Page last updated at 11:11 GMT, Thursday, 8 April 2010 12:11 UK

Election causes financial reforms to be dropped

Judge's gavel
The right to "class actions" against banks has been dropped

A law giving people the right to band together to sue banks and other financial service firms is being dropped by the government.

The right to "collective redress" is being removed from the Financial Services Bill so it can be passed by the Lords before Parliament dissolves.

The idea had been developed to make it easier for victims of financial mis-selling to gain compensation.

Plans for compulsory finance education in schools have also been dropped.

'Powerful weapon'

Consumers' association Which? said the next government should revive the rights to collective redress as soon as possible.

"Collective redress is a potentially powerful weapon for consumers against the systemic mis-selling of financial products and would prove a real deterrent for firms engaging in unscrupulous sales practices," said Which? chief executive Peter Vicary-Smith.

"By dropping these measures from the Financial Services Bill, a golden opportunity to empower consumers is being missed."

Lord Myners, the City Minister, said the idea was still "necessary, sensible and desirable".

But he explained that dropping collective redress was a pragmatic move to get the rest of the Bill through in the last days of the current government.

Proposals for a Council for Financial Stability (CFS), which would bring together the Bank of England, Treasury and Financial Services Authority (FSA), are also being dropped.

Financial education

Another victim of the forthcoming general election is the proposal for compulsory financial education in schools.

This had been included in the Children, Schools and Families Bill, which would have made financial education a compulsory part of personal, social, health and economic education (PSHE) in schools.

However. the Conservative Party's opposition to making sex education compulsory for at least one year, with no parental opt-out, has forced the government to drop the PSHE element of the Bill altogether.

Martin Lewis, who runs the campaigning website Moneysavingexpert.com, said this was a "gutting blow".

"The entire system was all about to change; things were all getting in place for compulsory financial education starting in September 2011 - the Department for Schools, Families and Children was nicely geared up, last month it even held a conference for teachers on how to teach it," he said.

"Now the worry is another generation of Brits will remain in the mire of financial ignorance."



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