SO many people feel they have been treated badly by the financial services industry. Whether it is pension companies, banks, insurers or mortgage lenders, I regularly hear of poor practice.
I have seen so much injustice and, as an independent consumer champion, have worked hard to help savers understand finance while trying to encourage Government and the industry to offer better protection and fairer products. Following the pensions and savings reforms introduced in the past year, it is so important to ensure that customers are treated fairly by the large financial companies. I also believe it is vital to roll out financial education to everyone, not just those nearing the end of their working life.
I have always, in the past, focused on policy, rather than politics, and have worked with all the major political parties trying to make finance work for the many, not just the few. I have now been offered the chance to become more directly involved and have decided to accept an offer from the Conservatives.
If they form the next Government, they have offered me a Ministerial role to identify how best to improve consumer protection, financial fairness and financial education. I would carry out a major review of financial fairness for consumers, including:
charge caps for pension products to protect savers from excessive fees;
improved rights for older consumers especially in the mortgage market;
promoting competition and innovation for all savers;
developing the Pension Wise service to offer financial education and guidance to working people at every stage of their lives – not just nearer retirement.
I want to see long-term savings work better for ordinary families who put their hard-earned savings aside for their future, which is so important to restoring the strong British savings culture. The Conservatives have also removed tax from almost all savings income.
I also believe the new pension reforms – and trusting people with their own money – are an essential step to helping everyone make the most of their hard-earned savings. For too many years, consumer rights have played second fiddle to the interests of large financial firms, but the new pension freedoms offer the chance to put the interests of British savers first and that is a real game-changer. The Government was right to make this radical change.
I have to say I was impressed last year when George Osborne stood up to the large financial firms. Without warning, he put an end to the rules that allowed them to take advantage of poorly informed customers and sell them standard annuities which may not have been suitable. He paved the way for a new environment for long-term savings.
People will no longer have to buy products that may not be appropriate for their needs. Those with the largest pension savings already had the freedoms and flexibility that are now open to everyone, but now hard-working families will have the chance to save more if and when they can, knowing they will be allowed to use the money as best fits their circumstances.
There are some who say only the financial industry, or Government, know best what people should do with their money and that most people can’t make sensible decisions for themselves. Well, I disagree. I truly believe British savers can be trusted to make the right choices. They will need protection, they will need guidance and many will also need advice, but that is where I hope I can make a difference.
It will be my job to review this and ensure customers get a fair deal – I am delighted to be offered the chance to do so. This will mean a new mindset from providers and potentially further Government action to protect savers. Of course it won’t be easy, but I’m determined to make a difference.
I will remain a champion for consumers, but also want to work with the industry to adapt to the new environment. I can do this far more effectively from within Government. The savings and pension reforms are only a start, the next steps are yet to come. Making financial services work better for the customers will ultimately also benefit the industry itself.
I also want to make sure that there is no discrimination in financial services. For example, it seems people beyond their 40s are often being denied mortgage loans purely on the grounds of their age.
Britain has strong, world-leading financial firms, but their long-term success will require a new approach.
Some companies are already recognising this and I look forward to engaging with them. Too many, however, are still relying on past captive customers being locked into expensive, inflexible products. Such practices need to be abandoned, in favour of more customer-friendly approaches, that will bring far more money into long-term savings in future. I hope to help this happen.
Dr Ros Altmann is a pensions expert and the Government’s business champion for older workers. She will become a Minister for Financial Consumer Protection if the Tories win the election.