The Daily Telegraph reported last month on the views of David Pitt-Watson, that excess charges can eat up 50% of pensions in the UK. This is higher even than the estimates I saw when collating the overall figures of around £11 billion annual costs of consumer detriment in financial services.
Even at times when stockmarkets were growing rapidly, it could take a decade for regular contributions to insurance based investments, such as endowment personal pensions, to break even. Inefficiencies in the distribution chain mean that UK retail investors can pay far higher charges than US investors – an exercise in sheer value destruction – in this case by the variety of intermediaries and ‘experts’ that stand between consumers and markets.
In the USA, the Dodd-Frank Wall Street Reform and Consumer Protection Act signed by President Obama runs to over 830 pages. In the UK, we don’t yet have concrete proposals, but we do have some good ideas. The Future of Finance from the LSE is an excellent collection of papers from a number of leading commentators – including Martin Wolf (FT), John Kay and Andrew Haldane, of the Bank of England.