/ Money

G20 finance leaders, don’t forget about consumers

When G20 financial leaders meet in Paris on Friday, they need to address the root cause of the crisis – irresponsible lending practices which grew out of control. If you were at the meeting, what would you tell them?

Default, downgrade, bailout, recession, debt crisis. Unless you ignore the news, it’s difficult to go a day without being bombarded by these words. It feels like it’s been the same ever since irresponsible mortgage lending in the US led to the collapse of Lehman Brothers and set off a domino-like effect across the global banking system three years ago.

G20 leaders meet in Paris

In an attempt to end the crisis, world leaders seem to hold an endless number of meetings desperate to give the impression that there’s still money left at the bottom of treasury chests, or that their IOUs can still be exchanged for cash somewhere and somehow.

We’ll no doubt see more of the same when G20 finance ministers and central bank governors meet in Paris this week. At Which? we want G20 leaders to address the root cause of the crisis: the regulatory failure that allowed irresponsible lending practices to flourish.

Better consumer protection in financial services will not only ensure the welfare of consumers when they go about their daily banking, but it will also help stabilise the global economy.

For over a year we have been campaigning for this with consumer organisations from other G20 countries, as change isn’t only needed in the UK, it’s needed around the world. It’s not enough for individual countries to have their houses in order – complex supply chains for financial services mean that UK consumers can be exposed to poor standards of consumer protection internationally.

For instance, buyers of a so-called ‘Secure Income Bond’ from a UK building society were actually purchasing bonds issued in Luxembourg, with the proceeds used to purchase life insurance policies in the US. Got that?

Your money needs better protection

Following our successful campaign around last year’s G20 Summit, global leaders agreed to investigate how to improve consumer protection in financial services. The OECD and the Financial Stability Board were tasked with this job and have been developing a set of reports, which we’ve fed into throughout the process.

And although we welcome these reports as a first step, a lot more needs to be done. That’s why we’re calling on the UK Chancellor to show leadership and champion consumer interests when he meets his international colleagues in Paris.

How has the economic and financial crisis affected you and your financial situation? Do you go about your personal finances in a different way compared to a few years ago? And if you could sit down with G20 leaders, what would you tell them?


I made a change to my spending just before the “crisis” hit. Prior to the “downturn”, I had been made redundant from 3 different companies, then during it, I was made redundant again, so I had to find a way to exist on nothing before getting back to work way before any “crunch” hit.

I accept this as the nature of the industry I work in, but when companies keep blaming the “recession” for their reason to let people go, I am always sceptical. Never do they say “well, we made a crap product and had absolutely no idea how to bring it to market. It seemed like a good thing to do at the time when we could borrow as much as we wanted to grow the business as much as we wanted”

When small businesses are closed by the banks because they owe so much money, who pays for it? That’s right, the banks. We all demonise the banks so much, but really all heads of companies should take a long hard look at themselves. That’s why banks won’t lend to small businesses, because they’ll get themselves a nice car, a nice house and a nice pension safe in the knowledge that when the company goes belly-up, the bank will have to pick up the tab.

Not sure if G20 leaders can do anything about it because if we force banks to lend to small businesses frivolously (as seems to be the request) it will be the taxpayer that picks up the bill when they default which would actually be way more of a political hot potato. I don’t deny that there are many small businesses who require an injection of capital to expand, but given the amount of bankruptcies and foreclosures of these small businesses that happened during the recession, lending HAD to be brought back under control.

Perhaps this model will encourage efficiency and commitment from people wishing to start or expand their own business