THE Financial Services Authority (FSA) finally got tough last week with the banks, insurers and advisers that live off you, the public. The FSA’s Clive Briault and Sarah Wilson told a City conference they would be poking their noses with increasing regularity into firms that do not shape up by the end of next year.

Wilson laid it on the line: “We have given you as much space, and as much explanation, as you could possibly need. It is now time for action.”

In no other industry would a campaign have to be mounted to encourage firms to treat customers fairly. That the FSA has been running such a campaign for years – and admits it still has a long way to go – speaks volumes about the ruthlessness of Britain’s financial-product sellers.

Naturally senior management at all the big firms publicly subscribe to being fair to customers – what else can they say? As Wilson implied, the real question is whether the more crooked advisers and sales staff “at the coalface”, as the FSA puts it, are going to wake up by the December 2008 target date and shed their instinctive tendency to pull the wool over customers’ eyes by selling unsuitable products.

I doubt it, as these dodgy dealers are good at covering their tracks.

Happily, Briault reported the increasing willingness and ability of consumers to take matters into their own hands. Complaints to firms about poor customer service have increased significantly in the past year.

But a survey has found that 71% do not trust their banks. Amazingly, brokers and advisers, who are responsible for much of the miss-selling, are trusted more. It seems there is no substitute for personal contact when it comes to having your wallet emptied.

One of the biggest problems, said Wilson, was financial firms creating false expectations. Too often, however, consumers want to be gulled, they want to hear that a certain policy will set them up for life for only £100 a month.

The day we can walk into a bank or adviser’s office with confidence will be the day the FSA winds up its “treating customers fairly” campaign. Meanwhile, take a check-list into such meetings. If your friendly financial expert produces a magic wand, examine it very carefully indeed.

Woe for widows

IN a piece of spin that New Labour’s Alastair Campbell would have been proud of, Legal & General (L&G) says it is to improve pension income for customers by offering postcode-rated annuities.

Sounds wonderful, doesn’t it? But the only way to collect a better monthly payout from the same pot is to be likely to die sooner.

Imagine the joy of the client at adviser Hargreaves Lansdown who was told she qualified to have a quarter more of her total pension pot paid as an annuity every year. But the pension provider got its sums just right: she was dead within four years.

You will receive L&G’s postcode generosity only if you live in a slum street. It has long been known that if you live in Kensington & Chelsea, a smart part of London, you will probably live about 12 years longer than if your home is in Glasgow. L&G has refined this down to street level, as there are, of course, some very desirable districts in Glasgow which might even rival Kensington in encouraging longevity. It will pay more to those in postcodes who are likelier to die sooner.

There is an element of chicken-and-egg here. The well-off, who generally have better diets, gravitate to living in better streets, which also have healthier air, are often near a park and so on. The poor settle for what they can get, whether it is eating greasy food or living next to a factory.

This method of assessing mortality is only an extension of the long-established principle that heavy smokers receive higher pensions because they will not live so long.

Next up: genetic testing, to see the likelihood of your developing heart disease or prostate cancer, a list that will lengthen as gene technology advances.

But the downside is that annuity rates for healthy people will slide. L&G is not going to pay out more to those in unhealthy postcodes without getting that money back from somewhere.

The problem is aggravated by two factors. Specialist firms such as Just Retirement are picking off those with short life expectancy, and the wealthy opt out of the annuity pool by drawing down directly from their pension pot.

Result? The main sufferer will be the middle-class widow who doesn’t smoke, exercises regularly, lives in a pleasant neighbourhood, has no family history of critical illness but relies on her monthly annuity cheque.

L&G is too busy putting a positive spin on its postcode pensions to worry about such people, but it will increase the need for them to work longer and save more.

Two-car safety

DO you want to cut the risk of a car accident? Just buy a second car. That’s the glib finding from Admiral, the car-insurance group, which says that multi-car households are 22% less likely to be in a crash.

The reason is that most multi-car owners are either motor enthusiasts or families with grown-up children. They also tend to have one high-end car, and drive that more cautiously.

But, even though they are 22% safer, Admiral gives only a 10% discount on its two-car policies.

Source: The Times Online