Firms continue to offer consumers unsuitable products

Expensive and complex products are unsuitable for most consumers. Despite this, firms offer such products on a broad front. This is one of the consumer risks that FI highlights in this year’s consumer protection report.

In the report, FI notes four areas where consumer protection needs to be strengthened. We see, for example, that firms sometimes offer consumers savings products that are not suitable, such as complex savings products that require the buyer to be knowledgeable and have plenty of time to monitor their investment. The risk of losing their money can be high. Therefore, firms have an obligation to find out if a certain product is suitable for the consumer.

"Some firms are deficient in this work. We have been highlighting for many years that consumers are being offered products that are unsuitable for them and have low value-for-money," says Moa Langemark, Consumer Protection Economist at FI.

Distributors can receive high commissions for selling a certain product, which can result in a conflict of interest where the needs of the consumer can be disregarded. When a customer chooses one product over another, the distributor can receive as much as ten times more in compensation. Advisors also tend to favour products from their own corporate group, even though more suitable products might be available elsewhere.

Daniel Barr, the director general of FI, takes the position that firms need to put consumers' interests first.

"The big question is also how to achieve a distribution system that to a large extent recommends inexpensive and simple products," says Daniel Barr.

FI calls for a national inquiry

FI has previously called for the Government to appoint a national inquiry to analyse conflicts of interest on the savings market. We would like to see the Government present measures that combat conflicts of interest.
Meanwhile, we are continuing our work to strengthen consumer protection. During the spring, for example, we are planning to look at how banks and other investment firms make their digital suitability assessments. A suitability assessment consists of a number of questions that should show if the offered product is suitable for the consumer.

More risks to consumers

FI's Consumer Protection Report is published annually under mandate from the Government. We present in the report our work with consumer protection during 2023 and describe the work we have planned for the year. We also account for our observed need for amended regulations. In 2024, FI is prioritising the following risks on the financial market:

  • Financial exclusion. When consumers are denied a payment account, or have their payment account closed, they experience financial exclusion. Therefore, we believe that banks should be able to do more to ensure that consumers have access to a payment account.
  • Fraud linked till financial services. Fraudsters trick consumers through social manipulation, for example into transferring money.
  • Unsuitable savings and insurance products. Consumers are offered savings and insurance products that are not suitable. In terms of non-life insurance, this can include gadget insurance, which is often unnecessary.
  • Unsound lending. We see, for example, that insufficient credit checks are leading to consumers more frequently experiencing problems with debt.