Not many people get to upstage Grim Gordon on his day of glory. Waving his tatty red leather box and...
Not many people get to upstage Grim Gordon on his day of glory. Waving his tatty red leather box and grinning like someone who knew something we all didn't, the Iron Chancellor arrived for his annual, stick-shaking ceremony at the House. Budget day brought no surprises, which is just as well given the impact of the Myners Report. The Budget was chewed up and spat out in hours. Myners is less digestible.
Myners is set to become a word in the lexicon of the City to match Cadbury, a shorthand which gives no clue as to the impact of the reforms proposed by first Sir Adrian Cadbury (on corporate governance) and now Paul Myners. His contribution is less a shot across the bows than a hole below the waterline.
In truth, no one expected anything less. At his appointment, reaction among his fellow fund managers to news of a new job for the Gartmore chairman was somewhat rueful. Some suspected a personal career agenda. "One thing is sure," a veteran anticipating the end of an era told me, "he's not going to come back and say 'don't change a thing, it's all working fine', is he?"
So it has proved. Of the 50 main recommendations put to the Treasury, measures like the abolition of the minimum funding requirement for pension funds have been widely leaked, discussed and accepted already. None of these are low impact. Myners' early charge that fund managers are incentivised to act in herds provoked outrage, partly because it hit home.
The usual response from industries confronted with change is to call for a report, which takes a long time to surface, preclude any public discussion until the text is widely distributed, and then reveal that the key recommendations have already been implemented. Myners was appointed, and reported back, quickly, with due consultation. No one can claim he doesn't understand the business.
The result has received a 'cautious' welcome. That means the industry is in shock. "He's run the flag up the pole,' said one consultant. "Now we'll see who salutes."
First, with almost imprudent haste, was Chancellor Gordon Brown, who found time on Budget day to welcome the effort.
But almost everyone else is hanging back a little, perhaps because the scope of the report is making everyone nervous.
Fund managers, consultants, actuaries, brokers, trustees, target companies, IFAs, investors and regulators all came in for a withering blast. Many recommendations went further than even those lobbying for change expected. Sure, fund managers should be paying more attention to broker calls but for them to pay for all dealing and research themselves is going to redefine both sides of the business.
Likewise, real professionalism is set to sweep amateurish pension fund trustees into the dustbin of history. The new models will be paid experts. But 'token' remuneration for non-executive posts is fraught with problems, ask the NHS health trusts and other pubic bodies. The call for a wholesale review of the personal finance industry is overdue, everyone in it just hopes Myners' glare will fall on someone else first.
Overall, the call is for the industry to raise its game. There is as yet no compulsive element, so there will probably be little open resistance to the proposals.
But lack of comment does not mean disinterest. Every investment house in the business is on full alert. We love the Report, they'll say, but market conditions right now are too precarious to implement reform.
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