Tories make some good moves

by Ed Bowsher on 13 April 2010  |  5 comments
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The Tories' clampdown on store cards is a smart move, but their obsession with abolishing the FSA is a mistake.

The Conservatives published their manifesto this morning and they’ve come up with some good ideas in the personal finance area. Here are my favourites:

Good ideas

-          Equitable Life: The Tories say they will make ‘fair and transparent payments’ to Equitable Life policy holders through an independent payments scheme. This is welcome news. Labour’s record on this issue is pathetic.

-          A seven-day cooling off period for store cards: Too often store cards are promoted by shop assistants who don’t understand the product they’re pushing. A cooling off period will be most welcome. I’m also delighted that the regulator will be able to ban excessive interest rates on store cards.

-          Ensure that no-one is forced to sell their home to pay unsecured debts of less than £25,000: The biggest downside of a secured loan is that the lender can easily repossess your home if you don’t keep up your repayments. However, contrary to popular wisdom, the lender can also repossess your home on an unsecured loan – the lender can do this via charging orders. I think it’s wrong that a lender can repossess a home for a relatively small unsecured loan, so I think the Tories’ proposal makes a lot of sense.

-          Launch Britain’s first free national financial advice service – better financial education is essential.

Minus points

-          Abolishing the FSA – the Tories have confirmed their plans to abolish the FSA. The FSA’s  track record is weak in many areas, but at a time of such uncertainty it’s foolish to go through the hassle and distraction of creating a new agency – the Consumer Protection Agency (CPA) -

and moving regulators’ offices around.

-          Credit card interest rates – The CPA will be able to ban excessive interest rates for store cards, but there’s no mention of credit cards. The rates on many cards are far too high and we need a clampdown in this area.

-          Raise the inheritance tax threshold to £1 million – Government finances are tight, yet the Tories are prioritising a tax cut for the affluent. That seems very strange to me. And, anyway, I see inheritance tax as a tax that supports enterprise and the free market. If people are expecting to inherit a large amount of money, they’re less likely to work hard and boost our economy. If there is money to spare, I’d much rather reduce the government’s deficit rather than fritter it away on unsound tax cuts.