Anne Fily

Independent
information
and guidance
Anne Fily
COFACE Conference
Madrid- 1 May 2015
Information on financial services
In the financial services area,
consumers are overloaded with information,
but it is often not complete, objective and transparent.
In particular it does not focus on the aspects that are
essential to help consumers make informed decisions.
Information on mortgage loans
Example: Test-Achats website (BE)
Nous vous aidons à calculer toute une série de montants relatifs au prêt hypothécaire. Et ce, quel
que soit le cas de figure: vous êtes à la recherche d'un tel prêt, ou vous en avez déjà souscrit un,
mais souhaitez négocier un nouveau avec votre financier.
Calcul
• de l'ébauche complète: produits annexes inclus
• de la mensualité maximale que vous pouvez vous permettre
• du montant que vous pouvez théoriquement emprunter
• de la mensualité
• des frais de notaire lors d'une vente de gré à gré
• pour convertir un taux d'intérêt annuel en taux d'intérêt sur base périodique
• pour convertir un taux d'intérêt périodique en taux d'intérêt sur base annuelle
• pour savoir s'il est intéressant de changer de prêt hypothécaire à taux fixe
•
Tableau d'amortissement
• de votre emprunt à taux variable
• de votre emprunt à taux fixe
• de votre emprunt à durée variable
Independent information
Comparison Websites are increasingly used by consumers,
but they are not always reliable
 The following requirements should apply to all CW:
- Transparency on the business model (ownership of the comparison
website/ or shareholders); financing model (who pays for what service);
- Coverage of sector (all providers, percentage of sector concerned, only
those who participate in the scheme, why some providers do not participate
in the scheme...);
- Data: frequency of updating, verifiability, accuracy, reliability, clarity and
user-friendliness;
- Methodology (ranking factors, source of information....);
- Accessible also to vulnerable consumers.
Relevant information:
information that should be provided by suppliers
Consumers must be provided with information well in time before the
contractual decision, and the information needs to be short,
understandable (no jargon), structured and relevant.
 Developing a standardized information sheet for each type of
retail financial product to inform consumers about the main
product features, and to facilitate comparison:
 Consumer credit
 Mortgage credit
 KID for Prips
Financial advice:
Who advises consumers?
Example - French study:
– 69% consumers rely on their banker
– 53% on family
– 22% on Internet
– 19% on media
•
36% admitted that they did not understand the impact of their
decision
•
25% considered to have received bad advice
Poor quality of existing advice
• Advice delivered by financial service providers or intermediaries is
biased and of poor quality:
– Biased by fees, incentives (products are sold, not bought)
– Poor quality, lack of expertise
– Misrepresentation: consumers believe it is for free, but it is
most often not, but hidden
• Lack of availability of independent advice in most EU countries:
– based on a fee paid by the consumer, not the financial
service provider
Consumer needs
Special need for independent advice major financial decisions and
complex products:
– No learning by doing, as for most consumers, buying home with
a mortgage loan or investing for pension only happen a few
times in life
– Complexity and uncertainties linked by nature to retail
investment services and some types of mortgage (e.g.: foreign
currency loans, variables rates)
– Feedback on quality of choice is not often available when
signing the contract
– Because products are sold rather than bought, consumers
choose financial products piecemeal, without an overall view of
their financial situation and how all their financial products fit
together
Independant personalised advice
on mortgage loans
Example: Which? (UK)
We want to find the best deal for you
We search thousands of mortgages to find the best deal for you.
All our mortgage advisers are paid a salary, rather than commission.
So we would only recommend a mortgage that is right for you.
What happens when you contact us?
•
•
•
•
•
•
We will make an appointment for you to speak to one of our Bristol or London-based mortgage advisers.
At that appointment we will want to understand what your circumstances are.
Our independent and impartial advisers will then do the hard work for you - looking through 1000s of
products to find the right deal for you.
You can decide if you want to take our recommendation.
There are no fees for the consultation. A fee is only payable if you decide to submit a mortgage application.
As all our advisers are paid a salary, and not commission, there is no pressure.
This is paid in two parts:
1. A fee of £249* when we start. This fee is non-refundable and payable on application.
2. A second fee once you complete your mortgage. If you’re a Which? member when you first get in touch,
this is £150. If you’re not a member, the fee is £250.
Independent personalised advice:
Example: Verbraucherzentrale BadenWürttemberg e.V. (VZBW)
Qualifications
of the advisers
Staff members are required to have a university degree in
economics. They also receive six months of internal
training . During this training period, they shadow a senior
employee and observe how to give need-based financial
advice. They also learn about relevant professional and legal
topics. At the end of this period, they are tested in a real advicegiving situation with a lawyer present.
Cost to user
(personalised advice)
140 Euro per 2-hours advice session
Average duration of
advice session
(personalised advice)
Face-to-face: 2 hours
The way forward
 Prohibition of the title 'financial adviser' or any similar
title for salespeople (bank staff, financial
intermediaries...);
 Ban on commissions which are a major source of
misselling;
 Developing advising tools like tree decisions,
calculators… to help consumers (for simple decisions or
as a first step) ;
 Engage into provision of independent financial advice
 Room for alternative, non for profit providers
Independent financial advice/guidance
Ongoing work (Financial Services User Group):
Identifying good practices of independent advice, in particular as regards:
-
Qualifications of advisers;
Remuneration of advisers;
Level of ‘price’ the consumer is willing to pay;
Incentives to encourage consumer demand for financial guidance;
Quality of the analysis of the consumer needs, and of his current financial
situation; inclusion of social and fiscal aspects;
Final delivery to consumers (detailed financial plan, generic guidance..)
fin
www.beuc.eu – [email protected]