What it says on the tin

Trustworthy financial marketing means two things, reports ALISON BIRD: clearer definition and more education so that consumers can make informed judgements.

What does ‘marketing ethically’ actually mean? Some say it’s simple: it’s ‘doing what it says on the tin’. That’s a laugh, others argue. The big problem with complex financial services is that what it says on the tin – about all manner of savings, investments, pensions and insurance – is frequently incomprehensible.

You get the subtle flavour of this argument in the recent debate hosted by the Financial Services Forum. To Clive Cowdrey, chairman of City insurers Resolution plc, financial marketing often ends up compromising its own best intentions. Most is legitimate promotion which doesn’t make claims it can’t substantiate. But, he adds: “I’m only saying that its existence adds to the confusion for the average consumer.”

To Cowdrey, therefore, the key is being clearer about what you say on the tin. But, to Chris Pond, the FSA’s first Director of Financial Capability, there’s a larger imperative than clearer labelling: people still need to be educated to see behind the language of any label and appreciate the true value of the tin’s contents.

And there’s a win-win here for the industry, he told the same Forum. “During the good times, people take it on trust that, if they invest in a pension, a mortgage or an insurance policy, it’ll probably be alright. But when times are hard, they’re less likely to trust if they don’t understand. So, by providing people with the education and understanding they need to engage in financial services, we’re actually increasing the potential market for those services.”

It’s a balance between facilitating the informed responsibility of the customer, and promoting fair treatment of the customer by the product seller. In fact, the industry is already bedding in a plethora of educational initiatives in financial management.

Louise Fowler, Business Leader, Brand and Marketing for Co-operative Financial Services, says her bank’s traditional focus on education and trust has generated “a flight of trust to our brand” in current conditions: new current account sales have grown by 38%. Its easy to understand website money guides explain the products in a “straightforward, clear and jargon-free format.”

Many others are similarly working to enhance customers’ understanding of financial management to build trust and widen consumers’ own informed choices. You and your money, from NS&I puts it this way: “Money can be a pretty complex subject, wrapped up in jargon, shrouded in mystery and hidden from view. We can't give you financial advice, but we can give you the facts. Our mission is to inform and inspire, to educate and enlighten, to entertain and explain. Above all, we want to help you make sense of money.”

And to encourage people onto the You and your money website, NS&I is working with the leading High Street retailer, WH Smith to distribute its series of brochures about personal finance. This ‘facts only’ approach is becoming more widespread within the financial services industry. The FSA’s own Moneymadeclear – ‘no selling, no jargon, just the facts’ – is one example. Another is the Royal Bank of Scotland’s MoneySense: “It doesn't matter if you need lots of help, only a little, or think you can manage without: here you'll find clear, impartial guidance on how to handle your finances.” (see money skills).

The educational initiative Funtosave, put together by mutual insurance organisations, encourages financial capability from an early age. The Institute’s Financial Education Partnership (FEP) scheme also aims to enhance the fiscal knowledge and financial management of the next generation.
CIOBS has been running FEP since the early 1990s, and in 2008-09 more than 29,000 pupils from 166 schools attended sessions. This number will soar in the coming years as personal finance skills become ingrained in national curricula.

Education is clearly the key, if people really are inclined not to sacrifice the benefits of sophisticated financial products in the interests of simplicity. And research commissioned by HM Treasury, suggests consumers on the whole actually do prefer improved labelling rather than simpler, more basic products. So, it looks as though a measure of success in ‘marketing ethically’ for a bank might well be to be able to claim with impunity that its financial products, though complex, do indeed do what they say on the tin.

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