Simple Products Consultation

The Goverment is running a consultation on how encourage financial services firms to offer simple products and how to make sure that consumers are aware of them. Full details can be found here, including a report that I was commissioned to write by the Treasury.

FSA Abolished

It was announced earlier this week that the Financial Services Authority is to be abolished and that it will disappear by 2012. I would suggest that this came as somewhat of a surprise, as George Osbourne had pledged to spend time listening before deciding and it was clear that the Lib-Dems were less keen on closing down the FSA. From a consumer protection perspective, in its place will be a Consumer Protection and Markets Authority, which will be responsible for policing the actions of financial services companies. The precise remit and objectives of the new authority will no doubt become clearer over time.

Bundled Current Accounts Don't Offer Value For Money

This report suggests that most packaged or bundled current accounts do not offer customers value for money and that their main purpose is to provide banks with a mechanism for ensuring that as many customers as possible pay a fee for their banking. Obviously such accounts for provide other benefits and will be suitable for some, but most will not get value for money. There may well be a framing issue at play here too. The fees for such accounts are almost always quoted in monthly terms and it may well be that £15 per month is inherently more palatable that £180 per year. Perhaps an AEC (Annual Equivalent Charge) should be provided, similar to an AER for interest rates. 

Is there a future for the FSA?

The Conservatives pledged to abolish the FSA if elected, however, the coalition has been very quiet on this matter since it came to power. This article provides the latest thinking and implies that there are tensions between the Conservatives and Lib-Dems over what to do with the FSA