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FOOL SCHOOL
My husband and I have four bank accounts, four pensions, four credit cards, three ISAs, one mortgage, one savings account, a small share portfolio and a couple of supermarket reward cards as well. That's 25 different accounts/organisations I've got to think about and I haven't even mentioned all the accounts we've got for the various utilities.
So I've been investigating the comparatively new online aggregator accounts which enable you to gather all your various online accounts on to a single web page. Essentially, you give the aggregator provider all the relevant account numbers and Personal Identification Numbers (PINs) and allow them to toddle off to your various accounts to get the latest information on them every time you log on.
Depending on which provider you use, your details are either encrypted on your personal computer or else are held by the provider's own encrypted servers but you only need one user name and password to log on to all your accounts.
Account aggregation is quite popular in the US and I can quite see why. It makes a lot of sense to keep as much of your financial information in one place that is readily accessible and up-to-date.
But my enthusiastic investigation of the service came skidding to a rapid halt when I discovered that the process of aggregation is not regulated by the city watchdog, the Financial Services Authority. In fact, three years' ago, when aggregator providers started surfacing in the UK, the FSA issued a press release specifically warning consumers that it had no powers to regulate the provision of account aggregation because it's not within their remit.
The FSA's Managing Director at the time, Philip Thorpe spelled it out when he said:
"This activity will fall outside the jurisdiction of the FSA and, as a result, we cannot guarantee you the protection of the regulatory system if something should go wrong."
That is still the FSA's view today.
The problems arise because you are effectively disclosing your personal security details to a third party - the aggregator provider's software - which may in breach of the terms and conditions of your service provider (ie: your bank). If there is a disputed transaction, fraud or security breach, then who is responsible?
While some organisations are happy to work together to support an aggregation service, others are not and they may not be happy that you have apparently permitted a third party to access your account details particularly if those details are held on that third party's servers.
The three main account aggregation providers in the UK are Citibank (My Accounts), egg (Money Manager) and Money Supermarket (View My Accounts). All three guarantee to accept responsibility if any losses are directly caused by them or their software and the two banks are regulated by the FSA who have made it quite clear that they would expect regulated organisations to adhere to minimum standards in all their business activities. However, the FSA would still have no power to act should something go wrong and the guarantees offered by the three main providers are purely voluntary.
The important thing, according to the FSA, is to ask three main questions when considering using an account aggregation service:
Around 200,000 people have signed up to the three main aggregator providers so the lack of FSA supervision of the service obviously hasn't put them off. And at least all three organisations are regulated generally as financial service providers so they certainly couldn't act illegally. On balance, I think account aggregators are a great idea and I plan to investigate further - but I'd still prefer the FSA to have some say in how they're operated.
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