A set of simple generic principles should be included on all financial product literature to help consumers make more informed financial choices.
The principles should include short, sharp messages such as “Reduce debt – always pay off credit card debt first” or “Save for retirement”, suggests the Financial Services Forum.
The principles should also be adopted by all firms which sell financial services products, not just the financial services industry, says the Forum in its response to the Thoresen Review. It says it is essential that the likes of supermarkets and companies such as The Post Office be included.
“Financial services companies have been trying to engage consumers and have them make appropriate financial provision for the last 25 years, with limited success, says Neil Scaife, managing director of the Financial Services Forum. “But by adopting and promoting an industry-wide set of financial principles, the financial services industry would be assisting whatever generic advice model the Government adopts post The Thoresen Review.”
He says he envisages that such a set of financial principles would tie in well with the proposed financial education programme in schools due to be launched in 2008 – and the maturing of the first Child Trust Funds in 2023. Other simple messages that could be used include “Protect what’s important: income, family” and “Start saving – aim to have at least three months’ salary as accessible savings for emergencies”.
“Such a set of principles would be a form of self-regulation for the industry and demonstrate a company was treating its customers fairly” says Scaife. “The principles could also be promoted as part of the financial education at schools, when 18-year-olds receive the money from their Child Trust Funds, at Government agencies such as Job Centres, as well as of course being promoted by the Citizen Advice Bureaux.”
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