I met Terry Smith at a dinner a few weeks ago. Although both of have worked  in the City for all our workings lives I couldn’t recall having met before. When I saw today’s  Evening Standard headline “ Smith’s defence of the investor class” I thought I’d read it – he’d made a good impression on me then. It reported his speech the annual Tacitus lecture in the City. My goodness how much I agree with him.

He argued we should:

• re-enact Glass Steagall in the US and introduce something similar here.  I support this strongly because this would both help make banks better – more manageable and practical to regulate; and it would also end casino banking – the use of capital supporting ordinary banking to double up and support highly leveraged investment banking balance sheets.
• Ban securitisation which in his words led to disastrous mis-pricing of risks as banks made loans they would not keep on their books
• Repeal Big Bang where again he saw the potential for profit at the expense of investors was manifold
• Encourage shareholders to end the payment of cash bonuses that fail to align management and shareholders
• Ban fund management investor platforms from taking commission from funds they host which gives them a vested interest in keeping fees high.

Wearing my Guinness Funds hat I couldn’t agree with him more about the pernicious effect the monopolistic structure of the platform. To pay to play on some platforms we have to offer share classes with 1.5% pa management fees because we have to pay away to the platform 0.75% to  1%. Now that RDR is nearly here we are offering share classes ( X class) which only carry 0.75%. pa management fee. I am sure that in due course we will see platforms that charge the retail investor  much less. May be 0.25% pa or maybe £25 pa.