Govt calls on industry to develop simple products
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The Government has called on the industry to develop simple savings and protection products as a priority as it launches a consultation on simple financial products.
The consultation, launched today, looks at proposals that will promote personal responsibility and enable consumers to better compare financial products.
The Treasury says previous experience with simple product initiatives, such as CAT standards and stakeholder products, has demonstrated the Government is not best placed to design products that are profitable for providers and straightforward for consumers.
It says initially simple products should be focused around those that do not pose any risk to capital, i.e. not investment products.
As a result the Treasury says simple savings accounts and protection products should be developed first.
The Treasury says it is keen to ensure that complexity is not a barrier to saving, and also wants to see the development of simple term life assurance, critical illness and income protection products.
Treasury financial secretary Mark Hoban (pictured) says: “The Government believes that there is a compelling need for the financial services industry to offer a range of simple products, both to help consumers understand the choices they face, and to provide a benchmark against which all consumers can compare the many thousands of products in the market.
“The Government has learnt the lessons from previous simplified financial products. We do not want to design these products, nor do we want to cap the charges that product providers can charge – competition between providers should ensure that there is healthy competition on price, service, and customer experience.
“I very much look forward to seeing simple products develop in a way that is beneficial to consumers, to industry, and the UK as a whole.”
In the paper the Treasury says it believes simple products should be straightforward enough to be bought without regulated advice. It argues that as consumers have increasingly turned to the internet and comparison websites for product research, the focus will be to deliver simple products through non-advised channels.
Advisers will still be able to sell simple products, or use the products as a benchmark tool. But the Treasury says this is not the primary focus for simple products.
The consultation closes on March 25.
Money Marketing’s Pave the Way to Save campaign is calling for policies which encourage greater consumer access to advice to help more people engage with savings products and protection policies.
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Readers' comments (18)
Anonymous | 14 Dec 2010 3:54 pm
Mark Hoban should go shopping with his wife more often. Supermarkets for several years have been offering simple savings and protection products as have banks, building societies et al.
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Anonymous | 14 Dec 2010 4:05 pm
God help us all if this man has much further say in financial services. As the previous cooment indicated there are numerous savings and protection products that already fit the criteria he is demanding.
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Mark Ashton | 14 Dec 2010 4:06 pm
I think it is fair to say that there is a whole plethora of simple products already available.
Is not the ever changing legislation that leads to confusion, misunderstanding, fear and inactivity of potential savers and investors?
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Simon Webster | 14 Dec 2010 4:19 pm
What CAT standard, stakeholder etc consistantly fail to recognise is that simplicity is not the issue it is access to advice. Many grown up business people who make a fortune in their specialist area cannot balance a cheque book and have no idea how much life insurance they need or what it should cost so what hope the great British public?
The other issue is constant change. Especially in long term savings: PEPs, ISAs, TESSAs, then how many pension changes have we had? The govt. moves the goalposts so regularly it destroys confidence then they blame the industry when the public is confused and reluctant to act against a backdrop of uncertainty...
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Patrick Schan | 14 Dec 2010 4:21 pm
Here we go again. Where does this guy spend his days? Does he really know nothing about this industry. It's just unbelievable.
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Anonymous | 14 Dec 2010 4:33 pm
I wonder if the 'Government' has done any research to actually see if there is a genuine need for such products or is this a just another arrogant assumption?
On one hand there is a serious commitment to educate consumers and on the other hand this proposal to spoon-feed the public as though it was thick and not able to make informed decisions whereby the onus on advice/product information rests with firms.
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Dom Browning | 14 Dec 2010 4:33 pm
Why is this bancassurer minister able to get away with this? Why are our businesses at risk because of the opinions of this one man. Who the hell is he anyway, never heard of him before he took up this role to promote bancassurers. Stakeholders didnot work under labour, why cannot this new labour minister stand down and let a proper tory who supports small business do his job properly.
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Anonymous | 14 Dec 2010 4:33 pm
Simple/sane reguation would be a better idea.
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Simon Mansell | 14 Dec 2010 4:37 pm
The government contribution to simplification was stakeholder which was so easy and straightforward that apparently it didn’t require advice or remuneration for advice because it could be purchased with the aid of a decision tree! The trouble was the decision tree became "decision trees” and these trees grew into a wood and the consumer couldn't see the decision tree for the decision wood! The net result of government intervention was the removal of distribution costs and hey presto the removal of distribution. This shows us that intangible products are sold and not purchased and yet in spite of the Stakeholder fiasco FSA/Treasury intervention has take financial services industry once again to the edge of an abyss, with Mark (rubber stamp) Hoban MP pushing ever harder over the edge. RDR proves that a regulatory fool doesn’t learn by their Stakeholder mistakes!
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Andy Newman | 14 Dec 2010 4:41 pm
I work for a product provider and help develop CAT marked ISA, Stakeholder, CTF's and Sandler MTS. I will be making sure I steer well clear of any projects assuming my employer is daft enough to spend a fortune developing
1.Products with restricted margin
2.Liable to wrecking by FSA regulation
3.Withdrawn by the next government
Meanwhile the govenment does everything it can via the RDR and the tax system to wreck product attractiveness to consumers. I'm really woried about my job because I think we could see a meltdown of providers. Perhaps I will have to raise my sights and become an adviser?
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