Hidden Charges are Mythical - like the Loch Ness Monster - Lower My Charges

Hidden Charges are Mythical – like the Loch Ness Monster

Hidden Charges are Mythical – like the Loch Ness Monster

800 600 Ian Brewer

Last week there was a very interesting broadcast on Radio 4 hosted by Lesley Curwen called the Transparency Detectives which I would like to share with you.

For those who would like to listen to the show, you can hear it on BBC Iplayer.


The show starts with a recording of a conference where it’s voiced about charges not being transparent.

Lesley Curwen then goes on to say three-quarter of households in Britain relies on the investment industry for their Pension and Savings outcomes.

Hidden Charges

What came up next – well beggar’s belief?

A large company Pension scheme called Rail Pen which handles the railway workers Pension scheme was interviewed

Victoria Bell one of the scheme trustees begins to explain they had concerns about the charges that were being applied to the scheme.

But being bamboozled they could not get to the bottom of it

So in 2011, they hired some forensic accountants which took them 7 months to investigate.

What they discovered on top of the disclosed charges which amounted to over £80 million a year they uncovered – wait for it – a further amount of just over £200 million – yes I will repeat that again £200 million.

In this age where group Pension schemes are failing due to funding shortfalls, this is scandalous.

Negative Compound Interest

Lesley then interviewed a lady called Hilary Salt who is a pension actuary – she said smaller schemes will not have the resources to do such an investigation but Lesley asked what would be the effect of negative compound interest based on say using a calculation of 1%pa.

Hilary couldn’t immediately answer – but said she would email Lesley with her findings.

Lesley jumps forward and says I now have the email and according to Hilary calculations based on a 1%pa charge the deduction of charges over time would deduct up to 40% or could be as much as 50% of the overall pension fund.

This is unbelievably true – and can be verified by many experts like Tony Robbins a champion in the USA on charges on 401k pension plans when the power of negative compound interest is applied.

Mr Costs

Lesley then goes to Amsterdam to meet a guy called Eric Veldpaus dubbed in the Netherlands as Mr Costs.

In 2011 he did a study on charges which eventually many of the principles on disclosure and transparency were implemented by the Government in the Netherlands.

Many campaigners in the UK on disclosure of hidden charges such as Gina Miller and Andy Agathangelou of the Transparency Task Force have welcomed new regulation which came in to force in January 3rd, 2018 called MiFID II which now forces companies to disclose these hidden charges but many still feel this doesn’t go far enough.

Lesley then meets Andy Agathangelou and discusses that the Assets Management Industry between 2011 and 2015 have made healthy margins of up to 36%pa made from charges taken out of peoples investments and pension funds and this is driven by the shareholders of such assets management firms.

Lesley then meets Gina Miller who runs an investment firm called SCM Direct – some of you reading this may remember her as the lady that took on the Government on Brexit in the Supreme Court and won.

She says being transparent on charges showed her firm was not as competitive as her rivals when her rivals wouldn’t disclose their hidden charges even though she knew her firm was better value for money. Not having to disclose the full picture on charges as other firms were doing was further highlighting how the industry was misleading the consumer on the full disclosure of charges.

The Great Conflict of Interest.

Lesley then met Daniel Godfrey who was head of the Investment Association – he says in order for the consumer to gain trust the Industry has to be more open about charges and put the consumer first.

Daniel wanted to put together 10 principles starting with principle one putting the consumer first.

When he introduced his 10 principles to the Investment Community this didn’t go down well with some of the members of the Investment Association so they left.

Daniel explained that the board of the Investment Association had some concerns that large members where leaving which would reduce revenue in memberships for the Association to run.

Daniel continued to explain that he left shortly afterwards.

Needless to say, the Investment Association didn’t enforce the principles Daniel had come up with after he left.

The Loch Ness Monster

Lesley then interviewed the current CEO of the Investment Association Chris Cummings and immediately quizzed Chris on the language used to describe hidden charges by the Investment Association

“Hidden charges are a myth like a loch ness monster – they don’t exist.”

Lesley pressed him on this – and he said the language used was regrettable but commented this came out before his time at the Investment Association.


Lesley rounded off the programme by discussing MiFID II which had come into force with` respect to charges disclosure on January 3rd, 2018.

However, this new disclosure has now exposed the true costs being a third higher than initially thought confirming that still a lot of work is needed to be done in order to allow customers get a fair deal in respect to charges when it comes to investing in Investments and Pensions.

The Presenter

The Presenter of the show was Lesley Curwen a well respected Award-winning financial journalist and BBC broadcaster. Public speaker & conference host BCC journalist

She also follows us on Twitter.and often re-tweets our blogs

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