Stay-at-home students 'could have fees scrapped'

Wednesday, 08 July 2009 12:00

The government plans to strengthen consumer rights and offer free financial advice as part of an overhaul of the financial system.

In a white paper delivered to Parliament, Alistair Darling said the financial system needs to inspire trust and confidence in consumers.

Consumers will be given access to free, impartial advice and personal finance education, Mr Darling said.

In addition, consumers will receive greater access to compensation and the Financial Services Compensation Scheme (FSCS) will be pre-funded.

"Consumers will get more protection, along with greater right of redress and access to compensation if things go wrong," Mr Darling told Parliament.

Mr Darling acknowledged that the credit crisis has forced the merger or collapse of several financial institutions, leading to a less competitive market.

Although the merged banks will not be split up, Mr Darling did say new entrants, including non-banking institutions, would be encouraged to boost competition.

"The FSA and the OFT will be working very closely to make sure we have a competitive banking system," Mr Darling said.

However, Liberal Democrat Treasury spokesperson Vince Cable said the current consumer protection system is "fragmented" and confusing while it is split between the FSA and the OFT.

Despite the criticism the current system failed to prevent the banking crisis, the tripartite authorities of the Treasury, the Bank of England and the FSA will remain unchanged.

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