Simon Read: The fines are fine – but the penalties should be heavier

Fines were back in the news with a bang this week after two big banks were slapped with massive penalties for misselling and uncompetitive practices. Barclays was hit with a record £7.7m fine by the Financial Services Authority after it flogged unsuitable investment funds to 12,331 people who had invested £692m through the bank.

Even better, it was also ordered to pay up to £60m in compensation to the customers affected. Pleasingly, Barclays wasn't given the normal 30 per cent reduction in the fine for responding promptly to the City watchdog, presumably because it failed to play ball with the regulator. In fact, it turns out that Barclays had identified the unsuitable sales as long ago as June 2008, but failed to do anything about them.

Meanwhile, the Royal Bank of Scotland was fined a whopping £28.6m by the Office of Fair Trading after staff revealed sensitive future loan pricing information to a rival which was, oddly enough, Barclays. Revealing such information is against competition laws because it effectively leads to the creation of a cartel. Barclays escaped a fine on this occasion because its staff brought the matter to the OFT's attention.

Just last week in this column, I called on the financial authorities to make fines on banks more effective by increasing them. It is clearly only a coincidence that this week's fines are much higher but their varying levels still concern me. Both fines were for, as I understand it, ripping off customers, but the OFT's fine was almost four times that levied by the FSA.

Does that mean that operating as a cartel is four times as bad as flogging dodgy investments to people? Of course not. It's presumably simply a sign that the OFT has greater powers to levy larger fines on the banks. That's not right. When the Coalition finally gets round to introducing the new regulatory body that is set to replace the Financial Services Authority, I trust that it will be given the power to levy much more draconian penalties.

life insurance is not the most pressing concern for many families, but failing to take out cover could leave many on a financial knife edge if the worst did happen. Part of the problem is that cover is seen as unnecessary as "it might never happen".

According to research from Aviva published this week, three out of five families have no life insurance, while almost nine out of 10 don't bother with critical illness cover or income protection insurance. Many are put off by the costs but, with life cover starting at just a fiver a month, that excuse doesn't really stand up.

The reason is more because people don't want to safeguard their futures and would rather spend their money now. When you are young and single with no responsibilities, that attitude is totally understandable. But when having a family comes with the responsibility to ensure that your children are looked after – and that includes their welfare if they had to live without you.

I'm always surprised by the number of friends and acquaintances who admit that they have not got round to writing a will, for instance. Don't they know about the intestacy laws? And, while I understand families that are living on the edge may not be able to afford to splash out on protection insurance, Aviva's research suggests that the typical family prefers to blow money on takeaways and booze, rather than saving money for the future. Families spend an average £113 a month on eating out and alcohol while putting away just £22 in a savings account. Of course, we all want to enjoy ourselves but is putting treats and fun before family really a good idea? The average family doesn't even have enough savings to cover a month's bills should their main source of income suddenly stop. That is certainly something to ponder.

The clamour of controversy over the resignation of the shadow Chancellor, Alan Johnson, on Thursday overshadowed the promotion of Ed Balls to the position. In fact, the switch could prove good news because Balls's economic background should make him a more formidable opponent to Chancellor George Osborne, according to many political commentators.

But away from Westminster I hope the appointment of Balls means that there will be more focus on Labour's core constituency of embattled consumers. We need a strong shadow Chancellor. As an former editorial leader writer for the Financial Times, Balls could be the man for the job.

s.read@independent.co.uk