A new caveat: let the buyer be informed

It's time for the public to be educated about financial products, says Nic Cicutti

Talk to any bibulous insurance salesman, and before the night is out you can be sure to hear him - it almost always is a man - utter the Latin phrase caveat emptor.

"Let the buyer beware" calls for purchasers of financial products to look carefully before signing a document. There is nothing necessarily wrong with that - except that over the past few years, caveat emptor has become a half-hearted rallying cry for those seeking to justify all manner of scandalous sales techniques.

Mis-selling of pensions, home income plans and umpteen other products have left ordinary people nursing heavy financial losses, and many investors are now chary not just of the products, but also of those who sell them.

And yet. There is an argument that those making financial choices have an obligation to obtain as much information as possible before deciding to buy.

Up to now, however, obtaining unbiased, intelligible information has been virtually impossible, and many financial institutions have become increasingly aware of the problem.

One solution has been adopted by NatWest, which, since 1994, has been helping schools to teach personal money management and enterprise within the school curriculum.

NatWest's Face 2 Face With Finance materials for schools have tackled head-on the issue of bias and product-placement that arises with so many industry-devised education packs - by not mentioning its name in any of the materials. The bank's willingness to operate a relatively hands-off approach to the service it offers has led to more than 50 per cent of all secondary schools signing up to its education programme.

So far, so good. Except that all this effort does not begin to solve the problem facing those who have already left school.

Last week, a centre dedicated to personal finance education, aimed at both school students and adults, was launched by University of Manchester Institute of Science and Technology (Umist).

The centre, based at Umist, will be called Money Matters. Its aim is to raise public knowledge and understanding about borrowing, saving, investing, retirement planning and insuring against risk, in order to help consumers to make better decisions about their finances.

Although funded to the tune of more than pounds 200,000 by financial institutions, including banks, building societies and insurers, the project intends to stay independent and carefully neutral in its approach.

Bob Boucher, principal and vice-chancellor of Umist, says: "Consumers are mistrustful of financial services, while the industry itself is the subject of much criticism. This is not a healthy situation. By empowering consumers with knowledge and the needs they aim to satisfy, change can happen which has positive benefits for [them] and the industry."

It all sounds highly laudable. One has the abiding sensation, however, that the primary aim of those organisations sponsoring the project is to arm the consumer with the information he or she needs - in order to buy their products. Money Matters is able to help consumers only if it is willing not simply to explain but, where necessary, to warn against buying a particular product.

Perhaps the most depressing feature about the enterprise is the underlying assumption that we will never again be able to take key benefits from the state for granted.

Even so, a cautious welcome is in order. Anything that helps to wipe the drunken smirk off the insurance industry's finest is worth a cheer and a half at leastn