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“What the industry needs is tools not rules.”

“What the industry needs is tools not rules.”

Mark Dunne
Thursday 29th March 2018

Campaigner and Transparency Taskforce founder Andy Agathangelou tells Mark Dunne about his fight to reduce the chances of another financial crisis.

"The reality is that it is probably impossible to avoid a financial crisis because you cannot know the unknown unknowns."

Andy Agathangelou, Transparency Taskforce

Why did you establish the Transparency Taskforce?

I joined the financial services industry in 1986. On a few occasions I witnessed behaviour which I didn’t think was quite right. Things that were benefiting the companies I was working for, but, to one degree or another, at the expense of the client. I’m a perfectly reasonable person and when those incidences arose I reported them to the companies I worked for, in a reasonably civilised way by making a discreet phone call to compliance.

On all three occasions, unfortunately, the problems I identified weren’t dealt with very well and I ended up choosing to leave those companies.

On a couple of those occasions it was painful because I had a wife and young children and hadn’t been planning to leave my job, but did because of what transpired. Frankly, I was extremely angry about what had happened. I felt that what was going on was stupid, was short-termist, wasn’t ethical and just wasn’t right. I was even angrier at the way the company reacted to the situation. Instead of solving the problem they decided to try and keep me quiet.

What that meant was that I was angry with the individuals involved, but over a long period of time, we are talking years and years here, I started to reframe the problem. I started to see that it wasn’t the behaviour of the individuals that caused the issue. It was the context, the dynamic and the ecosystem in which they worked that, for example, pressurised them to overstate the sales position by recording business being generated in a particular way.

I started to see that it wasn’t about people; it was the ecosystem. That is what made me think that whilst financial services is profoundly important it has some significant problems. Too much opacity, conflicts of interest, incentive schemes that encourage wrong behaviour, short-termism, a lack of accountability and a lack of transparency on costs and charges.

In December 2014 I was speaking with Con Keating and Dr Chris Sier, who is now chair of the institutional disclosure working group for the FCA. Sier was explaining how transparent the Dutch market was compared to the UK. One thing led to another and I had the idea that perhaps we could improve the way the market works by shining a light on how there is a correlation between transparency, truthfulness and trustworthiness and that maybe we could get a few people together who all thought the same way.

That led to me running a meeting on 6 May 2015 at London University, which became the spark that led to me creating the Transparency Taskforce.

So the underlying motivation is about seeing that our industry is profoundly important, but also being streetwise and experienced enough to know that there is a lot that needs fixing within it and having the sense of purpose to do something about it. I had previously set-up Friends of Automatic Enrolment, which is a community group, and played a key part in setting-up the Association of Member Nominated Trustees. So by the time I spoke with Chris Sier and Con Keating, I had a huge amount of confidence that I could bring people together to understand the issues and share ideas about how to solve them.

How would you describe the level of transparency in the UK’s retirement savings industry?

It is much, much better than it was two or three years ago. The Pensions Regulator (TPR), the Department for Work and Pensions (DWP), the Financial Conduct

Authority (FCA), the Competition and Markets Authority (CMA) and the Advertising Standards Board have been  doing a brilliant job in the past two or three years to recognise that the market has problems that need fixing and have done a great job in demanding more transparency.

If I was marking a student’s performance in school, I would say that recent behaviour has massively improved from where it was. We are, however, starting from a low base. We are starting from a base that is so low that over the past 30 years – I would characterise it from Maxwell’s pension saga through to Bernie Madoff and everything in-between – we have had dozens, probably even hundreds of incidences of bad market behaviour, either by crooked individuals or systemic problems, such as endowment mortgages and PPI, through to an entire industry sticking its head in the sand about issues like closet trackers, as an example. So there have been big improvements, however, we have been awful over the years.

What is interesting is comparing where the UK is to other countries. We ran a conference in Boston in September and the regulatory capture over there is horrendous. They have a ridiculously fragmented regulatory market and the UK is light-years ahead of where the US is right now in terms of transparency.

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