How far will financiers
have to go to ensure that customers know what they are buying at
the point of sale?
A press release from the Commission
into the Future of Civil Society, set up by the Carnegie UK Trust,
calls for “labelling and comprehensibility tests” for financial
products.
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It wants to introduce a
Fairtrade-style kitemark system which will ensure that said
financial products meet a 50% comprehensibility test – in other
words, that one in two of an “independent panel of ‘ordinary’
consumers” will clear the products as easy to understand before
they are allowed to be sold.
Motor finance providers reading this
proposal would be forgiven for allowing themselves a hollow chuckle
at this prospect; the forthcoming Consumer Credit Directive (CCD)
and the Office of Fair Trading’s Irresponsible Lending guidelines
mean that regulated car loans will have to meet much more stringent
standards.
Lenders will have to ensure – somehow
– that sellers of their finance understand every single consequence
that a change of circumstance could bring to their agreement; a
difficult enough prospect with the financially literate, and almost
impossible to ensure in, say, a busy dealership on a Saturday
afternoon with a customer who could have trouble understanding the
ramifications of a complex finance agreement.
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