A group of representatives from industry bodies including the Association of British Insurers, the Money Advice Service and Which? have put forward recommendations to launch a range of simple financial products.
In October, the Treasury created a steering group to develop a range of simple products, headed by former FSA director and Lloyds Banking Group chief risk officer Carol Sergeant.
The group was asked to report back to Treasury financial secretary Mark Hoban by July.
In its interim report, published today, the group has proposed a template for an easy access savings account, a 30-day notice account and simple life cover. It is also consulting on developing a simple income replacement product for those who have lost their income due to sickness.
The simple savings products would require a minimum deposit of £1, with no charges for the day-to-day running of the accounts. There would also be no introductory bonuses or tiered rates.
Simple life cover would be provided on the simple concept of “you die, we pay” without additional features such as joint life, indexation or waiver of premium.
The group plans to set up an accreditation body to ensure that these products meet core standards outlined by the group and an accompanying kite mark badge to ensure the products are clearly identifiable to consumers.
The full set of initial recommendations set out in the report is now open for consultation, ahead of publication of the final report in February.
The group says its simple products proposals have been designed to be offered on a non-advised basis. It suggests awareness of simple products could be raised through channels such as the MAS, providers, the workplace and social media. The group says IFAs could also play a role in distributing simple products.
The report has identified a target market of 29.4m adults for simple savings products, and 19.8m adults for simple life cover.
Hoban (pictured) says: “The Government is committed to putting the consumer back at the heart of the financial system, but we understand that restoring public trust in financial products is not an easy task at the moment.
“Simple financial products offer a unique opportunity to demonstrate that products can both be easy to understand and meet customers’ most important financial needs.”
Equity Partners UK managing director Kevin Tooze says: “Simple savings accounts are already out there, and as for life cover this is a product that should really be advised because consumers need to know about whether it should be taken out on a joint life basis and putting the benefits in trust. Simple products are designed to guide people but sometimes they end up having the reverse effect and being quite dangerous. It seems like another move to bypass IFAs.”
The consultation closes on 12 October.