The title of this article may be provocative but I am deadly serious about the issues plaguing the investment industry. This industry is vital because no political party or government will be able to fund the aging population.

The plain facts are that Britain simply is not a good place to grow old. The statistics are known – 1.8 million pensioners live in poverty and this number is set to increase substantially. So we are a vital industry, which today is refusing to face up to its faults and to transform by accepting its long term existence depends on adapting and proving we understand our customer, remain relevant and can demonstrate value.

In the last twelve months, I have noted the move from burying heads in the sand to countless events, roundtables, debates and consultations about the need for change, putting customers first, transparency, the future of the industry, value not costs and embracing technology. All wonderful rhetoric whilst companies still churn out products that are not fit for purpose and which trap the prudent public. Industry websites are littered with the words integrity, trust, transparency, culture, added value – but as far as I can see these jewels are being put in boxes on a shelf not imbuing all aspects of these organisations so trust can be rebuilt.

On the European Consumer Market Scoreboard, started in 2008, this industry has been bottom in terms of trust and ease of product comparability year on year and there we remain. We need to stop the ego stroking and confront the serious problems we are facing. I accept there are demand side issues such as short termism, over-consumption of debt, lack of financial education and a desire for instant gratification but there are significant failures on our supply side.

In my view, we have to hit the trust reset button; we need to interrogate ways of making the 3 Ps – product, price and promotions - work better for investors, the people with whose money we are entrusted; transparency is the key to unlocking a better future for us all – demand and supply sides.


The global crisis of 2008 heralded the emergence of a very different investment world from that which prevailed for much of the preceding 30 years. Investors have experienced, and will continue to experience, a more orthodox investment environment characterized by lower returns and greater volatility. But most products sold were developed pre 2008 in a high return environment. Our industry is very lax in R&D and providing investment solutions designed to meet the challenges of this new investment landscape in terms of corporate structure, investment strategy and simplicity and investor relations. Traditional active managers are still flogging high fee, low performing products, where a mere 4% of active managers outperform the index for 3 consecutive years.

Product labelling and recall

Are investors allowed to see what they are buying – where their money actually is? No; they only get to see the top 10 holdings, which is normally just 40% of the picture. And have you ever heard of a product recall? No; instead the mentality is to carry on selling until you get caught, then pay out from a bundle put aside for fines, rather than behaving responsibly in the first place.


Most companies operate as ‘Caveat Emptor Asset Management’, with disclaimers that are basically ‘get out of jail cards’, and in my view have no place in this modern investment landscape. In any other industry there are strict regulations about testing before you can sell a product or service. Then there are offer periods and discounts – why? The large fund houses are marketing, not investment, machines.


The issue of transparency of pricing is being pushed into a “lowest cost is best” debate by those who will benefit but via our True and Fair Campaign, we have been calling for transparent fair pricing; these are the same things. It is not a race to the bottom, it is about fair, transparent, sustainable pricing and providing consumers with a comparable, understandable ‘ticket’ price.

I also do not believe it is about cost in isolation but about balancing risk and returns with costs. Investors need to make the best possible choice for them. This means understanding what they are likely to get back after all costs, at all levels - advice, platform, wrapper and investment management. So even though the ideal equation or balance you need to consider is cost + risk + performance, price is of paramount importance because fees are accepted as the biggest eroder of returns.

In terms of a properly functioning, competitive industry, there is little compelling evidence of financial innovation – there is a handful of new players and new structures but these will struggle to gain market share without transparency, a level playing field and deep pockets to compete on the branding and marketing stage.

It is my contention that our industry needs to press the reset button, embrace transparency and actions that will act to disinfect and shine a light on the dark practices that still prevail. Then we can say we are hitting the Trust spot.

Over the last few years, I have not been as diplomatic as others because I wanted to ensure the debate around transparency, consumer protection and industry ethics could not be fudged. If the industry focused on transparency, I believe cultures would change, trust would be restored and the value we offer would be understood. The public need to see sincere actions, not shiny words. 

Gina Miller – Founder, SCM Direct & the True and Fair Campaign