Apart from the billions that went missing in the global financial crisis, perhaps the greatest loss to its institutions was a widespread deference to their opaque, jargon-heavy, ultimately secretive way of doing business.
It was encouraged by this growing cynicism and the desire for clearer communication in finance, that Mark Polson made his own breakaway from corporate giants when he established the consultancy The Lang Cat in 2010, dedicated to simplifying complexity and disrupting the cosy financial services community.
Its genesis came after he had ticked off the milestones on the familiar “Edinburgh tour” of the life sector, with spells at Scottish Widows, Scottish Life (later Royal London) and what is now Standard Life Aberdeen, working on the marketing for its wrap platform which launched in 2006.
As he had become more deeply entrenched in corporate life, Polson had found himself in constant pursuit of what he calls “the room”, which he imagined was a secretive, smoke-filled chamber where people in the know had it all figured out.
“What I’ve learned is there is no such room. It’s just folk doing stuff, and hoping for the best,” says Polson.
He became aware that financial organisations often started out with good intentions that would eventually be battered out of shape after becoming entangled in bureaucracy and pressures from many sides, including shareholders.
Polson saw an opportunity to branch out and get corporate decision-makers to move away from abstract language and complexity for its own sake and focus on the customer, to “try and make things sharper and cleaner and better – and often lower cost”.
The Lang Cat started out as a technical consultancy, but in 2013 Mark Locke was hired from Aegon UK to set up a communications and PR side to the business, with Polson having spied a gap in the market for a fusion of technical know-how with marketing and communications.
It now has about a dozen staff spread across Edinburgh, London and the Isle of Wight, and aims to help deliver “what the consumer should be serviced with – and not what the industry thinks the consumer needs”.
That said, Polson echoes the experience of fellow disruptors, such as Edinburgh-based peer-to-peer lender LendingCrowd, that while being a new and smaller player brings the bonus of agility, a battle remains to gain traction against dominant incumbents in a market where profit margins are tightly squeezed.
“It’s not an easy place to disrupt because you can’t just rock up and do this stuff – you’ve got to be properly regulated,” says Polson.
Indeed, rivals of his firm include the “Big Four” – PwC, KPMG, Deloitte and EY – that together cover about 40 per cent of the global $150 billion consultancy market, according to Consultancy.uk. They have “all seen impressive growth rates of their consulting arms in recent years, far outpacing the growth rates of accountancy, audit and tax wings”, the consulting platform said.
Getting large players in financial services to act – and settle invoices – is a struggle, says Polson.
“I’m interested in really trying to change the dynamic about how companies listen to externals… there are other ways to do this stuff,” he says, amid an environment of much greater scrutiny of auditors, for example.
The Lang Cat has certainly taken deliberate steps to remain on the fringes of financial services, such as being located in Leith, symbolically outside Edinburgh city centre. It also boasts trendy offices (unlike the lavish premises of traditional firms, “all built with other people’s money – that’s easy to forget when you walk into it every day”). Furthermore, the company’s name is a nod to a song by Fife musician James Yorkston, which Polson says was a constant soundtrack when he set up the business.
None the less Polson is keen to stress that while its cat-themed branding may be light-hearted, the business must be an iron fist in a velvet glove to survive.
“If you know what you’re doing, if you know the subject you’re talking about, it’s okay to be light about it and be funny about it, and to have a funny cat.
“Because the second you need to drop into detail, and actually get the proper stuff done, you can do it. What I think is unforgivable is to have all that fluff up there and no substance underneath.”
He also says the firm may appear to conduct itself unconventionally, but “underneath it’s a very, very cautiously run, traditional business, very prudent… we’ve got to be sustainable”.
The Lang Cat has now worked with Polson’s three aforementioned employers, and the likes of Aegon, BlackRock, RBS and Prudential.
And one area where it has been sticking its head above the parapet is by commenting on the updated Markets in Financial Instruments Directive (MiFID II), which recently became effective. This requires investment managers to disclose additional transaction costs charged to their funds, on top of the established ongoing charging fund figure.
The Lang Cat revealed last month that across the top 20 best-selling funds of 2016, investors in 13 were shown to be paying on average 30 per cent – and up to 85 per cent – more in additional transaction fees than had previously been disclosed to them. Mike Barrett, consulting director at The Lang Cat, said that as recently as 2016, the Investment Association dubbed such additional charges the “Loch Ness Monster” of investments.
“It turns out that Nessie is alive and well, and charging tourists a third more for a photo than they expected,” said Barrett. “Numerous surveys over recent years have shown how people trust financial services at roughly the levels normally reserved for politicians and estate agents. And with fund groups now saying, ‘Oh, sorry, when we said we were charging you x, we meant a figure over a third higher,’ it’s not hard to understand why.”
Polson echoes Barrett’s criticism that it took a change in the law for such charges to be to disclosed, and says transparency is essential overall to allow people to establish whether something is good value
“The financial services industry still does, far too often, everything it can to stop people understanding what they have and how much it costs. The language starves people of the information they need.”
He aims for The Lang Cat to deliver more such industry commentary, which will ultimately help its growth.
And he warns that while the firm uses words not frequently heard in finance, “actually we have to be better than the guys using old corporate language because we know it’s going to get read differently”.
As for Polson’s own duties, the plan is eventually for him to step back from day-to-day consulting as the firm brings in more staff and bolsters its client roster.
He sees headcount reaching 30 to 40 in Edinburgh, and is also looking to boost the ranks in London, while the firm has been working with organisations overseas in the likes of Europe, Australia, South Africa and the US.
Acquisitions of operators on, say, the communications side are also not beyond the realms of possibility, although he warns that it could dilute The Lang Cat’s specialist nature.
It would also involve bringing in external funding for the first time. “That’s a very hard mind-shift for me as a business-owner, because it’s all been organic and that’s been really deliberate. To shift that I’d be incredibly cautious about doing it.”
But Polson categorically rules out the firm itself being acquired. “I definitely don’t want to get out of this business – I’m here for the long term.
“I think in the next five years, the market for what we do will continue to strengthen and I think we could grow to twice our size quite easily.”