Advisers are to blame for the lack of financial product innovation by failing to support new product types, says Rosenblatt Solicitors.
Head of financial services division Nigel Frudd says advisers often refuse to recommend new products for fear of being reprimanded, causing a rash of me-too-type products launched by providers.
Frudd says: “Because of previous misselling of products, the market has become very conservative and inflexible. This sits unhappily with a desire for innovative products as the first reaction of most IFAs to a new product is to see how it benchmarks against other existing products in the standard categories.”
He cites Life Trust’s longevity income plan as an example.
Frudd says: “The LIP has characteristics of both a bond and an annuity but it curr-ently sits as the only product to specifically address the financial needs for older ages due to the increase in long-evity, which is one of the most important financial planning issues to emerge in recent times and which will become more and more important in the years ahead.”
He says the FSA’s treating customers fairly drive stems from the belief that existing product offerings are largely unsuitable.
He says: “The FSA has been crying out for more product innovation which as an aim is commendable. But without support and input from the financial services industry, product innovation could be dead in the water.”