Greetings from sunny Liverpool, where I’ve been on a day trip to the Labour party conference. I haven’t been up to the north-west for a while, so wasn’t sure what to expect.

First impressions: the regenerated city centre is impressive, with its de rigueur dockside developments now completed – but everywhere you look there are very young people carrying BlackBerrys. Half appear to be girl-band wannabes straight out of The X Factor, instant messaging each other incessantly on Day-Glo clad devices; the other half appear to be suit-clad spin-doctor wannabes straight out of The Thick Of It (via Aberystwyth Students’ Union), emailing each other frantically in search of their shadow spokespersons.

One observation: all those news stories about kids with BlackBerrys were spot on (as was the casting of the youthful Chris Addison in the BBC political satire).

I’m up here to speak at a Social Market Foundation fringe debate: “Creating better financial outcomes: how do we empower consumers?” I haven’t read many policy pronouncements on this of late, so I wasn’t sure what would be said.

First impressions: the ideas from the panellists were impressive – each of them carrying practical applications. Chris Leslie, shadow financial secretary, stressed the importance of implementing the Vickers report proposals on banking competition– to reward consumers with investment choices, rather than “tapping them on the shoulder” and telling them they’re bailing out the banks. Matt Mayo, from MasterCard, looked to the role of technology in helping customers manage money – citing his company’s work in mobile phone payments. Brian Pomeroy, former chairman of the Treasury’s Financial Inclusion Task Force, leant weight to the argument for a suite of simple financial products– plans for which the government is already consulting on.

One observation: any notion that policymakers underestimate the loss of trust in financial services is clearly wide of the mark.

When it came to my turn to put forward ideas for reform, I agreed with some of my fellow speakers – as is de rigueur in political debate these days – but questioned the message that consumers were being sent. I hadn’t been able to conduct a vox pop on the streets of Liverpool One, so I tried to imagine what a customer, on walking into a bank or financial advice firm, might think.

First impressions: all financial advice, and all banking products, still appear to be “free”. To many consumers, there must seem to be a long-enshrined right to receive these services free at the point of delivery – just like the National Health Service, comprehensive education and The Guardian website. I suggested this belief – like two of the others – could probably be traced to the 1940s, when banks and their managers were deemed pillars of the community. Some of Vickers’ reforms even evoke a return to the ethos of Captain Mainwaring’s bank in Dad’s Army. But, as I pointed out, that would see them full of spivs, panickers and stupid boys – not so different from the management structures of 2007.

My argument was that perpetuating a belief in free financial services has done customers the worst disservice of all. It’s why recent polls show that between 31 and 46 per cent of consumers will refuse to pay fees for advice from 2013, when this becomes the only way advisers can be remunerated. But consumers only think advice should be “free” upfront because they don’t understand the backhanders paid behind the scenes – payments that resulted in every mis-selling scandal of the past 30 years. I warned that we still have a customer-provider relationship based on a lie. Banking is not free – it is based on hidden subsidies, from cross-selling of dubious products to savers seeking only a decent interest rate. Advice is not free – it is based on charges that are used to promote only expensive funds to investors, and fee structures that can deplete personal pensions by up to 39 per cent.

I agreed that simple “kitemarked” products might help. But I worried they could lead to an abdication of responsibility and misconception of risk.

My recommendation was for simple contracts setting out all costs over the term of a product, risk in terms of the probability of loss over different time frames, and service levels guaranteed by the provider. Consumers and providers both sign and take responsibility for their side of the outcome. Could such contracts work?

One last observation: the Vickers report considered making bank account numbers portable, because young people understood this concept, thanks to mobile phones.

What Liverpool showed me is that everyone – from a young age – can understand a contract if they want to. Why else have they all signed up for the smartphone where getting the message really is free?

matthew.vincent@ft.com

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