Personal Finance: The guide, the bad and the ugly
Deborah Arnott hits back at criticism of the Financial Services Authority's information booklets
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Your support makes all the difference.PULLING FINANCIAL guides apart is a lot easier than putting them together, as John Andrew knows. Getting the "facts" straight but easy to understand takes patience and a lot of work. As each publication comes out, I still see improvements I wish we had made (and will be made when we reprint).
But it was a surprise when John Andrew wrote in The Independent criticising our guides. He is on the development group of the Money Management Council, which this week awarded us its Quality Mark for the same publications.
The Financial Services Authority, the industry regulator, has produced these guides as simple introductions and all have been accredited for clarity by the Plain Language Commission. They are not meant to be comprehensive, and are backed by a helpline. We have had independent research on reactions to the guides. The response was positive. People took in the key points and liked the content.
We want to keep improving the quality, and we will certainly take some of John's comments on board. But he is criticising content, not just style. We made the point that some investments, such as pensions, are more suitable for taxpayers. John says the tax position is irrelevant and the point is the need to provide for retirement.
He is wrong. Choosing the best way to save for retirement is directly affected by tax positions. He is also wrong to say non-taxpayers are never able to pay into a pension. Employees who earn too little to pay tax get relief at basic rate on personal pension contributions. This means some on low incomes with sufficient family income from a partner might find putting money into a pension a sensible way to save for retirement.
Second, he says we are obsessed with costs and charges. Charges can have a major impact on performance. Before regulators forced advisers to disclose them, customers had no way of knowing how much upfront charges were. On some products, they are high enough to wipe out the value of your investment for the first years. We have two other guides, on the risks of opting out of, or transferring from, your employer's pension, plus more on making a complaint, mortgages, annuities, and financial planning.
The FSA is creating league tables of financial products and we are setting up a single Ombudsman and a compensation scheme. The FSA is here to ensure a fair deal for the consumer. We are happy to accept constructive criticism.
The writer is the FSA's head of consumer education
Call 0845 606 1234 for the FSA's helpline; or 0800 917 3311 for free booklets and fact sheets
`The Independent' has published a free 20-page `Guide to Independent Financial Advice', which tells you how an IFA can help and how to find one. The guide, written by Nic Cicutti, this paper's personal finance editor, comes with a list of names and telephone numbers to whom you can go for help. Call 0117 9712932 for a copy.
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