We seem to make a little bit of progress in raising overall customer confidence in the sector, only to blow most of it away as a result of a fresh financial scandal or a series of scandals. Two steps forward, three steps backwards.
And it all happens under the watch of a regulatory infrastructure that is meant (or so I am told) to protect the interests of consumers. Utter baloney. It is bloated, reactive and out of touch.
Of course, the Woodford Equity Income fund debacle represents the latest financial scandal to dent consumer trust – one that increasingly looks as if it is going to end in tears for all concerned, apart from Neil Woodford, who is made for life and the one beyond, irrespective of the outcome: horses, mansions, holiday homes and Ferraris.
And you could add on top the related Hargreaves Lansdown ‘scandal’ that has diminished investor confidence in the true motives of those that run fund platforms (profits über alles). A crying shame given the financial liberation these online platforms have offered investors.
So, should someone force Mr Woodford to waive his fees on his suspended Equity Income fund? Yes (I have been banging this particular drum since day one of the scandal). As of July 4, there has been no intervention from the Financial Conduct Authority.
Should we require platform providers to remove all exit fees? A resounding yes.
So, what does the FCA do? It sits on its inert hands as if it does not have a care in the world.
Yet there is another scandal that has long nibbled away at consumer trust, but no one (including the FCA) seems to want to tackle it – and that is the loyalty penalty.
This is the way in which a swath of the financial services industry continue to abuse the trust of long-standing customers by providing them with inferior terms (be it lower savings rates, higher mortgage rates or more expensive insurance premiums) to those available to so-called ‘newbies’ – new customers.
It is an outrage that no-one with the powers to intervene really seems to want to address, even though the detriment to customers and the financial services industry’s reputation is enormous.
I have been writing about financial companies profiteering on the back of customer inertia for years. It has often been a lonely battle, which no-one, apart from the victims – and the occasional representative from the Financial Services Consumer Panel – has been interested in.
That was until late last year when suddenly the good people from Citizens Advice decided to intervene.
They fired off a red hot super-complaint to the Competition and Markets Authority claiming that consumers were being penalised for their loyalty to the tune of £4.1bn a year. It demanded an immediate end to the loyalty penalty.
Although the complaint caused ripples at the time – as well as plenty of newspaper headlines – precious little has really changed.