One Swede in two finds simple percentage calculations difficult, and many do not know how inflation works. At the same time, there are growing demands for an increasing number of people to make difficult decisions about their personal finances. There is thus a great need for independent advice and good, simple information. These are a couple of the conclusions in FI's new consumer protection report.
Only half of queried adult Swedes responded correctly to three simple questions about fundamental financial terms and simple mathematics. This is shown in a new study that FI helped devise, which measured Swedes' financial and arithmetical capabilities.
At the same time, consumers are under growing demands to make more difficult and often crucial decisions about their personal finances. This situation creates a great need for comprehensible information and sound advice for consumers. Unfortunately, however, FI sees many firms providing deficient information, giving advice that is not in the consumer's interest, and selling expensive products that do not always deliver on what was promised.
FI would thus like to see a commissions ban covering all financial advice, irrespective of the type of firm providing the advice. In order to ensure that the advice given to consumers is actually determined by what they need, and not what generates the highest earnings for vendors, it is important that the commissions system is prohibited by law. This is written by FI in its consultation response to the Securities Market Inquiry published today.
FI also finds that the information regarding financial products needs to be simplified so that consumers are better equipped to make a conscious choice when, for example, transferring occupational pension funds.
FI has also urged the fund industry to tackle the problem of closet index funds – funds that are not actively managed despite the consumer having paid for it. For instance, the companies should give a clearer picture of the fund's performance in relation to a benchmark index, and clarity about how actively the fund is managed.
The consumer protection report is presented and discussed at FI's Consumer Protection day, held today between 2 p.m. and 5 p.m. at Stockholm Waterfront. There will be a webcast of the entire event on FI's website.
Martin Noréus, Acting Director General, and Malin Omberg, Executive Director of Consumer Protection, will be available to the media at Stockholm Waterfront between 1 p.m. and 1.30 p.m.