FAT cat managers at Standard Life were among those singled out for criticism today as a Treasury committee again tore into an industry that was once considered beyond reproach.
John McFall, the Labour MP and committee chairman, has ordered greater transparency over executives' wages and more correlation between customer benefits and pay.
''In recent years, savers have too often read of top management in financial institutions reaping large rewards and bonuses at the same time as a mixture of a bear market in equities and poor asset allocation has savaged the values of savers' funds,'' says today's Treasury committee report.
It adds: ''For example at Standard Life, most of the executive directors . . . saw their basic pay and performance-related bonuses rise by more than 30% between 1999 and 2001, in spite of this being described by the company as a 'period of turbulence'.''
Mr McFall said: ''Remuneration should be aligned to a company's performance and how it is performing for customers at the time. When the bottom is falling out of the market, 30-40% increases in executives' pay is off kilter and it needs to be changed.''
Mr McFall has already targeted the actuarial profession, which has repeatedly miscalculated financial risk. He said last night: ''Today, actuaries have to be whistleblowers. It is not enough to simply say we are only advisers on financial risk and it's the managers who do the execution.''
The report adds: ''It is still far from clear to the committee that the actuarial profession can be relied on actively to alert the public in cases where policyholders' interests are being sacrificed in favour of the interests of management or shareholders.''
MPs list a catalogue of other problems that have beset the long-term savings industry in recent years, damaging savers' confidence.
The problems followed the stock market boom of the late 1990s, which fuelled huge growth in the sales of pensions and investments. Once the technology bubble burst, the market tide began to go out, exposing one scandal after another. In 2000, the UK's oldest mutual insurer Equitable Life put itself up for sale and then began to slash the savings of its one million policyholders.
Then up to 10 million people who had been sold mortgage-linked endowments began to receive letters warning that the windfall they had been promised might actually be a significant deficit.
Next to be uncovered were two rounds of mis-selling, in the shape of split-capital investment trusts and so-called precipice bonds, both of which had hinged on an ever-upward stock market.
Also, a growing number of pension funds were wound up in deficit, forcing the government to intervene with new legislation.
Last night, the Consumers' Association said the committee's report was ''a damning indictment of the financial services industry'', and its proposed reforms would mean ''a fundamental reform and restructure'' based around the needs of the consumer.
Mr McFall has given the industry until Christmas to respond. Yesterday Mr McFall's services were rewarded by the Queen as he was sworn in as a privy councillor - a parliamentary honour mostly reserved to prime ministers and cabinet members.
Main recommendations
l Clear, standardised summary box for all savings products, telling customer what product is linked to, if saver is guaranteed to get money back, how risky product is and what charges are.
l Development of simple, standardised risk indicator for all retail savings products to be included in summary box.
l A much clearer system for telling savers how much they are paying for sales and advice and relative costs of paying through a fee of commission.
l An urgent limit to the current system where IFAs carry on receiving trail commission for years after they have sold a product, often without giving any real ongoing advice to saver, which can cost the customer thousands of pounds.
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