Thu 24 Oct 2019, 09:19 AM | Posted by editor
LETTER from Mark Langabeer, Newton Abbot Labour Party
Panorama reporter Richard Bilton investigates the secretive world of fund managers. In June this year, a fund manager was suspended by administrators because he was unable to pay back monies owed to investors. His name is Neil Woodford, who was described by Alex Brummer, the city editor of the Daily Mail as a man that appeared to have the Midas touch when it came to financial investment. Brummer himself had drawn out some of his own pension pot because of his perceived success as an investment manager.
Matters came to a head, when Kent County Council Staff were unable to get their money back. Pension holders are owed in total, the sum of £260 million and around 300,000 people have been affected by the scandal. As Bilson points out, much of our financial security depends on the stock market. Fund managers buy and sell shares at a profit and increase investments such as pension schemes. The Tories deregulated pensions by allowing people to take monies out of their pension pots prior to retirement.
This has resulted in an increase in the number of investors and a boom for fund managers who charge a fee for increasing the value of investments. Analysist believe that Woodford had changed his model from investing in large companies with riskier new tech firms that are less likely to be profitable in their early years. He also broke rules regarding the holding of shares that are easily accessible and valuing companies above their real worth. Fund managers are not allowed to make valuations because the inflating of a company’s worth will result in higher fees charged by a manager. Woodford made £24 million on fees in 2018.
Bilton also investigated a fund manager by the name of Mark Denning who is responsible for managing a fund with assets over £300 billion. A owner of a vintage yacht and several homes across the globe appears to invest in companies that are owned by family members and has shares in a fund that he managers. Both these practices are breaches of conduct and are seen as a conflict of interest. Bilton argues that there appears little oversight and a spokesperson for the Financial Conducts Authority stated that the regulations need to change.
In my opinion, the activities of fund managers is entirely parasitical in nature. Only when the major companies are publically owned and democratically controlled can reduce this kind of speculative activity. What we need is a state pension that exceeds anything that the pensions industry could offer. If all pension pots were pooled and a guarantee of 90% of final salary, the necessity of fund managers would cease.
