Consumers have to learn to be realistic

I don\'t read the Sunday papers often but lured by a World Cup guide I did so last Sunday. In some ways I regret it.

Apart from the normal world woes, the financial pages once again gave the industry a good beating. Cynics would say no surprise there, our industry is usually in the firing line.

The lead story was not related to mortgages but was pertinent none the less. What is getting everyone so vexed is the charging of fees (some say excessive) on current accounts.

This has been added to a growing list of consumer issues ranging from endowment mis-selling to payment protection on credit cards to exit fees on mortgages.

The problem for the financial services industry will always be one of justification. Spokespeople can state the reasons why the afore- mentioned concerns are not problems. This is the way the industry works, and many of the alternative views are persuasive to an extent.

Consumer cynicism is growing as was clear to see in Mortgage Strategy’s Word on the Street on early repayment charges last week. There is clearly a lack of understanding and realism on the part of mortgage consumers.

According to the consumer feedback it seems it’s all right to take a two-year fixed rate at 1.99% and not have to pay an ERC for up to five years. By the same token it’s also not a problem that a 4.99% fixed rate is taken for two years without an ERC applying.

I guess most product managers would be happy to run through the financial models but a fixed rate with no early redemption char-ges would be a step too far.

But this ingrained something-for-nothing consumer attitude forms part of the steep hill advisers now have to climb.

It’s about education – basic understanding of what is on offer. Education of this type is a long-term thing and needs a concerted app-roach from the education system, the regulator and the financial services industry. The journey looks like being a long one.

A good place to start would be to get people to understand that if a lending insitution offers you credit, you don’t have to take it. I guess it proves two of the oldest clich豠to be true – it takes two to tango and there’s no such thing as a free lunch.

I won’t be buying a Sunday paper again for quite some time – perhaps until the 2010 World Cup.

Simon Biddle is head of communications at Infinity mortgages