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Time to regulate self-appointed experts
feisty1
Posts: 1,487 Forumite
The rise of self-proclaimed financial experts on television and radio is damaging our industry. Sitting on the periphery of regulation, they are in the powerful position of being able to offer generic advice without having to validate or justify it. Consumers take what they say as gospel with little or no protection.
Clients need good financial guidance now more than ever, not the sensationalist rhetoric indictment of the times we live in that pundits like this wield so much public influence.
The majority of Britons are not financially educated and take experts' advice without any thought of the consequences.
This is something these pundits play up to and is all too evident in the tabloid layout of their websites.
It never ceases to amaze me the lengths consumers will go to to notionally save a few quid - I say notionally because the costs incurred often outweigh the benefits.
If you ask consumers why they listen to media experts, they tell you that they make complicated financial jargon easier to understand. But I think it is the evangelical way in which they deliver their sermons that makes the financially naive do what they are told.
By their own admission, many of these experts worry about the effect their advice has, especially when consumers say things such as "because you say so that's what I'll do". They are right to be concerned because the results can be disastrous.
Let's not forget high-profile media pundits were some of the biggest supporters of online Icelandic bank Icesave, which collapsed recently. I am sure all the consumers who took their sage advice are overjoyed they did so now.
In their defence these pundits simply say that they did recommend banks such as Icesave but always provided caveats and pointed out the health warnings, which is something of a cop-out.
You can't accept the mantle, plaudits and undeniable wealth that comes from being a consumer champion only to wash your hands of any responsibility the moment things go wrong.
It is time that financial websites promoted by media personalities were subject to the regulations that control the industry proper, which may encourage consumers to think twice before taking their advice.
Shape of things to come
The surprise 0.5% base rate cut was great news for embattled borrowers but the relief was short-lived for clients taking out tracker deals with Abbey.
After the cut it announced it was raising its tracker mortgages by 0.5%, wiping out the reduction and sending the message that interest rates have little to do with the base rate and more to do with the money markets.
For a banking giant like Abbey owner Banco Santander, which prides itself on having a branch on every corner, this looks like an abuse of its position.
While there is still a need to raise cash on the money markets, Santander's reliance on them is noticeably smaller than many of its competitors.
So why did it decide to hike rates on Abbey's tracker deals if it didn't need to?
This could be a portent of things to come. Unless there are sufficient checks in place, the monolithic institutions emerging from the ongoing financial crisis will be able to throw their weight around with little or no recourse. This is something we will all pay for in the end.
Sacking bosses won't help
Liberal Democrats Vince Cable and Nick Clegg have been calling for the senior executives of failed banks to be sacked. This is not helpful.
I have no doubt they bear some responsibility for the banking crisis but not all the blame rests with them nor is sacking them going to achieve much.
The banking sector acted in a risky way, which means the systems and controls put in place to ensure collapses did not happen were flawed.
In the UK we like to think that we have gold-plated regulation, preferring to adopt our own rules to the annoyance of our European partners. Recent events have shown the flaws in this argument.
We have a huge amount of regulation and oversight in the financial services industry, yet we are on the precipice of one of the most serious financial catastrophes ever. Calling for sackings is futile, especially when many of these executives have first-hand experience of what went wrong. They should be working with the regulator to help ensure this does not happen again.
source: mortgage strategy Kevin Paterson
Clients need good financial guidance now more than ever, not the sensationalist rhetoric indictment of the times we live in that pundits like this wield so much public influence.
The majority of Britons are not financially educated and take experts' advice without any thought of the consequences.
This is something these pundits play up to and is all too evident in the tabloid layout of their websites.
It never ceases to amaze me the lengths consumers will go to to notionally save a few quid - I say notionally because the costs incurred often outweigh the benefits.
If you ask consumers why they listen to media experts, they tell you that they make complicated financial jargon easier to understand. But I think it is the evangelical way in which they deliver their sermons that makes the financially naive do what they are told.
By their own admission, many of these experts worry about the effect their advice has, especially when consumers say things such as "because you say so that's what I'll do". They are right to be concerned because the results can be disastrous.
Let's not forget high-profile media pundits were some of the biggest supporters of online Icelandic bank Icesave, which collapsed recently. I am sure all the consumers who took their sage advice are overjoyed they did so now.
In their defence these pundits simply say that they did recommend banks such as Icesave but always provided caveats and pointed out the health warnings, which is something of a cop-out.
You can't accept the mantle, plaudits and undeniable wealth that comes from being a consumer champion only to wash your hands of any responsibility the moment things go wrong.
It is time that financial websites promoted by media personalities were subject to the regulations that control the industry proper, which may encourage consumers to think twice before taking their advice.
Shape of things to come
The surprise 0.5% base rate cut was great news for embattled borrowers but the relief was short-lived for clients taking out tracker deals with Abbey.
After the cut it announced it was raising its tracker mortgages by 0.5%, wiping out the reduction and sending the message that interest rates have little to do with the base rate and more to do with the money markets.
For a banking giant like Abbey owner Banco Santander, which prides itself on having a branch on every corner, this looks like an abuse of its position.
While there is still a need to raise cash on the money markets, Santander's reliance on them is noticeably smaller than many of its competitors.
So why did it decide to hike rates on Abbey's tracker deals if it didn't need to?
This could be a portent of things to come. Unless there are sufficient checks in place, the monolithic institutions emerging from the ongoing financial crisis will be able to throw their weight around with little or no recourse. This is something we will all pay for in the end.
Sacking bosses won't help
Liberal Democrats Vince Cable and Nick Clegg have been calling for the senior executives of failed banks to be sacked. This is not helpful.
I have no doubt they bear some responsibility for the banking crisis but not all the blame rests with them nor is sacking them going to achieve much.
The banking sector acted in a risky way, which means the systems and controls put in place to ensure collapses did not happen were flawed.
In the UK we like to think that we have gold-plated regulation, preferring to adopt our own rules to the annoyance of our European partners. Recent events have shown the flaws in this argument.
We have a huge amount of regulation and oversight in the financial services industry, yet we are on the precipice of one of the most serious financial catastrophes ever. Calling for sackings is futile, especially when many of these executives have first-hand experience of what went wrong. They should be working with the regulator to help ensure this does not happen again.
source: mortgage strategy Kevin Paterson
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Comments
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*sigh*
Icesave was top of the savings list, thats why people went there.
Why do people go to Barclays every tax year even though there are problems? Because Barclays offer the best rate. This is what consumers want and they don't look at the warning signs.
If you look back to the ISA Barclays thread you will see complaint after complaint. Go back a year and look the previous thread complaining about Barclays. Exactly the same.
You can hardly blame people like Martin because its the consumers that are to blame for being too thick.0 -
When you cut 'n' pasted this from THE LINK posted on another thread [ the Have a Go at Martin one] shouldn't you have omitted the final 2 items in the article as they don't relate to your title?
The opinions in the article are just that - opinions. The writer is entitled to hold them and others are entitled to agree or disagree as they see fit.
Personally I don't agree, those who are regulated are giving personal advice to individuals for a fee [or a commission from a product provider]. The reason they have to be regulated is the litany of past indiscretions of the financial services industry of mis-selling in many and varied guises over the years. Indeed the very problems we are currently experiencing are further shenanigans by operators within that industry - namely the banks. At best the article is an attempt to self justify, at worst an attempt to hide the true issues involved.
Those issues are that the banks were regulated by their own government - but were unsound - and under the EEA passport arrangements were allowed to operate in the UK without the UK regulator being able or willing to verify their soundness.
Put it another way. Had the mortgage broker who wrote this article advised a client to use a mortgage company that subsequently went bust, holding the arrangement fee before the loan was granted, would they have been liable if that was the best regulated product for that client? I don't somehow think so.0 -
What is the suggestion then? Making financial journalism of any kind a regulated activity? Can't see it somehow.0
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It amazes me that you condemn expertise which is available to the consumer for free or at very low cost. Anyone looking at this kind of information can see a wide divergence of views and can judge for themselves how good they think it is. They have the option of not paying an IFA for equally or most probably even more idiosyncratic advice, supposedly matched for their individual circumstances, delivered in private to all intents and purposes in an equally unaccountable fashion, the only advantage being a good bedside manner perhaps. Roll on ever more free insights into the workings of our capitalist economy I say. The time is always right to buy, demonstrated by IFAs is at best wishful thinking on their part.0
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Next we'll get calls to regulate forum posters
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Perhaps educating people to make informed decisions rather than shooting the messenger may be a better approach
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isofar has got this just about perfectly.
If questioners on this site educated themselves just a little (by reading the site's articles, for example) their questions would be answered without having to show that they can't be bothered.0 -
Sadly todays society tends to like it that way as it suits them on two levelsisofar has got this just about perfectly.
If questioners on this site educated themselves just a little (by reading the site's articles, for example) their questions would be answered without having to show that they can't be bothered.
1.) A lot of people are lazy and can't be bothered, just like it handed to them on a plate.
2.) If you educate yourself, you assume a degree of responsibility for what happens afterwards, modern society much rather enjoy the idea of following in ignorance, then if it goes wrong they can play the "I didn't know." card and blame everybody and anybody else for their predicament, such is life..Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0 -
Yes but the whole mess in the first place was caused by the so called top financial gurus in the US such as Ben Bernanke and Hank Paulson. Yet the same people are in charge of clearing the mess up.
Opinions differ widely and anti-establishment financial guru Jim Rogers thinks Bernanke and Paulson ought to be locked up for crimes agoinst humanity.0 -
Bernanke and Paulson were only appointed to their current positions in 2006, this crisis was well on it's way by then. Paulson was formerly CEO of Goldman Sachs, one of the US investment banks least exposed to the crisis. Bernanke on the other
hand was an academic teaching economics at various universities prior to his appointment at the Fed. So all in all they are probably no worse a choice of candidates to sort the mess out than anyone else.Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0
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