"Return of tribunal fees"

 

Hat tip to Thompsons Solicitors. This is dreadful news. The employment tribunal process is already biased in favour of employers. Today I had to help an unemployed member apply to a tribunal. The prospect of fees will frighten people. We already have unscrupulous lawyers threatening to claim costs on winnable cases.

Picture is of the UNISON team that took legal action in 2017 which resulted in fees being quashed since they were found to prevent access to justice and discriminative. Hopefully these fees can be stopped as well. 

"Ripping off customers is nothing new for asset managers... "

Check the FT article here 30 June 2017

The FCA’s report is a travesty that is bereft of remedies, writes Gina Miller

In 2002, the Sandler Report on the UK retail investment market found “the reporting of product charges is typically neither clear nor consistent”. More than 15 years on and the UK regulator is still allowing the industry to rip off customers by charging excessive fees, which has a huge detrimental impact on the returns investors are getting on their hard-earned money.

Granting people the basic consumer right of knowing how much they are paying appears to be too difficult for an industry that works with complex data, facts and figures. In terms of price competition, there simply cannot be any genuine price competition if the consumer does not know the price.

This is why, as the most recent FCA report reveals, the asset management industry has profit margins of 36 per cent. This is more than double the operating margin of the FTSE pharmaceutical and biotechnology sector (14 per cent), which is based on intellectual capital and extending lives.

When the FCA’s interim report came out in November 2016, it was hard hitting and exposed the numerous dubious practices SCM Direct has been highlighting for years through our True and Fair campaign: closet index tracking, hidden fees, consultants’ conflicts of interest and false reporting of performance.....

check out full report here and get angry if you have any pension or investment plans. You are being ripped off. When you exclude their bonuses the profit of fund managers is not 36% but 48%. 

How Tory Tribunal fees prevent justice at work.

For those who think they don't need trade unions to fight for justice at work, I say think again.

Making an application for an employment tribunal now costs £250 and then a further £950 for a hearing. As this research shows, low paid workers with strong cases are being blocked.

"A new report to be published in academic journal Modern Law Review on Monday (27 March 2017) will put forth that the introduction of employment tribunal fees in 2013 was "a clear violation" of UK and EU law.

The authors, Jeremias Prassl from Oxford University law school, and Abi Adams, of its school of economics, analysed government data in order to show that for up to half of claimants with a strong case, the expense of taking their claim to court was higher than the expected payout if they were successful. 

These workers - usually in low-paid, insecure positions - are therefore put in the position of losing money to enforce their rights. As a result, the academics described the fees as "disproportionate" and argued that they are illegally blocking workers from access to justice.

The paper will be published on the day that Unison's judicial review against the fees will be heard in the Supreme Court, and the authors commented in support of the union's case".

Hat tip Institute of Employment Rights

Fees - and what trustees should know? AMNT Open Day Feb 2014

Final late post from last month's Association of Member Nominated Trustees (AMNT) open meeting on the "Understanding fund structures and their implications - what Trustees should know" presentation.

This was by George Emmerson from Standard Life and Maddi Forrester AXA.

While I enjoyed all the presentations that day and learnt a lot - this was probably the most practical and I have since used the information on fees at trustee meetings.

For pensions trustees the most common the charge you see most is called the Annual Management Charge (or AMC). However the most important figure on fees that Trustees should always ask for is the Total Expenses Ratio (or TER) which should include everything.

I asked the question is it ever appropriate for fund managers to give performance figures GROSS (before) of fees instead of NET of fees? I was told that fund managers when they bid for new business at beauty parades etc have to give their past performance "Gross of fees" but there is no reason why they should not take out their fees from their performance if they are employed as your fund advisers. (make sure that your fund managers mandate states that you want net of fees reporting as well).

So trustees up and down the land make sure you get the TER and performance net of fees. If a fund manager (private equity or hedge fund) say they can't give you specific TER information, then in my view, don't buy from them.

Afterwards George and Maddi held a fun "Acronym Bingo" where they tested the trustees present on our knowledge about what all the weird and wonderful acronyms used by the financial services industry actually mean. My score in this bingo quiz was pretty abysmal while our AMNT Co-Chair Barry Parr took first prize!

Pensioners being ripped off

A good article here on the arguments put forward by "pensions campaigner and former government adviser Dr Ros Altmann" that pensioners who buy "annuities" when they retire are being ripped off.  Annuities are insurance products that you buy when you retire using the money you have saved while at work in a DC (Direct Contribution personal pension) scheme.

"The Financial Services Consumer Panel, which monitors the FCA, recently published a report after a 12-month study into the annuity market. Investigating 15 online firms, and using a £49,950 pension pot example, minus a 25% lump sum, it found fees for the same service went from 0.75% to 3.35%, with costs ranging from £281 to £1255".

Not only fees but annuity "rates" (how much you get after fees) in some companies (even well known ones such as the Pru) are simply rubbish. Even the better schemes offer poor value due to the current price of government bonds called gilts which determine how much you get from annuities.

I am pleased that she highlighted that most annuities are "single life" only. That means unlike Defined benefit pension schemes that cover partners automatically - with a "single life" annuity when the retiree dies - his or her partner get nothing.

In my workplace most employees are in a DC scheme. I dread the day that I will called to see the spouse of a retired union member who wants to know what will they now live on? That day will come very soon.

What was not mentioned is how most people also buy a "level" annuity when they retire. This means  that there is no protection against inflation so each year their pension is worth less and less.

According to this site if you retired 5 years ago inflation would have reduced the value of your level pension by nearly 14%. If you retired 10 years ago by a staggering 30%.

What a mess. Pensioners are being cheated by excessive fees, poor returns and no protection for their loved ones or against inflation.

We still desperately need modern collective Defined Benefit pensions for all.

Hat tip Dave Watson via UNISON Weekly News.

How we pay for the City (& expensive Red Wine)

I recommend that if you have a funded Pension that you listen to this excellent Radio 4 programme "How You Pay for the City".  

Former fund manager David Pitt- Watson pointed out that excessive charges in the UK compared to  Holland means that the average comparable dutch pension will be 50% more than you would get in the UK.

While the incomparable Mr Colin Meech, UNISON National Officer for Capital Stewardship, thinks that the Local Government Pension Scheme is just being ripped off. He recounted how a colleague who became a fiduciary trustee on a large scheme was shocked to find that the trustee board spent more time being wined (at £100 per bottle!) and dined by fund managers than they spent supervising the scheme. I have heard the same story from that colleague.

It is not just excessive fees by fund managers but also "churn" (excessive buying and selling of stock); stock lending (they lend out your share certificates for a fee), "Custody Banks" (if something is too good to be true...) and "transitional management" (there is a completely shocking story how the Royal Mail Pension fund was cheated and how a judge was told that an untruth was not a lie)

By coincidence we heard similar arguments at the AMNT Summer Conference from Michael Johnson that I posted upon yesterday.