BSA Annual Lecture 2006 - Current Issues in Retail Financial Services, by Peter Vicary-Smith, Chief Executive, Which?

Introduction

"Which? tests a lot more than just washing machines.” It became clear to me very soon after I started at Which? two years ago that the job entailed speaking on an enormous range of subjects - washing machines one day, cars another, food marketing messages to kids another. And financial services is one of the areas that I find myself commenting upon regularly, although I would not describe myself as a financial services expert. Rather I take the core consumer principles that help define an effective marketplace and look at how this market matches up. I look at consumer expectations set against consumer experiences and then evaluate how well the industry is serving its customers. I’ve also discovered that the Building Societies Association extracts its pound of flesh when inviting people to deliver this annual lecture – in return for a no doubt lavish dinner with your Council afterwards I have been asked to not just speak for almost as long as David Cameron at the Tory party conference (though I suspect with rather fewer interruptions for spontaneous applause) but also to subject myself to a lengthy question and answer session afterwards. Hence having a Which? experts panel up here with me to help answer your questions and counter your attacks.

It is good to be here, for over a long period of time Which? has been a supporter of the building societies industry in many ways. In what is frequently an industry driven by shareholder value, we believe that mutuals have much to offer. Mutuals have often demonstrated good value for money and more innovative ways to engage with customers than some other sectors. Over the years, we have found that mutuals often offer better deals for consumers, because their lower margins allow them to offer good interest rates for both savers and borrowers. For example Which? consistently reports building societies topping our best but tables. In October’s Which? 5 of the top 7 cash isa’s and 6 of the top 7 children’s accounts are offered by building societies. This should be a competitive pressure on the PLC sector and I congratulate you for your success.

I have been asked to discuss current issues in the world of retail financial services. Where do I start? You do not get a bigger blank canvas than that.

So, for the purposes of tonight’s lecture, I want to focus my attention on a particular theme that I believe is going to become increasingly important, and that is the concept of ‘responsibility’. In terms of the consumer some see this as defining caveat emptor.  Making the consumer the focus for accepting negative decisions. I hope that you can appreciate why asking the buyer to beware can be seen as akin to asking the drowning man to learn to swim. Too little, too late and the consequences can be tragic.

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