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The price caps have failed all over Europe

Simplified price-capped products have failed in the European countries where they have been introduced, according to a study by Charles River Associates for the European Commission.

CRA principal Tim Wilsdon says the common theme from the study is that problems have been created whenever pricing regulation has occurred.

The CRA report assessed whether simplified products such as the stakeholder pension or the Sandler range were required in other countries and could not find one example of a simplified product that can be held up as an example for others to follow.

Wilsdon says the example set by simplified products in countries such as Austria, Germany, UK and Ireland was not one that should be followed across Europe.

The one success story appears to be the French Purp, a retail personal pension product under price regulation, but Wilsdon says it is still too early to assess whether this will be a continued success.

Wilsdon says it is important to make the distinction between simple products and the standardisation of products such as collective investment schemes, which can benefit the European market through cross-border trade.

He says: “Product simplification by itself within the context of a complicated marketplace has not proved successful. Similarly, regulation of prices, particularly on pension products, has generally been problematic.”

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Jeremy Pearson is Technical Support Manager with Canada Life’s ican Technical Services Team. Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland. Many parents value the standard of education offered by […]

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