UKSA has responded to the Financial Conduct Authority (FCA) discussion paper DP25-3 - ‘Expanding consumer access to investments’ with radical but simple proposals. The FCA wants the consumer to take more responsibility for its decisions. If so it needs to pay more attention to issues of trust.
The paper emphasises consumer responsibility. But there is no emphasis on the need to help the consumer in that respect.
As with any service industry, there is a conflict of interest between suppliers trying to sell services as expensively as possible and consumers who do not understand the issues. If regulation is involved there is another conflict between an industry trying to extract money from customers and a regulator staffed by many who may see their future careers in that industry. These pressures are both natural and unavoidable in a capitalist system. Consumers need help to navigate the consequences.
The most effective way to help consumers is to help them help themselves.
The Money & Pensions Service tries to do this with its MoneyHelper service. But to be effective as a learning source it must be trusted. And to be trusted it needs to be honest about industry conflicts of interest.
But despite honest attempts to present good material the site is:-
- silent on the subject of product costs – one of the most important issues behind successful saving,
- silent on the subject of counterparty risk,
- silent on the issue of trust, and
- subservient to the FCA by referring to its Investsmart site on matters of investment.
UKSA is in discussion with MaPS about this, and, as a next step, about developing a financial learning facility which confronts the issue of trust and caters for the enormous diversity of the audience in both inclination and competence in the management of their money.
Longer term, MaPS will need different terms of reference to be effective.
UKSA's contributions to financial learning can be found at HMN and PHM.
