Inside Money: Come in ComCom, CDO investors calling

The Commerce Commission has gone for a simple design with its new website - off-the-shelf logos, a small splash of colour, clean font (Georgia) and, thankfully, no tedious video introductions or complex interactive facilities.

But while I appreciated the design effort, for my purposes the content was a bit light. In particular, I was looking for a press release titled 'Commerce Commission releases decision on ING CDO funds', or something equally bland. But it wasn't there.

It has been over a month since the last time the Commission said it needed another month to complete its "ongoing discussions" with ANZ, the owner and part-distributor of the ING funds.

In fact, the Commission said it needed "at least" another month to barter with ANZ (despite the fact a decision has already been made), which leaves it nicely open-ended and with plenty of scope for conspiracy theories to flourish.

Instead of closure on the ING CDO issue, I flicked through the Commerce Commission's statement about credit card late payment fees, which warns banks against charging more than $15 for the 'service'.

The statement quotes Commerce Commission Auckland fair trading manager, Graham Gill, saying:

"Generally we urge consumers to shop around. Look at all fees being charged by all lenders, including exception fees or other default fees, and if the fees are too high, vote with your feet and go to another provider."

Graham's right, in theory, but it's not necessarily that easy to find and weigh up the value of all the different charges banks might hit you with.

And if something as relatively simple as managing a bank account can befuddle us, you can perhaps forgive the Commerce Commission for dragging its heels on the CDO decision.

But would higher levels of financial literacy have protected New Zealand consumers from the CDO fiasco, or bank fee-gouging for that matter?

Financial Times writer Michael Skapinker argues in a column this week , that financial literacy only goes so far, which is not very.

Skapinker cites a paper by Lauren Willis, a professor at Loyola law school in Los Angeles, titled 'Against financial literacy education' as his inspiration.

"Teaching financial literacy is not like telling people that smoking kills or how to engage in safe sex, where the message is straightforward and unchanging," Skapinker says. "Even if consumers could master the intricacies of money management, the speed of financial innovation means much of what they learn would soon be out of date."



David Chaplin