Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Currencies

Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

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Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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Banks

Carney: UK is ‘investment banker for Europe’

The governor of the Bank of England has repeated his calls for a “smooth and orderly” UK exit from the EU, saying that a transition out of the bloc will happen, it was just a case of “when and how”. Responding to the BoE’s latest bank stress tests, where lenders overall emerged with more resilient […]

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Categorized | Financial

Financial services – the blame game


Posted on September 30, 2012

    The rotters. UK motor insurers, it seems, have been keeping premiums high by using overly expensive repair shops and more hire cars than necessary. The Office of Fair Trading has decided that the situation merits a full-scale investigation by the Competition Commission. Such murky conduct comes on the back of other misdemeanours by the financial services industry, from mis-selling loan payment insurance to persuading shopkeepers to buy complex derivatives. No wonder confidence in the sector is not high.

    It is not only Brits that do not trust the industry. According to CEB, an advisory firm, half of global consumers also have little or no confidence in financial providers. Sales are depressed, too. According to the Investment Company Institute of the US, net global sales of mutual funds, were $100bn in 2011 against $1.5tn in 2007. In insurance, data from Swiss Re show that global premiums fell in 2011 after growing between 3-4 per cent during most of the 2000s.

    Market conditions are partly to blame. Lousy equity markets are not the best backdrop for mutual funds, while austerity is crimping appetite for many financial products. But financial services companies should also look closer to home. Consumer confidence in the industry is lowest, says CEB, when it comes to its ability to offer “clear and simple policies and fees”. That is not surprising given the obsession that financial services companies have with jargon. High charges and poor performance add to the mistrust.

    The industry has huge market opportunities worldwide. In developed markets, ageing populations need to fund their retirement. In emerging markets, people are just starting to get to grips with insurance and investment. If the companies cannot find a way to profit without ripping off their customers, they have only themselves to blame.

    Email the Lex team in confidence at lex@ft.com