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Treasury opposed to standard risk ratings

The Treasury has told MPs it would be concerned about any attempt to standardise risk ratings for investment products.

A report from the Treasury reinforces the fears of former Treasury FInancial SEcretary Ruth Kelly that standard risk ratings would not work.

It forms part of the Treasury&#39s response to the select committee report into restoring confidence in long-term savings, which was based on a six-month probe of life companies, MPs, economists and consumer groups.

During the sessions, Angela Eagle MP pushed for a traffic-light system to indicate how risky a product is but response to the idea was lacklustre.

The Treasury statement says: “We have concerns surrounding the practical difficulties that a summary risk rating could have, especially when one considers that the risk profile of a particular product may change in the future.”

The select committee has previously had success in getting product information boxes placed on credit cards. The Treasury acknowledges that it is vital for the health of the sector to have necessary product information readily available to consumers.

It is waiting for the outcome of work being undertaken by the industry and regulators on standardised product information before adding further to the debate.

Consumer body Which? is critical of the FSA and Treasury feedback on the select committee recommendations.

Principal policy adviser Mick McAteer says: “Far from restoring consumer confidence, this response will do little to reassure consumers that the Government and FSA have their interests at heart. A radical reform of the entire long-term savings system is needed.”


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