I previously spent many happy years working as a newspaper journalist, a craft where one of the trickier skills is whittling down complex information into straightforward, easily digestible sentences.
There are parallels between my former life and one of the most important innovations currently being developed by the banking industry. Earlier this year, Carol Sergeant, a respected former Lloyds Banking Group executive who previously worked at the FSA and the Bank of England, published a Treasury-commissioned report on how our industry can deliver more simple products for customers.
Her review marshalled the thoughts of banks, consumer groups, the regulator and the Government on identifying, structuring and bringing these products to market.
The review’s final report called for a simple products badge with an independent accreditation process. Another body would scrutinise that system’s effectiveness.
We in the banking industry are fully behind these proposals and I do not say that because I sat on the Sergeant Review’s steering committee.
To restore trust in our industry, it is vital that custom-ers can manage their financial affairs with confidence and ease. Given that the Sergeant Review’s final report was published in March, you might wonder when simple products are set to hit the high street.
Such important measures cannot be drawn up overnight. The banks are currently working hard on a quality assurance system for these simple products.
Customers need to feel confident that a product badged as “simple” will be just that. Financial services companies must be assured that the accreditation process is effective and that it works in harmony with regulation overseen by the FCA.
The banking industry is set to report back to the Treasury next March with detailed proposals of how the new system should work. I am encouraged that this initiative will be immensely useful to consumers and also help revive trust in our banks, but I would sound a note of caution to customers and providers.
Vital though this initiative is, it cannot – and should not – be seen as a silver bullet that will ensure no misselling ever takes place in the future.
While simple products would be designed to be sold without regulated advice, every customer has individual circumstances and needs. It will be important to provide them with necessary information to help them make an informed choice when buying a simple product. For example, it may not always be appropriate to prioritise saving over paying down high-cost debt.
But while simple products are not necessarily a safe harbour from misselling, they have the potential to become a trusted benchmark on which millions of customers can rely.
I look forward to seeing the introduction of this very valuable initiative.
Anthony Browne is chief executive of the British Bankers’ Association