It is very important to be aware of your rights when dealing with any kind of financial product or service. The actual rights you are entitled to will vary according to the product, but to make the most of them you will need to be aware of them in advance, as it may effect the decisions you make. Don’t wait until there is a problem to find out what your rights are!
In most case, your rights are stronger if you have taken advice before you make a commitment than if you did not. If you are negligently or fraudulently advised, you have some recourse to protection. If you did not take advice, then the responsibility is yours. If in doubt, take advice.
In general terms, you have a right to expect:
- The firm to be financially sound and trustworthy
- Advisors and salespeople who are competent and knowledgeable
- Correct information on which to base your decision
- A clear complaints procedure
- Compensation if something goes wrong outside the normal risks of the product
In terms of specific products, the rights you are entitled to vary.
Banks and Saving Accounts
The FSA ensures that banks and building societies are financially sound. Banks and building societies abide by a voluntary banking code, which sets out standards for ensuring you get the information you need to make an informed decision and that you are treated fairly. They must help you if you wish to make a complaint by having internal procedures in place, and letting you know what they are. They must also belong to the Financial Ombudsman Service.
Loans and Credit
Moneylenders such as bank and insurance companies are regulated by the FSA, who make sure they are sound and trustworthy. Other companies (such as loan companies) have to be licensed by the Office of Fair Trading. The Consumer Credit Act of 1974 ensures you have access to certain information. Loans from banks and building societies are covered by the voluntary banking code, which includes procedures for making a complaint.
There are other lenders who may not be covered by any regulation. If you have a complaint against one of these companies, you can contact your local Trading Standards Office, but your rights are much reduced.
If you buy goods or services worth more than 100 pounds using your credit card, the credit card company is jointly liable, along with the supplier, if the goods turn out to be faulty. They have a joint responsibility to put matters right.
Insurance companies are all regulated by the FSA. However, general insurance advisors need not have any particular license or training. Many, however, choose to subscribe to the General Insurance Standards Council (GISC), and you may prefer only to deal with GISC members. They have agreed to abide by the GISC General Insurance Code for Private Customers, which includes formal procedures for making a complaint.
Should an insurance company be unable to meet its commitments, then you may be covered by the Financial Services Compensation Scheme.
Life insurance policies, investments and personal pensions are all covered by the Financial Services and Markets Act, which ensures that all companies are trustworthy and competent. They must also have formal complaints procedures, give you suitable advice, and provide you with certain key information, both before and after you buy.
Nearly all mortgage lenders subscribe to a voluntary code, as described in more detail by The Mortgage Code Compliance Board, which also has a list of lenders who subscribe. This includes formal complaints procedures, and regulations ensuring you are being treated fairly and have the information you require to make informed decisions.
Lenders who abide by this code have agreed to only take customers from advisors who also abide by the code.
As has been famously covered in the media of late, pensions are a complex area and are not always the risk-free product they used to be. The decision as to what kind of pension to subscribe to is probably the most crucial financial decision you will make in your life.
The FSA publishes a whole series of guides to pension issues, which provide useful information on how to choose and maintain your pension effectively.