Nationwide product and marketing director Chris Rhodes has called for a code of practice to be developed to try and make all products easily understandable to consumers.
Speaking at a fringe event at the Liberal Democrat conference in Birmingham, Rhodes said the increasing complexity of products, with conditions that change after set periods of time, means that savvy consumers are being subsidised by those who do not constantly switch to the best rates.
He said: “The regulatory response to date has been one of disclosure but I am not sure that will work in a market where 25 per cent of customers are not financially literate.
“Whether it is through regulation or a code of practice, there needs to be some standards of behaviour, not about just a set of simple products but about all products being simple.
“All providers should be challenged by regulators or a code of practice used to make these things simple.
“Nationwide is asked why we don’t do it. But we are 10 per cent of the market and 10 per cent cannot change the rest.
“It needs a policy or regulatory response and not the response we have seen, which has been, let’s have a few simple products, let’s make the whole bloody lot simple.”
LibDem Treasury spokesman in the Lords Lord Newby said: “The regulatory response is to have ever more complicated regulations to deal with ever more complicated products. Having been at a couple of fringes on regulation and the EU, we are at a point where the attempt to regulate this complexity is almost beyond the regulators – but that is not stopping them.”