Key Takeaways:
- Nigel Farage has been criticized for promoting the idea of buying physical gold and putting it into pension pots through his £400,000-a-year second job at Direct Bullion.
- The Reform UK leader’s videos do not always include disclaimers that the value of gold can go down as well as up, or that his comments should not be considered investment advice.
- Pensions experts have described the idea of converting some of a pension into physical gold as "niche" and only suitable for sophisticated investors.
- Farage has been accused of being irresponsible and potentially misleading his followers with his investment advice.
- The Advertising Standards Authority (ASA) has been asked to investigate whether the online material meets its standards and falls under its regulatory orbit.
Introduction to the Controversy
Nigel Farage, the leader of Reform UK, has come under fire for his second job promoting the idea that people should buy physical gold and put it into their pension pots. Through his role at Direct Bullion, Farage earns £400,000 a year, more than four times his MP’s salary, for just four hours of work per month. He has featured in several Facebook and YouTube videos, where he explains the benefits of investing in gold and encourages viewers to put it into self-invested personal pensions. However, not all of his videos include disclaimers that the value of gold can go down as well as up, or that his comments should not be considered investment advice.
Expert Criticism
Pensions expert Tom McPhail, a governor of the Pensions Policy Institute, has described the idea of converting some of a pension into physical gold as "niche" and only suitable for sophisticated investors. He emphasizes the importance of considering transaction and storage costs, as well as the lack of regular income from gold investments. McPhail suggests that for most people, a diversified portfolio with a mixture of bonds, equities, property, and cash is a better option. He also criticizes Farage for not providing clear disclaimers and for potentially misleading his followers.
Regulatory Concerns
Tom Brake, the chief executive of Unlock Democracy, has raised concerns about the Direct Bullion videos promoted by Farage with the Advertising Standards Authority (ASA). He points out that some of the videos lack disclaimers, and that the disclaimers that are present are often in a tiny font and appear fleetingly, making it difficult for viewers to notice them. Brake has asked the ASA to investigate whether the online material meets its standards and falls under its regulatory orbit. A spokesperson for Reform UK dismissed the concerns, stating that the party "took pity on the Guardian for not having better things to do with their time than measure font sizes".
Farage’s Response
Farage has defended his actions, stating that people who took his advice to invest in gold have seen returns of over 100% on their money. He has been promoting the idea of investing in gold for five years and claims that his relationship with Direct Bullion predates his time as an MP. However, his response does not address the concerns raised by pensions experts and regulatory bodies about the lack of disclaimers and the potential for misleading his followers.
Other Jobs and Income
Farage has several other jobs and sources of income, including presenting for GB News, for which he has been paid around £450,000 since entering parliament. He is also a columnist for the Daily Telegraph, earning £48,000 a year, and a commentator for Sky News Australia, which pays him more than £50,000 a year. These multiple sources of income have raised questions about Farage’s commitment to his role as an MP and his potential conflicts of interest.
Alternative Investment Options
Other pensions experts have suggested that gold can play a useful role in a diversified pension portfolio, but it’s essential to keep it in proportion. Kate Marshall, a lead investment analyst at Hargreaves Lansdown, recommends gaining exposure to gold through exchange-traded commodities (ETCs), such as the iShares Physical Gold ETC, which aims to provide exposure to physical gold. ETCs are a low-cost way to add exposure to gold to an investment portfolio, and they can be a simpler and more diversified option than investing in physical gold directly.
