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Financial services
18 March 2010
The last two years have seen the financial system in crisis. Some of the high-street banks that we viewed as solid and reliable institutions almost ceased to function. It is no surprise that consumers became wary, concerned and confused about whether and where their money would be safe. The banking crisis has shaken consumer confidence in our financial sector – this needs repairing.
I am sure every taxpayer is aware that significant investments have been made to ensure that not a single depositor with a UK bank lost money. But rebuilding faith is not just about fixing the banks. We also need to give more power to consumers and help people take better control of their money, know their rights and be able to take action when these rights are not met.
One step towards this was the Chancellor Alistair Darling’s announcement this week that from 1 April we will be rolling out a free-of-charge Money Guidance service across the country.
This means people can pick up the phone, go online or come in and talk to an independent financial expert to get free impartial advice on any money issue. Someone who is thinking about buying their first home, for example, will be able to get help understanding the different types of mortgages, which type might suit them and how much they could borrow. The experts can also help a consumer work out how best to budget if they tend to turn to credit cards at the end of the month.
What this service also looks to do is to take the financial jargon with which so many people get confused, and replace it with clear, concise and understandable information that people will be able to comprehend and explain to their families.
The Prime Minister, Gordon Brown, also announced this week proposed measures to make banks and credit card companies behave more responsibly and act fairly towards their customers. Never again should banks and credit card companies encourage people to borrow more than they can realistically repay.
Under ‘Right to Repay’, consumers will pay down their most expensive debts first and thus reduce levels of high-interest debt more quicky. Companies will also be prevented from hiking up the interest rates they charge - or increasing customer credit limits without asking - if consumers are struggling to make ends meet.
Both of these announcements in the last fortnight build upon a vast amount of work being undertaken both within the Treasury and across Government. This is to ensure that consumers are armed with the information and understanding they need to make sound financial judgments and decisions, as well as the legal grounding to take action if this is not provided.
