The office of fair trading in Britain has noted that most consumers pay little or no attention to bank charges on so-called “free accounts,” even though the actual costs to the account holders of “free” bank accounts and the spread earned by the banks on low or no interest accounts are significant

In a recent issue of this publication, a well-known consumer advocate suggested that consumers of all types need to be protected by yet another agency (like the OFT) that will expose supposedly “excessive” fees and charges imposed by financial institutions of all types.

While it is true that consumers often pay too much for products and services, this is true in every part of the economy, not just the financial services industry.

However, the market is a far more efficient and, ultimately, a fairer mechanism for setting prices than any government agency ever could be.

It is inappropriate for any government agency, other than in the case of monopolies, oligopolies and certain commodities, to make itself an arbiter of prices of products and services, and by implication their value to individuals. The value of a product or service to any individual is a function of their choices, expectations, biases and experiences.

It is not the government’s role to attempt to ensure good bargains and value for money for those consumers who are not prepared to invest a little of their own time and attention to the question, or who have no interest in doing so.

The courts have long refused to decide whether prices arrived at between buyers and sellers in the marketplace are fair or appropriate. The only exceptions are in outrageous cases of “unconscionable” unfairness. The common law early on concluded that determining value in contractual disputes is a mug’s game.

Giving regulators a mandate to interfere with market mechanisms in order to ensure fair prices for all will not and cannot work. What has great value in terms of a characteristic, in the broadest sense, of a product or service to one consumer may have little or no value to the next.

One answer, which is key to improving the financial bargains that consumers are able to get, is to promote personal financial education, starting in the schools.

With additional information, children and adults will be less naïve about personal financial matters and will be better able to get a deal that is fair, from their perspective.

Here are a few key points that the curriculum needs to cover:

> First, there is no free lunch. Everything has a cost.

> Second, if you don’t really care about how much you pay for something, no one else will, and some sellers of goods and services are only too happy to take advantage. So, caveat emptor — buyer beware.

> Third, convenience has a price, and you will pay for it.

> Finally, take some responsibility for the choices that you decide to make when shopping for services. If you want to spend your day running from one store to another to save $5, that’s your business. But don’t ask me to pay for a watchdog to monitor prices and make sure you don’t pay too much, whatever that might be.

A number of years ago, when brokerage commissions were fixed, the securities regulators concluded that price competition is a good thing.

As a result, the regulators decided that consumers of brokerage services should be given some choice as to the levels of service they wanted and the prices they were prepared to pay for the value they attached to the services provided. Consumers were permitted greater freedom to choose and to bargain.

The results have not been perfect, but then again, what is?

Some consumers who have chosen to deal with discount brokers — solely on the basis of price — probably are not getting the advice they need. Others probably are paying for services that they don’t need and will never use.

However, that is their business. The majority of consumers for these services are being well served. While it would indeed be desirable to have a “perfect” market, we will not perfect it by letting a government agency decide what is “fair” or what has value, or shame sellers of products by identifying them in the media as a “bad player” on the basis that they don’t provide value for money, in accordance with some arbitrary methodology.

@page_break@Richard Austin is a financial services lawyer, former deputy head of compliance, wealth management, at a Schedule 1 bank and counsel at the law firm of Borden Ladner Gervais LLP. These opinions are his and not necessarily those of his firm.