Sam Dunn: Financial services are still in the Jurassic era
Sunday 23 April 2006
Debates don't get much more impassioned than the one over whether to teach creationism and intelligent design in the classroom.
Fresh furore was provoked last week by the arrival in British schools of John Mackay, an Australian geologist who claims he has fossil evidence that disproves evolution, and will give lectures on his beliefs.
One part of the UK that could desperately do with a touch of evolution to shed its dinosaur approach to the way it often treats customers is the financial services industry.
Its reputation for sharp practice, being commission-driven, having rotten complaints handling and general shiftiness - in short, being huckstersaurs - is peerless.
You don't have to reach into the fossil record for its most recent misdemeanours.
In the past two weeks alone, the insurer Royal Liver Assurance has been fined £550,000 for mis-selling with-profits savings policies to elderly customers, and the Advertising Standards Authority has rapped the knuckles of British Gas for a TV spot that misled viewers over whether to switch to a rival service.
"Whoah!" I hear the cry go up, "you can't punish an entire industry - property, savings, pensions, investment funds et al - for the actions of a few bad apples."
Unfortunately, if you don't remove the bad apples immediately, the rot spreads. Let it go too far, and the reputation becomes well-earned.
A different sort of voice, that of the average consumer, reflects this. The anguish some financial customers feel. Seeking help for an endowment mis-selling query, a reader expressed anxiety about where to turn: to the insurer itself or the claims company?
In fact, he has no need of either, but his lack of trust prompted him to first get in touch with the Money desk.
Trust - or rather the absence of it - is a chronic problem for the financial services industry.
Baroness O'Neill of Bengarve, principal of Newnham College, Cambridge and an expert on the philosophy of trust, said in a lecture last month that the relationship between companies and customers was becoming critical, and fragile.
John McFall, chairman of the Treasury Select Committee, suggests that high-street shops like HMV are now more trusted by individuals than banks, insurers and building societies.
The committee is to interview members of the financial services industry next week as part of its inquiry into the design and regulation of the proposed national pension savings scheme. Alarmingly, insurers - those behind pensions and endowment mis-selling scandals who have largely abandoned cheap stakeholder funds because they're not profitable enough - want a major role running it.
The shape of the scheme is being forged over the next few weeks, and I share consumers' fears about trusting this part of the financial services industry.
Life companies may have the infrastructure to deliver but they have rotten form. I'd rather see the retail fund managers have a shot - the pensions industry needs somebody else in charge.
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