There’s an awful lot going on in financial services and, a week or so ago, I was contemplating it all. “Aided” by the then warm, humid weather and mandated business attire in an office with no air conditioning or fans, I came to the irritable realisation that, despite all this frenetic activity, something was missing – something much simpler than all
the fancy-pants things being worked on. Let me explain.
We’d recently had the Treasury Select Committee opining on the RDR. Among other things, it endorsed the FSA’s move to ban commission and factoring. This, they thought, was likely to corrupt motives. That, I thought, was bleedin’ obvious. The FSA’s Platform Paper moves to ban provider payments – these too fail to align everyone’s motives. We had the 86-page Final Report of the WRIC – a group of high-powered grandees who concluded such things as we all need more and better financial education, including in schools. None of this I disagree with, not at all.
I think it all came together for me when I read a fascinatingly appalling story in the Economist about employee health care in the USA (it’s an excellent piece, it’s just the practices that appalled me). Many US firms give financial incentives (read, money) to their employees to do apparently onerous things like taking their potentially life-saving pills! At this point I had a vision of my Grandma saying they need a kick up the arse! (She was able to reach such conclusions rapidly despite not having a PhD in economics or a six-figure salary; she used a disappearing essence called commonsense.)
Take commission and provider payments. Imagine, hypothetically speaking, going to the DIY store and seeing an offer for having your home decorated for free, all you have to do is pay for the paint used. I think this would be greeted with scepticism; you wouldn’t expect a natural wood finish – on anything. Or, in place of ever more educating and nudging, I ask
you to consider experimental traffic schemes in places like Holland where removing all the road markings, signs and other highway paraphernalia forces road users to think for
We’ve all heard the advice caveat emptor, let the buyer beware or, more prosaically, show some commonsense! We know “you don’t get owt for nowt”. So why exactly is it that when we move from the physical realm to the abstract – such as finance, advice or pensions – that policy-makers think consumers should be treated like cosseted babies? All the pensions, platforms, advice and finance regulation in the world will be incomplete without a firm kick up the consumer’s backside.