...but you can read some preliminary information here:
About Team GTI
Team GTI is al about our Global Transparency Index initiative which will highlight best practice in the most transparent countries and allow different countries to benchmark themselves against others.
It will be a country-by-country assessment of the transparency of different pension systems around the world. Our initial focus is the UK, USA, Canada, Australia and the Netherlands.
The issue of financial services transparency is extremely topical in many parts of the world as growing consumer advocacy movements demand more from financial institutions, in particular in what they are disclosing to consumers. One particular problem is the hidden costs in investments, particularly in pension schemes. Consumers often feel like they aren’t being told the whole story, and they are right.
In any society, it is critical to have a pension system that is robust and transparent and that does not allow the excess extraction of fees and costs by agents. It must be a system that can be trusted as its societal benefit is huge – it has a major impact on the quality of life of retirees and also on the government support required by these people to have a reasonable standard of living.
Transparency is required for the market to operate efficiently so that consumers know what they are getting and what they are paying for it.
Just as importantly, trustees who oversee pension funds need to understand what they are paying their fund managers and other service providers to ensure they are investing their members’ funds in the most effective way. If it is not and there is excessive leakage of costs to other parties, pensioners will get less in retirement (accumulation schemes) or governments or other employers will need to pay more for the benefits provided (defined benefit schemes).
Identifying and sharing pro-transparency best practice
Several countries have developed effective strategies for driving up the level of transparency in financial services. They have implemented great ideas that have taken a considerable amount of time, effort and money to develop. Their ideas have been fine-tuned in the real world so the knowledge and understanding of what they have done will be an invaluable insight for other countries to benefit from.
Countries wanting to improve their transparency should have the opportunity to easily and inexpensively evaluate what other countries have successfully done. But this is not currently possible, because there is no centralized analysis of the disclosure and transparency of each country’s pension systems.
Enabling efficient and effective regulation
Financial services regulation is an expensive and resource-hungry activity but new regulations often fail to achieve their full potential. There are many reasons for that.
Regulators and policymakers need to take more advantage of what has been done in other jurisdictions. But there is rarely an objective and detailed understanding of how other countries have approached the challenge of introducing new regulations. The Global Transparency Index can play an important role in providing regulators with a much clearer understanding of best practice disclosure that can be used to improve transparency in their individual pension systems.
Evidencing superior capability, if appropriate
Some countries see themselves as world leaders in the provision of transparent financial services. They would welcome the opportunity the Global Transparency Index provides to ‘showcase’ their system and benchmark themselves against other countries. The Index would also provide other countries with motivations to ‘raise their game’ and improve their disclosure and transparency so they do not fall too far behind the more transparent countries.
Our Proposed Approach
The Global Transparency Index will be a country-by-country assessment of quantitative and qualitative research data that will form the basis of a ranking system. The countries with the most transparent financial services sectors will be at the top of the list and the least transparent countries will be at the bottom.
Our current thinking on our approach is as follows:
By producing the Global Transparency Index, we create a powerful platform for sharing best practice that will inevitably lead to questions such as:
There is great enthusiasm within our International Best Practice Team about the value and usefulness of the Global Transparency Index to all sorts of stakeholders right around the world.
In the planning stages of the Global Transparency Index we are genuinely keen to take on-board ideas and preferences from all stakeholders to optimize the value of the Index.
The Policymaking Perspective
We are looking to design and build the Global Transparency Index in such a way that it becomes a unique and invaluable resource for regulators and policymakers. Most Governments around the world are encouraging their populations to become increasingly responsible for their own financial security and welfare in retirement and to take upon themselves more of the financial risks of retirement.
For that ‘risk transfer’ approach to be justified to the community and for the transition to be successful, Governments need to know whether their pensions and investment sectors are efficient and adequately transparent with consumers, particularly in relation to issues such as costs/charges, how/where monies are being invested and investment performance. The Global Transparency Index will provide critical evidence for regulators and governments to assess the transparency of their system in comparison with other systems, and to highlight areas of improvement for each system.
A detailed report will be produced that will describe how each county measures up on a wide range of transparency criteria. The report will show where each country is strong and where it needs to improve across key areas such as the disclosure of fees/costs, asset allocation, performance and benefits/guarantees. It will also cover some indicators of good governance, complaints mechanisms, the allocation of members to products and the role of financial advice in the system.
With all that in mind, the Global Transparency Initiative will provide policymakers with policy ideas and insights from around the world that they can quickly and inexpensively draw on. It is imperative that regulators and policymakers have such evidence-based analysis to inform their policy initiatives. It will also provide an incentive for each system to drive improvements in transparency so that their system compares more favourably in the following year’s Index. We are convinced that the Index can be a force for good to drive all systems towards greater transparency..
Summary and Next Steps
The Global Transparency Index has the potential to deliver real, practical benefits to a wide range of stakeholders around the world and contribute to much better transparency in financial services. We believe this will lead to greater trust of the financial services sector as consumers will feel like they are being told the whole story.
We have deliberately not provided a prescriptive detailed account of how your organisation can help; rather we trust this document has whetted your appetite and motivated you to start discussing how you might want to get involved and back the initiative in whatever way suits you best.
You can view the members in Team GTI and all our other Teams, and our Ambassadors by downloading the spreadsheet that you can access through this link; scroll to the bottom of the page.
If you would like to know more, please contact me through firstname.lastname@example.org