Consumers

In the last issue of Community Affairs Briefing, we reported on calls from not-for-profit pressure groups for greater regulation of the financial service industry. They wanted to make sure that vulnerable customers can get access to essential products like a bank account. We argued that the industry itself should become more innovative, finding profitable ways to serve `marginal' markets, and that the only compulsion should be to report openly what they do. But if they did not, we warned regulation would follow.

Now, in yet another example of the power of NGOs to set the agenda, we report on public agencies being forced to respond: the OFT is a regulator with statutory duties to take action while the NCC was set up by government to champion the consumer interest. When the whole industry is pilloried, it must be galling for companies like NatWest, whose community affairs programme is indeed tackling financial literacy even if its mainstream business has yet to respond fully.

Two lessons emerge. First, for individual companies: big national firms cannot simply ignore consumers who have been marginalised by the competitive modern economy. Find a way to address their needs, evaluate what you do and tell the world about it. Second, for whole industries: you need to mobilise and work together to tackle social problems; individual effort will be slow to change overall public perceptions. Where is the financial services equivalent to alcohol's Portman Group, for example? Too many trade associations put all their efforts into resisting greater industry regulation alone, not organising an appropriate sector-wide approach. It's time for collective action on social responsibility.

Corporate Citizenship Briefing, issue no: 38 - February, 1998