This page is a work in progress...

...but you can read some preliminary information here:

 

About the International Best Practice Team

 

The concerns for transparency, truthfulness and trust are not confined to the United Kingdom.  This is why the Transparency Task Force has expanded beyond the UK, through the International Best Practice Team, to include representatives from other countries. 

 

The International Best Practice Team is comprised of an impressive list of individuals from over 10 countries including academics and key individuals that help run well-respected professional bodies, trade associations and successful companies. 

 

The International Best Practice Team’s diversity in terms of location and role is extremely important, but all the individuals share a common set of characteristics:

 

  • They share the view that the present levels of transparency in financial services are unacceptable

 

  • They believe the prevailing levels of opacity are harmful to consumers, market participants and the efficacy of governments’ policies, right around the world

 

  • They are seasoned, experienced people that understand how the financial services sector operates and how transparency can significantly improve the way the sector behaves

 

  • They have deep subject-matter expertise across the pensions and investments universe

 

  • They are collaboratively-minded; happy to build consensus and work as a team

 

  • They are pragmatic, wanting to do what will actually make a difference

 

  • They are willing and able to provide input on a voluntary basis to help move the market to a higher state of transparency, for the benefit of all

 

About the TTF's Global Transparency Index

 

The main focus for our International Best Practice Team is to develop our Global Transparency Index 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:

 

  • We shall research various aspects of transparency on a country-by country basis, evaluating how effectively consumers are provided with the information they need to make decisions in a timely, easily accessible and understandable manner through regulation, laws, market practice, consumer expectations etc.

 

  • This will involve both quantitative and qualitative analysis

 

  • The research will be conducted annually, so we can see how the ‘world view’ develops over time

 

  • For the first year we will focus on just four countries: Australia, Canada, United Kingdom and United States, to prove the model before rolling it out to fourteen countries in the following couple of years: Argentina, Australia, Brazil, Canada, Chile, Germany, Hong Kong, Japan, South Africa, The Netherlands, New Zealand, Singapore, United Kingdom and United States.  Thereafter we will look to further expand the coverage

 

  • We are likely to focus on transparency in the workplace pensions sector initially, and become increasingly comprehensive year-by-year by including other sectors of the financial industry.

 

  • Similar research methodology will be used to the Melbourne Mercer Global Pensions Index – David Knox, a senior figure at Mercer is involved with our project and he is providing valuable input

 

  • Each of the countries will be given an overall score, with a ranking produced – most transparent country at the top, least transparent at the bottom. We expect the ranking will create healthy competition; particularly amongst those that want to be at the very top but also amongst those that will want to get off the bottom.  There will also be a summary report for each country that sets out the areas of strength and weakness and how they compare to other countries on the ratings criteria.

 

  • The ranking will highlight best practice but also give country-by-country recommendations for improvements. Those recommendations will be fed straight into each country’s regulators and governments

 

By producing the Global Transparency Index, we create a powerful platform for sharing best practice that will inevitably lead to questions such as:

 

  • What are the most transparent countries doing that the others are not?
  • What steps did they take to be able to operate as they do now?
  • How is their transparency positively impacting their consumers and their society as a whole?
  • What would be the ‘obvious key issues’ for the least transparent countries to focus on?
  • What are the obstacles preventing greater transparency from developing ‘all by itself’?
  • How can regulators around the world develop a more standardized and harmonised approach?
  • What does the position in the ranking say about the ethics of each country?

 

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. 

 

Please get in touch through andy.agathangelou@transparencytaskforce.org if you want to get involved and be 'part of the solution'.

Who's in TTF's International Best Practice Team?

 

You can click on the link below to see who's involved so far. 

There's no cost or firm commitment - just do what you can to help as and when you can; and you can join our conference calls which take place on the first Thursday of the month. Thank you.  

TTF International Best Practice Team members
TTF International Best Practice Team mem[...]
Microsoft Excel sheet [51.9 KB]
Print Print | Sitemap
© Transparency Task Force