Nationwide calls for greater transparency in financial services

Nationwide is asking the government and the FSA to take action to bring greater fairness and transparency to financial services in the UK.

The building society has sent its five challenges for 2003 to more than 50 MPs and officials including the Chancellor of the Exchequer, key ministers at the Treasury and the Department of Trade and Industry, and key members of the FSA.

Firstly, Nationwide calls for the promotion of quality standards for financial services. In a statement, the society says: “The CAT standard already provides a challenging framework for providers along with transparency and fairness for consumers.

“Creating the standard was a very positive move, but it will only gain more widespread acceptance if it is supported and promoted by the government and the FSA.”

It says that strongly supported CAT standards could significantly reduce consumer confusion by cutting the amount of complex marketing activities.

Equity release products are the subject of another Nationwide demand. The building society has already called for the establishment of a CAT standard specifically for these products.

It says equity release products could play an important part in the financial planning of those who are &#39house rich, cash poor&#39 particularly given the recent growth in house prices and the poor performance of equity based pension schemes.

But it adds: “The group of consumers that are most likely to use these products are often elderly and vulnerable and, without clear regulation, there is a danger that current practice could lead to future accusations of mis-selling.

“The Government and the FSA have a clear opportunity to lay down a regulatory framework of consumer protection and it would be better for them to act now rather than wait until problems emerge in the future.”

Thirdly, Nationwide claims that levels of transparency in the mortgage industry are poor, and calls for lenders to provide consumers with the information they need.

It accuses other lenders of hiding behind complexity with wide variations in rates, charges, penalties and other conditions. This leads to confusion which in turn sees consumers take out a mortgage with an attractive headline rate, only to find themselves paying through additional charges.

Nationwide says credit card customers find it hard to compare the 1,300 brands available in the UK. It calls for the creation of transparent and compulsory product information to help consumers make an informed choice.

Following concerns over the savings gap, the building society also asks government to consider making stakeholder pensions compulsory for those who have no alternative pension arrangements. Nationwide believes government could do much more to promote stakeholder funds.

Philip Williamson, Nationwide&#39s chief executive, says: “Putting the interests of consumers first is at the heart of each of these challenges. This is an agenda for the year ahead that can help to deliver better value to consumers.

“Politicians and regulators often speak strongly in support of fairness and transparency but in 2003 we would like to see this supported by more action.”