Consumer panel urges focus on bias, not transparency
EU regulators are putting too much focus on disclosure and are not tackling the root problem in financial services which is bias, consumer panel says.
More effective disclosure that helps consumers make informed decision is a good move but not an end in itself, Kay Blair, vice-chair at the Financial Services Consumer Panel, has said.
In an interview with FTAdviser, Ms Blair said that one of her main concerns in Europe is that “so much” of the emphasis is on increased disclosure.
She said: “We see it through some of the Prips initiatives, we see it through Mifid. More effective and meaningful disclosure that helps consumers make informed decisions has to be good absolutely but it’s not a panacea and its not an end in itself.”
According to Ms Blair, sometimes it is “too convenient” for the industry to state that they have given consumers information so consumers should take more responsibility.
She said: “We don’t buy that argument at all because in terms of a consumers’ responsibility this is an industry that doesn’t work like other industries.
“It’s not as though you are going into John Lewis to buy a washing machine and you know what will happen. [In this industry] you buy a product and you may not know for five to 10 years whether it is going to deliver for you, so the nature of advice is critical, the nature of the product is critical and it’s very important for consumers that they have confidence both in the professional expertise and qualifications of the person that is giving them advice.
Ms Blair added that there have been too many examples of advisers recommending heavily-incentivised products.
She argued: “They need to know that advice is unbiased so that the products are geared to their individual needs. We have seen too often how products, particularly in the UK, have been pushed because of the incentive structure and awards structures and we would like to get back to simpler times probably.
“There is too much emphasis on disclosure from remuneration rather than tackling the root problem of bias. We have been really strong advocates of the Retail Distribution Review as we think bias abolishing and commission at the same time of raising standards means consumers will get a much better deal.”