MEPs say consumers need money-management lessons

Date: 19/09/02

By Peter Chapman

EU CITIZENS should be given training in basic finance so they would be less likely to lose their money on bad investments, according to a leading MEP.

In a report on 'prudential supervision', Dutch socialist Ieke van den Burg says consumers need a helping hand to understand how to compare the vast array of products from insurance to pensions - and how to spot rip-offs.

'National securities supervisors should develop 'financial literacy programmes' among the population to make it more aware of scams or missellings of financial products.' Special programmes should be developed for 'vulnerable groups', adds Ven den Burg.

The call for boosting citizens' financial know-how comes as millions of Europeans are turning to the financial markets to provide for their retirement because state provision for the next generation of pensioners is expected to be far less generous than today.

Van den Burg believes the 'finance 101' courses would ensure amateur savers would be on their guard against any repeat of the current collapse of stock markets.

Money-savvy consumers would also be less likely to fall foul of the kind of bad advice which cost thousands of UK workers huge sums after they were advised to opt out of company schemes and set up private pensions instead.

Centre-right colleagues in the Parliament's economic and monetary affairs committee said they also supported the plan.

UK Conservative Theresa Villiers, whose constituency includes the City of London financial district, said such a move would ensure they 'are better able to judge the products that are provided for them'.

However, consumer groups warned that education would never replace the need for an EU-wide rulebook ensuring customers get a fair deal when they buy complex, but increasingly vital, financial products.

Dominique Forrest, finance expert for the European Consumers' Association (BEUC) said: 'It is not the panacea.'

He suggested the promised single market for financial services could offer customers a better value for money deal - through greater competition.

But he said consumers lacked the confidence to shop around the EU for pensions or investment plans because they were unsure how to compare products and what basic levels of protection they would enjoy if they bought from a foreign company.

'It takes more than education to make sure consumers benefit from the single market for financial services. You can have as much education as you want, but if you are unable to compare products because contracts are too complicated or you don't know what rules are to be applied [by authorities], then you are left in the blue.'

EU citizens should be given training in basic finance so they would be less likely to lose their money on bad investments, according to MEP Ieke van den Burg.