I am all for non-toxic products but, in order to meet that criterion, charges are going to have to stay low – and that leads to the next problem. Who will distribute them? As we all know, financial products, don’t sell themselves and a shiny array of kitemarked products won’t help anyone if all they do is sit, stakeholder-esque, on the shelves.
Low charges mean IFAs can’t do the distribution. Given the compliance regime they have to operate in, it’s simply not financially viable.
Maybe the banks could but, let’s be honest here, their past forays into the distribution of financial products hardly fills one with optimism. Anyway, I can’t see banks rushing to knock out these ‘low-margin’ offerings. Not when there are other, much more lucrative, options to sell their hapless customers.
If the legislators and regulators want to shift these kitemarked products, the only way is to make them easy to recommend and, unpalatable as the FSA or it’s successors may find it, that means taking out the regulatory risk.
Design them well, kitemark them clearly and then introduce protections, for those who distribute them, from litigious action or regulatory sanction down the line.