Legal, Decent and Honest
Stuart Coverley's guide to the work of the
NfCG Legislation and Consumer Affairs Committee

Off your doorstep

In one of the NfCG replies to the Dti on the Doorstep Selling consultation document, we drew attention to another undesirable practice that could also be used on the doorstep.

The water companies and the Midland Bank have separate policies aimed at providing help for domestic emergencies. Unfortunately they have too many exclusion clauses to satisfy some of those considering taking them out. The full details are only discovered when the contract arrives, though with the Midland Bank you can write for the fuller booklet. The former offer a 3 week 'cooling-off' period - enough for anyone, you might think. However it starts from the day they receive your reply, not when you receive the contract. In one case known to us the contract was only received a day or two before the 'cooling-off' period expired.

Discounting Insurance

The forced sale of travel insurance if you want a discount on the price of your holiday is to be banned. Not so clear is whether a company can insist on the traveller taking the company's own insurance if you take one of their package holidays. The excuse is sometimes that it is easier for their representatives in a resort to know the procedure when one of their clients becomes ill. In some cases firms are providing the insurance "free". We can only assume the amount is allowed for in the holiday prices.

Polarising the Rules

"Polarising" is defined in the dictionary as "dividing into two groups of opposing opinion". It has been used to denote the difference between independent and tied sellers of insurance products. Following a discussion with the Office of Fair Trading and its current consultation on the subject, NfCG has sent a copy of a letter dated 6th December 1991 written to the Securities and Investment Board giving our views. They have not changed since that date - it pays to recycle! We confirmed our opinion that it is essential on the first visit for an insurance agent to make plain whether he is independent, or an agent or employee of an insurance company, which would restrict his choice of products. It also enforced our views that 'best advice' should not be replaced in any future regulations by the term 'suitable advice'.

Profits not charges

In a Paper on the proposed Financial Services and Markets Bill 1999, Alec Samuels suggests the enormous costs of the financial Service Authority should come from industry profits, not charges 00 the consumer. 'Ibis would also include fines for market abuse like the recent mis-selling scandal. It remains unclear whether transactions with Banks and Building Societies are included along with the buying of shares and unit trusts, guts and bonds. The idea of a single authority and a single financial ombudsman to deal with all problems sounds attractive, but the idea of a vast bureaucracy does not. A simple, speedy system will have to be devised with just one point of entry for all complaints. It is also essential that it becomes a general principle that the provider should make sure that the consumer is kept fully informed and that jargon is avoided. All transactions should have a 10 day 'cooling-off' period. All clients' money that is uninvested should he kept in a trust account.

Active price regulation

Annual percentage rates (APRs) were introduced when borrowing money was mainly a matter of a simple mortgage, a bank loan or hire purchase. Nowadays things arc much more complicated with interest-free periods (0% interest) and low introduction mortgages. Changing rates of interest during the period of the same transaction makes things very complicated. In many cases there seem to be no set rules for how the APR is calculated so that comparing deals can be very difficult. The APR was designed to illustrate the costs of a loan including all fees so it could be compared with other offers. '[he Office of Fair Trading, which has received numerous complaints, considers that new legislation is required. The Government will seek to harmonise the calculations and future of APRs with the rest of Europe but the problem is when will this be?

Preferring phone calls

Registering with the Telephone or Fax Preference Services will bring some relief from unsolicited calls, but many smaller local companies phone indiscriminately. New Government measures may make the use of screening mandatory before calls are made. Meanwhile the 'ITS writes: "If you have asked a company not to call you again, they are obliged by their telecommunications licence not to do so. If they persist we would recommend you contact OFTEL . . .  "We do offer a complaints service should you still receive calls despite your registration with us."

Return to Index for current issue                         Return to Main Magazine Index