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.