The ABI is looking at developing the idea of traffic-light labelling on products to help consumers understand financial risks and is in talks with other sectors about their approaches.
Raising Standards director Martin Shaw is to meet with the Food Standards Agency to look at how it explains complex information to their customers. The food regulator is looking at introducing a colour-coded system for food ranging from red labels for foods that are high in fat to green labels for healthier foods.
Shaw is also impressed by the white goods sector, which has two scales for products, one measuring energy efficiency and the other looking at emissions. He suggests transferring this to financial products, where the scales could be the volatility of the product and its underlying risk, as a product could conceivably be low-risk but with high volatility.
He is keen to find a simple format to explain complex information and believes the use of a traffic light coding system or a summary box could be the way if it were worked up into more detail.
He points to the recent FSA discussion paper 04/01 (see above) where this is suggested as a way of illustrating risk.
Shaw says: “It is worthwhile looking at other sectors like food and energy who have brought together complex information into a simple format. We are keen to work this up into more detail but are not yet at a level to be able to say it is right for the consumer.”