The thankless task of the consumer affairs regulator

Last night, the Archbishop of Canterbury led a discussion about “Good Banks”.  One of the speakers was John Fingleton, the former CEO of the Office of Fair Trading. Responding to a question about the ethically-spirited Co-op Bank’s recent debt rating downgrade, he observed that while it is true that people say they want “good” banks, it is also true that they don’t tend to support them with their business.  He suggested that a “good bank” might be one that charged a fair fee for current accounts rather than claiming they are free and then recouping its costs through unfair overdraft charges or inappropriate product-pushing.  How many of us would give up our existing free banking to pay a monthly fee at a “good bank”?  Another characteristic of a “good bank” discussed by the panel would be ethical investment choices; if eschewing tobacco and arms investments led ultimately to lower interest rates for savers, would consumers applaud or complain?

Fingleton pointed out that the problem is not unique to the banking industry.  He gave another example from food retail: people say they want corner shops, then do all their shopping at Tesco.

Pity the poor regulators that we expect to safeguard our interests.  They ask us what we want and we give them one truth (we’re not lying, are we, when we say we want good banks?); but they must set the rules and supervise markets in a way that accommodates the competing truth revealed in our self-serving consumer behaviour.

“Consumers are a bit schizophrenic,” said Fingleton.  A useful word for a world of competing truths.

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