William Kay: Contrite banks agree that they're not doing enough for their customers

When pontificating on the shortcomings of the financial services industry, IBM, the American computer giant, is not the first name that springs to mind, but advising on business change is a good way of promoting computer sales. And since IBM took over the consultancy arm of PricewaterhouseCoopers last year it has clearly acquired some muscle it is itching to flex.

But while the report outlined on page one is not afraid to tell financial companies where to get off, it is heavy on the broad brushstrokes and light on detailed recommendations.

Some of its analysis is questionable, too. To start with, the authors say that only 23 per cent of most people's assets are investable or liquid, "a figure we believe will only decrease given the nature of the world's stock markets". This implies house prices will continue to billow and stock markets will continue to slide.

That may be so in the short term, but the widely held view is that house prices are near their peak and share prices are near their nadir, so liquid assets are likely to rise as a proportion of most people's assets.

If anything, the report understates the total value of the houses we are occupying. It reckons we have £1,000bn of equity supported by £1,200bn of debt. Some industry experts believe our total debt is lower and the equity higher, but there is no doubt of our dependence on the wealth in our homes.

That is why so many people in Britain seem relaxed about their apparently low rate of saving in pension schemes: they intend to cash in on their property when they retire, as Paul Gosling explains on page 5. Which makes it all the odder that the IBM report blithely excludes pensions from its calculations, though there is a mountain of statistical data in this area.

These criticisms weaken the basis on which the report attacks the financial services industry's well-documented fondness for pushing product, often at the expense of consumers' interests. If there really is such an imbalance between property and financial assets in our portfolios, that hardly suggests the industry is forcing financial products down our throat.

But I was more surprised by the industry's response. The intermediaries were, perhaps predictably, defensive, but the banks I spoke to were remarkably contrite.

The recent commitment to retail financial services by the new chiefs of Lloyds TSB and Abbey National suggests competition for savers' and borrowers' custom is to increase. Maybe we shall also see fewer cases of banks sneaking in interest rate changes under cover of darkness, even blowing the whistle on one another more often.

* The best way to cajole financial services companies into taking more notice of customers is for customers to take more notice of them, by being better informed and more criticalr. And initiatives are about to burst upon us, designed to achieve just that.

On Monday, the government's Personal Finance Education Group (PFEG) is to be given a fresh impetus which I hope will strengthen its ability to improve teaching of the subject in schools. The following day, the Financial Services Authority is to unveil its refashioned consumer strategy under the leadership of Anna Bradley, former director of the National Consumer Council, who joined the FSA in January.

Separately, one of the FSA's three managing directors, John Tiner, launched a plan for everyone to take an easy-to-understand financial healthcheck to be used directly by consumers, voluntary or advice bodies, firms or employers. It will always be difficult to save people from themselves if they are determined to be greedy or leave their brains in the freezer when they are trying to assess a financial proposition.

The FSA and PFEG are dedicated to giving people the tools to see through the hype so beloved of our financial services. Gordon Brown, the Chancellor, has little room for manoeuvre in next month's Budget, but a few million set aside for financial education would be money well spent.

w.kay@independent.co.uk

William Kay is personal finance editor of 'The Independent'