The scene is a draughty Treasury office in Whitehall. The minister is discussing insurance with his permanent secretary.
M: Sir Humphrey, I wanted to get your views on simplified products and the FSA’s paper.
Sir H: Actually minister, around here, the FSA is so last decade.
M: But simplified products really is a very worth- while initiative.
Sir H: Minister, did you just say simplified products? That is what we in Whitehall call an oxymoron, like ’military intelligence’.
M: Very droll, Humphrey, but this initiative is designed to close the protection gap by making products much easier to buy.
Sir H: We have spent a very long time making products difficult to buy. When they become too easy, that is when the trouble starts.
M: Nonsense, Humphrey, how can that be true?
Sir H: Minister, please be very careful what you wish for. After all, look what happened to PPI.
M: Yes but PPI was a rip-off, wasn’t it? After all, the banks sell it and we hate them don’t we…don’t we?
Sir H: We do, of course, minister, but we do not exactly like the insurers either. The point about PPI was that it sold really well because it was easy to buy. Sold in droves and it would have been fine if they had not tried to claim. There are thousands of PPI customers who love the cover to bits, it is only the claimants who do not like it.
M: Hold on, you mean simple does not equal better?
Sir H: Tough question, minister. Making everything simple would be such a waste of the last few years. All that gobbledegook and compliance work gone to waste.
M: Gone to waste?
Sir H: Well, the industry is knee-deep in compliance people. What happens to them when we simplify products?
M: We get them out on the road selling insurance.
Sir H: Oh, minister, have you ever met a compliance officer?
M: One or two.
Sir H: And what struck you about them?
M: They were very…organised.
Sir H: Is that a synonym for dull, minister?
M: Deadly dull actually.
Sir H: So I do not see them out on the road selling insurance, do you, minister?
M: But that is the point, it will be so simple to sell, even compliance officers could do it.
Sir H: But minister, we must avoid consumer detriment at all costs and the easiest way to do that is not to sell anything, not make it easier to buy. I mean, what if the insurer will not pay the claim?
M: You mean like PPI?
Sir H: Yes, minister, just like PPI. We have got the industry exactly where we want it.
M: So how do we play it?
Sir H: Lots of well-meaning rhetoric but just put the sort of people in charge of it who will not want it to happen and then blame the industry for over-complicating it. You get the glory for a brave initiative and we hit the industry around the chops with a wet kipper.
M: Thank you, Humphrey, what would I do without you?
Peter Le Beau is managing director of Le Beau Visage