Plan your finances through the OFT website

THE Office of Fair Trading exists to ensure companies play by the rules when they deal with the public and with each other. The OFT is not averse to showing its teeth to the financial services industry and has published critical reports into health insurance and pensions. The pension report was one of the factors prompting the Government to re-examine private pension provision and to propose the new stakeholder pension.

The OFT has added a personal finance area to its internet site aimed at the general consumer. The OFT site carries articles on each of the main groups of financial services. This ranges from the very basic, such as bank current accounts, to more complex products such as open-ended investment companies (Oeics) or PEP mortgages.

The site starts by looking at financial planning, something it suggests we should all do more of. The OFT formulates an action plan for improving wealth. Its suggestions are all sensible, if hardly radical: you should review income and spending, pay off debts before building up savings, avoid borrowing on credit cards, build up an emergency fund for unforeseen problems. The section includes the usual monthly budget planning sheets, although these are not interactive and there are no on-screen calculations. The OFT site takes the same no-nonsense approach to mortgages, insurance, savings and investments and pensions. The site goes into more detail on insurance, pointing out that the decision on whether or not to take out a policy depends on the consumer's attitude to risk, the scale of the risk and the cost of insuring against it.

One of the strongest sections is on mortgages. The OFT goes in to quite some depth on the various ways of paying back a home loan, including the way most lenders calculate repayments. The OFT suggests that especially towards the end of the mortgage, where home owners with repayment mortgages are paying more capital, lenders should look to switch to a system which credits repayments as they are made, rather than once a year. The pages give a clear explanation of endowment policies and warn of the dangers of giving them up. Finally, there are links to official bodies, ombudsmen and trade organisations dealing with consumer complaints.

The OFT site's address is: http://www.oft.gov.uk/html/finance

Stephen Pritchard can be contacted at hi-tech-investor@dial.pipex.com