Some major investment in change

Your article on the life and pensions industry, “A matter of life and death” (MW July 28), addresses, arguably, one of the UK’s most important social issues: the lack of pension provision for UK citizens from the early part of the next century.

None of the major political parties or any financial services providers would disagree with this. At the same time, nobody is prepared to take responsibility for creating a climate of change.

My company works with more than 20 major financial institutions. It is our estimate that more than 1bn a year is spent on marketing financial services. There is no doubt, in one sense, that this marketing expenditure is working because consumers are more aware than ever before.

Supported by the financial sections in most newspapers, consumers have come across terms such as endowment, unit trusts, PEPs, SERPs, interest-only mortgages, index-linked with profits, equity futures, derivatives, tracking funds, all share index, FTSE 100 and so on.

Confused? The financial services industry may not be, but overwhelming evidence demonstrates that the British public is. The fact is consumers do not know their PEP from their unit trust.

To my mind, the single biggest problem facing the financial services industry is not a lack of awareness but the lack of understanding of it. This is the issue that both Government and the industry needs to address and, until it is tackled, not 1bn or even 10bn will convince consumers to build their own financial services portfolio.

Britain needs a financial services education drive that is supported by both the Government and financial services industry. Individual companies do not have a hope of changing the UK financial services culture.

In a co-ordinated initiative, the industry should redirect some of its vast advertising and promotional spend to build a deeper understanding and break down barriers.

The campaign should be about empowering individuals to make appropriate financial decisions. In other words (heresy as it is to say this in the life industry), consumers would end up buying rather than being sold life products.

A co-ordinated strategy is a clear case of the whole being greater than the sum of the parts because everybody stands to benefit. There would be less dependency by individuals on the State. Financial services companies would sell more products and services and, above all, consumers would make confident decisions, with positive implications for all concerned. This is a goal to which we must all aspire.

Conrad Free

Managing director

P Four Consultancy

London WC1