Since Nutmeg opened for business in 2012 we’ve grown a great deal. One of the benefits of growing is that it gives us the power to call for policy changes that matter to our customers.
On financial regulation
In May, we answered a Treasury consultation on how financial regulation can be made friendlier to innovation. In it, we made a series of recommendations, including:
- oblige financial advisers and investment firms (like Nutmeg, Hargreaves Lansdown, St James’ Place, and so on) to give customers real transparency on fees and performance
- cap the time pension providers can take to transfer a pension, and require all transfers to take place electronically
- allow firms like Nutmeg to cut down some of the financial jargon we are required to use (so we can use phrases like “your money is at risk” rather than “capital at risk”)
We made these recommendations because we believe that all investment products should be priced, like Nutmeg’s, inclusive of all fees and VAT, in pounds and pence. We don’t think customers should be kept waiting for months when they decide to move their pensions to a better, cheaper provider. And we would like the freedom to make all of our communications clearer, and more accessible to everybody.
We also make recommendations about the ways in which investment management firms tend to work – in other words, the business operations.
In April, we responded to the Science and Technology Committee’s inquiry into how robotics and artificial intelligence are changing different sectors of our economy.
We argued that firms like Nutmeg are using automation to make wealth management more efficient and cost-effective. It’s allowed us to speed up important processes like money laundering checks, and make far faster pension and ISA transfers than most of our rivals.
We also told the committee that these innovations are catching on only very slowly with our more established competitors. Because many firms are not transparent about fees or performance, their customers do not realise how much they are being charged – so they don’t look for better alternatives. Our competitors are not under pressure to modernise, and cut costs.
On intergenerational fairness and advice
We were very happy to see the Work and Pensions committee launch an inquiry into intergenerational fairness earlier this year. In it, we raised our concerns about house price affordability, the savings challenges faced by young people, and the sustainability of the ‘triple lock’ on the UK state pension.
We also argued that financial advice needs to be made available to those who do not yet have substantial savings pots, so they know how best to make those investments.
This call for accessible financial advice was one we made even more forcefully just before Christmas of last year, when we participated in a major Financial Conduct Authority (FCA) and Treasury review of financial advice. In a formal submission and through our co-founder Nick Hungerford, we made the following policy recommendations:
- Simplify the definition of financial ‘advice’ and ‘guidance’ to reduce customer confusion
- Align the UK’s and the EU’s differing definitions of financial advice
- Launch a pensions dashboard allowing every adult to see all information about their pensions in one place
- Support the development of automated and online financial advice, so more people have affordable access to high-quality financial advice
- Foster more innovation, through the creation of a dedicated FCA financial advice unit
When the final report was released in March 2016, it echoed each of our recommendations, alongside a range of other welcome policies – though we were disappointed at just how little was done to deliver transparency on pricing for financial advice.
For us, this demonstrates that being involved in ongoing conversations with government is worthwhile. Throughout 2016, we will continue to make formal submissions, and we will continue speaking to MPs, peers, government departments and parliamentary committees.
We want this process to be as open as possible, so we will continue to report on the conversations we are having. We also welcome feedback and suggestions from our customers. We don’t have a full-time lobbying operation, but we do want the government to know how we, and our customers, think savings and investment could be made better.
Risk warning: As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. ISA rules apply. Pension rules apply and tax rules may change in future. If you need help with pensions, seek independent financial advice.