would be a start and a cap of just one per cent would, according to one estimate, see some workers as much as £160,000 better off after a life time of saving.
Which?, the independent consumer watchdog, as well as calling for the cap to be set even lower than 0.75 per cent wants tight regulations to be put in place to prevent providers hiding their excessive charges elsewhere.
This is something we’re on to at The Whitehall Partnership and have created our own software that enables us to show new clients just how much they are losing from fees on their existing investments.
By talking of capping fees, the government is effectively opening a second front – to revert to the D Day analogy – against the financial bandits. Annuity providers are already under scrutiny over their the amounts they cream off the top whenever retirees hand over their life savings in exchange for a monthly income and face accusations that they used the EU Gender Directive that puts female annuitants on the same footing as male to further boost their profit margins.
How this plays out in the long term remains, of course, to be seen. But I hope it signals the beginning of the end of the cynical treatment that the financial services industry has dealt its customers for far too long.
In the meantime there can be no better course of action for the saver and nest egg-builder than to spend a small fraction of their money on cost-effective financial advice from a genuinely independent and unbiased firm such as The Whitehall Partnership; one that will take the trouble to understand not just your current financial needs but also your hopes and dreams for the future and ensure that your money works for you and not gets eaten away by cancerous returns-destroying charges.
My message is: don’t wait for the government to come to the rescue, but call us today on 0845 43 49 250 to arrange a free initial consultation that will commit you to nothing at a time and location of your choosing. We have meeting facilities in Worcestershire and Birmingham or if you prefer, in the comfort of your own home.