MSE News: Government demands simple savings

opinions4u

...and here we are wasting what precious small resources remain paying armies of Civil Servants to nit-pick the unpickable, legislate for the stupid, shovel cash from one poor wretch to another, and load our dwindling industries with more, more, more, bureacracy and baggage.......

And not a single politician prepared to change it.

Superb post by the way.

Jake'sGran

Oldbiggles wrote: »

Whilst it’s easy to agree with some of the comments posted here. I’m suspicious.
Does this mean that the Gov’t is about to create yet another Quango to investigate this well know problem? (another excuse for ‘legitimate’ expenses that won’t be questioned, no doubt)
The Gov’t keep coming up with great ideas (like ISA’S for instance). But no sooner have the financial institutions started them up they immediately start adding complications to boost their profits. An ISA was launched as a CAT standard savings account, but now you’d have a hard job finding one, and you will never convince me that the interest rates being offered are fair. Banks and Building Societies are guilty of holding back on the Tax Free element of these accounts.
They should only be permitted to offer a instant access ISA if the interest rate is equal to or greater than ANY other savings account on their books. (and that includes the rates they offer on term accounts, child accounts, over 60 accounts or any others.

I have gained a lot from "some of the ideas the Govt keep coming up with" and have used them all starting with Tessas then PEPs and ISAs. The latter has been the least beneficial idea because the rates are always less than those available without the ISA wrapper.

If a person is over 70 and getting a tax free pay allowance of £9490 or more and does not have a private pension they don't need ISAs. May as well have the extra interest, small as it is.

NB I have been impressed by quite a few of the posts in this thread but my THANKS button has disappeared ??

Kohoutek

opinions4u wrote: »

Even the majority of the educationally challenged in society can work these things out. The problem isn't education and it isn't the complexity of savings products available. It's laziness, lack of interest and an inability to make a diary note (or mobile phone reminder).

I think you're right to an extent, but since we teach kids about subjects that aren't part of the formal curriculum at secondary school like drugs, sex, how to use computers, "citizenship", religion, basic careers advice, I don't see why they shouldn't be taught about personal finance. You could just add a few supplementary lessons to the GCSE Maths curriculum.

Particularly to someone that isn't that educated (or perhaps just not that bright or plain lazy as you suggest), the range of different products available and personal finance jargon can be very confusing. The multiplicity of the meaning of the word bond is an example.

Loughton_Monkey

Kohoutek wrote: »

I think you're right to an extent, but since we teach kids about subjects that aren't part of the formal curriculum at secondary school like drugs, sex, how to use computers, "citizenship", religion, basic careers advice, I don't see why they shouldn't be taught about personal finance. You could just add a few supplementary lessons to the GCSE Maths curriculum.

This sentiment is fine. But isn't that part of the problem? Kids these days (a growing number of them) cannot read, write and do simply maths, and yet we load all this on them, thinking it will work?

I firmly believe that drumming in the basics pays enormous dividends later in that kids will then be able to find out and understand most of these things themselves, or at least understand what they are signing etc. Only after this does wider education into all those things you mention make sense.

How many posts on this forum have you seen, that (a) are written in the most abysmal 'language' with no capital letters, full stops, and riddled with spelling mistakes, and (b) ask the most basic question that could be easily answered by a simple 'Google'?

JuicyJesus

Personally I don't think it should be an issue for banks, and indeed any other company, to presume that their clients have a level of intelligence about them. Not in the sense that they should be able to tell when they're being deliberately misled (banks, on the whole, don't deliberately mislead anyone) but in the sense that they should understand the significance of what they're signing up to and the concepts behind them.

The problem is this: The banks presume, therefore, that customers are aware of the information they have been sent about the way their accounts work (in the form of T&C booklets), that what is in that contract is binding on them and that they have responsibilities under the agreement. In reality, the customer does not read that information and will scream bloody murder if they are in any way disadvantaged by the contract they signed up to.

I would argue that if someone does not read a contract but signs it anyway, that makes them incredibly reckless. I would hope any sane person would agree with me. I would hope that if that same someone then complains about how that contract they signed disadvantages them, they would be told precisely how reckless they had been and that it is their fault, ultimately.

The problem is not that the products are not simple enough. My contents insurance policy is written in plain language, as are the terms of my current account. The problem is that nobody reads these terms, and now as a result of the bank charge "reclaiming" campaign and other such examples of idiocy everyone expects to be released from terms that disadvantage them if they shout loudly and complain enough.

This is the crux of the matter. We should not dumb down the financial services industry for the benefit of people who are being wilfully ignorant. Rather, the wilfully ignorant should be educated, and not pandered to by blaming the banks when they fall foul of a contract that they signed their agreement to without even bothering to read. People need to be instilled with a sense of responsibility for their actions and for their financial health, rather than expecting it to be delegated to other people.

To put it another way - "simple" products for these idiots to understand got us Halifax's £1 a day bank charges, because they're "simple to budget with". That's the thinking here. It's bad thinking.

jimjames

Loughton_Monkey wrote: »

A totally different, and even more innovative solution - and one I have suggested before - is that everyone who wants to save should get a "License to Buy Savings Products". This will come only after a rigorous written examination (multiple choice) where they have to state whether or not they can read, whether or not they have an IQ larger than their age, and answer simple questions on what is meant by "Interest", "Deposit", and Cash in your Pension".

Those who cannot get such a license will have to leave what money they have under the mattress, or it may even force them to use it to pay off their 27.9% Store Card credit balance.

This sounds like a fantastic idea! You need a licence to drive and a licence to travel so why not....could save a few people a lot of money by learning a bit.

[Deleted User]

If it was simple then there would be no interest in the savings sections on these forums or in the Banking and Saving section of the main site. No one visiting to get information or ask questions, no kind souls ready and waiting to help the unenlightened and no-one lurking looking for opportunities to show how clever and knowledgeable they are.

Sites like this make it very easy. But not everyone knows about this site. Those trying to find the best deals on their own will have a much tougher time. Perhaps not difficult, but time consuming. A lot of people have better things to do than surf the internet all day and night! LOL

Consumerist

Deleted_User wrote: »

A lot of people have better things to do than surf the internet all day and night! LOL

When these "confused" souls are looking for that new car or fridge, computer, music centre, etc., how do they select their prospective purchase from the myriad of options available on the market. Do they want government to consult with manufacturers to provide simple cars, simple fridges, etc.

Now, I am the last person to support the banks and their sharp practices but it seems to me that most consumers are quite able, and willing, to do at least some basic research before making purchases but when it comes to savings they want to blame the banks for giving them too much choice.

I think opinions4u has hit the nail on the head in post #21. There is little information needed that is beyond the wit of the average consumer to make a rational choice of a savings account. In the normal course of events, a new purchase needs to be made when the old one has worn out (i.e. when the bonus ends) or else live with the fact that the old one won't work as well as it used to.

Oldbiggles

Jake'sGran wrote: »

NB I have been impressed by quite a few of the posts in this thread but my THANKS button has disappeared ??

Mine is working OK!

:xmassign:

calypso_rhapsody

I've found this thread fascinating - even took a look at the government's consultation document.

It seems to me that there are simple savings products out there - what could be more easy to understand than a 1 year term account (ok, i agree, calling it a bond is confusing) - you give us your money for 1 year and we'll pay you x% for that year. Most easy access accounts are also pretty straightforward (provided you take note of the bonus expiry date!). The government is not suggesting that only simple products should be offered but that there should be some ... but I think there already are - so I don't see how this idea will reduce confusion or encourage people to save.

It seems to me that the key issue is one of inertia - there are simple products, there is information readily available particularly on the internet, and on many of the same comparison sites that punters use to buy car insurance ... but they just can't be bothered to look (as opinions4u said!)

So how do you make saving more interesting to the average Jo or Joe? This has got me stumped ... Through popular culture - Strictly Saving? Despite Martin's best efforts there is almost nothing on TV that will generate interest in saving .... maybe we need lots of Delia/Jamie/Heston/Nigellas on TV making saving and understanding finance interesting? But it's just not very visual - anyone inspired enough to devise an attention grabbing TV programme?

Of course education is vital and I agree that the basic arithmetic of finance should be part of the GCSE maths syllabus - it's more likely to be useful than knowing how to calculate the volume of a cylinder!

The other thing I'd like to see is more communication from providers to ensure that customers are reminded of bonuses being removed, that maturity options are fair and equitable etc etc ....