A piece of ceremonial

Martin Evans: 04 October 2009 in Financial services

I recently received - and I expect you did too - a leaflet from my bank entitled

Important changes to your credit card terms and conditions.

Three closely spaced but neatly laid out pages told me about a range of new and changed conditions that apply to my credit card. These are required by compliance with UK and EU regulations. The bank thinks these are so important that it tells me it is

Important information - please read this carefully

Well I did. I have to say that after about half a page of type, rather on the small side, in lines, rather on the long side, I was beginning to wonder why it was so important.

Finally, near the bottom of the second page, I came to this:

Making your terms clearer
We've also taken this opportunity to make some of our conditions clearer for you. Please take the time to read the following conditions: 5.2, 5.3, 5.4, 6, 7, 8, 9.2, 9.3, 9.5, 10.3 (previously 10.4), 11.2, 12.1, 12.2, 12.4, (previously 12.3), 13.4 (previously 13.3), 13.6, 14.1, 14.4, 14.6, 16.1, 19.10 (previously 18.7), and 19.12 (previously 18.8).

I should have mentioned that neither the new nor the old conditions were enclosed but I could get them by calling customer services or consulting the relevant page of the bank's website.

Perhaps somewhere there is a world where normal bank customers will indeed send for and then read all these important conditions; but it is not the world in which you or I or indeed the authors of the leaflet live. Or would want to live.

So what is happening here?

Politicians, regulators and financial services company employees are through the best of motives conspiring to create a nonsense. Politicians want the companies to be open and clear to customers. Regulators have to turn that into something that can be regulated - in court if necessary. And companies want to defend themselves against penalties for non-compliance.

Walter Bagehot famously explained that the British constitution was divided into the dignified and the efficient parts. Leaflets like this are part of the dignified ceremonial of consumer protection. We mustn't kid ourselves that they have an effective function.