The asset management industry must regain consumers' trust and boost pension saving or risk a financial crisis even worse than the 2008 crash, the Investment Management Association (IMA) has said.
In a speech at Mansion House, IMA chairman Douglas Ferrans said: "The first step is to reconnect with those investors and understand what they need and how best to serve those needs. The second is to demonstrate why we deserve their trust and confidence."
Ferrans noted the IMA's work towards creating a ‘pounds and pence' measure of funds' cost and performance to help investors understand what they pay.
However, he stressed that work like this must go further.
He said: "We need to ensure that when we spend our clients' money, we do so with real skill and diligence. We must ensure that when we face issues that give rise to potential conflicts of interest, we are able to think independently and put our clients' interests first."
Ferrans also said the industry must improve its corporate governance.
He said: "The challenges in effective engagement are well-known and I have in the past defended the right of our firms and clients to decide how far down this path they individually go.
"However, as an industry, this is an area that cannot and should not be ignored."
The IMA, along with the National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), recently pledged to create an investor forum to improve engagement, in which pension funds would be the "overwhelming voice".
Ferrans went on to warn that the industry must clean up its act because of its important role in encouraging individuals to save for retirement.
He said: "There is a massive underestimate of the future bill to pay for pensions and long-term care, and unless we all redouble our efforts to facilitate an environment where individuals do not rely on the state in later years, future generations will have a crisis on their hands that will make the recent banking crisis look like a tea party."
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From 1 March