Shop around for best value, says independent financial watchdog
18/09/2002
With four out of ten people saying they consider only one company when buying a financial product, the Financial Services Authority is today reminding consumers that shopping around is key to finding the best value deal on financial products and services. To help them, it has published top tips in a new FSA guide, It pays to shop around, available free from high street post offices.
Chris Bernthal of the FSAs Consumer Division said:
"Buying a financial product is no different to buying a TV, car or holiday. You need to shop around and compare information about products from different companies. To get best value consider the price as well as the features of a product and its terms and conditions.
Youll obviously want to look at costs and charges, such as the annual interest rate on your credit card. Also ask about restrictions, like penalties for paying off a loan or withdrawing your money early. If youre thinking about investing, is there a minimum period you have to leave your money invested for? And remember the value of your investment can go down as well as up, so make sure you understand the risk involved and are comfortable with it.
For useful tips on how to shop around for financial products, get a copy of the FSAs new free guide It pays to shop around from your high street post office."
The watchdogs top tips include:
Be clear about what you want. If youre unsure about your financial goals and priorities then use the financial planning tools available on the FSA website to help you work them out (www.fsa.gov.uk/consumer) You may also want to get expert professional advice from an authorised financial adviser.
Use the FSAs comparative tables at www.fsa.gov.uk to help you shop around. They provide useful, easy-to-understand information about the features of a variety of financial products, including unit trust ISAs and stakeholder pensions, so that you can compare like with like. And because theyve been developed by the independent financial watchdog, theyre free of any hint of bias so theyre not trying to sell you anything.
Consider expert advice. An authorised independent financial adviser will be able to help you shop around and advise you on products from a range of different companies. To get the most out of financial advice, get the FSAs Guide to Financial Advice from the Consumer Helpline on 0845 606 1234.
Take time to read through all the product literature. It might seem like a chore, but its your responsibility to make sure that you understand what youre buying before you sign on the dotted line. In particular take a look at the Key Features Document that providers supply for investment products like unit trusts or life policies.
Ask questions if theres anything you dont understand. Dont feel silly or stupid if you dont understand straight away. Keep asking questions until you do understand what youre signing up to. If the adviser cant or wont give you answers that you can understand, then its not the firm for you and you should head for the door.
Always check the firm is authorised. Before you do business with a firm, ring the FSAs Consumer Helpline on 0845 606 1234 . That way, if you have a complaint or if the firm goes bust, you will have access to complaints and compensation schemes.
Whatever happens, dont be bowled over by the first product that you see. Take the time to compare it with other deals to find the one that suits you and offers best value. But remember that if a deal sounds too good to be true it probably is!
For more information on shopping around pick up a free copy of the FSAs guide, It pays to shop around which is available in main high street post offices or ring the FSA Consumer Helpline on 0845 606 1234.
Notes for editors
Jpegs of the front cover of the guide It pays to shop around are available on request from the FSA press office on 020 7066 3232.
The Financial Services Consumer Panel Annual Survey Report 2000 shows that on the whole, recent purchases of financial products were made after contact with very few companies. The largest proportion of recent purchases (38%) involved contact with only one company and a further 11% with two companies. For more details see www.fs-cp.org.uk
The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.