Government Seeks to Simplify Financial Services for the Consumer

The Government has come a step closer to developing a set of simple financial products in order to allow consumers to negotiate the financial services industry more easily.

HM Treasury is well-placed to introduce the range following the publication of final recommendations from an independent steering group, which was set up by the Government in order to look at the potential issue.

The group, chaired by former Head of Risk at Lloyds TSB, was asked to look at how financial products – including savings accounts and life insurance policies – could be simplified.

The steering group published its final report today after consulting a range of consumer groups and industry representatives.

The report's final recommendations are:

  • All simple financial products will comply with an agreed set of high-level principles, which cover product features, language, terms and conditions, pricing transparency, purchasing process, and regular information and product updates.
  • The language used in simple financial products will be straightforward and consistent between products, and all key terms and conditions will be the same for each product, making them easy for people to understand and compare.
  • A simple financial products badge should be created and awarded to qualifying products via a robust accreditation process. Simple financial products will carry this badge, the brand of the provider, and the British Standards Institution (BSI) 'Kitemark' to clearly identify which products meet the simple financial products standards.
  • The BSI will be responsible for setting product standards, licensing the use of the simple financial products brand and monitoring adherence to the product standards and specifications.

The report also proposes four further steps:

  • Trade associations represented on the steering group have committed to negotiating the specific arrangements with the BSI to take this work forward;
  • All of these trade associations will continue work on broader simplification and standardisation of language, working with the BSI and regulators;
  • The ABI will report back on its work on income replacement insurance in six months; and
  • The Money Advice Service will provide support and guidance about simple financial products when these are available.

Economic Secretary to HM Treasury, Sajid Javid, said: "People need to be able to manage their everyday finances with confidence and ease. The products outlined in this report represent a milestone towards achieving this, and I am impressed with the way that such a diverse group of organisations has worked together to develop them.

"The challenge now is to ensure that the work that has gone into the Sergeant Review is transformed into tangible changes for consumers, and I look forward to discussing progress made with the industry and consumer groups next year."

Carol Sergeant, who chaired the steering group, said: "We have known for a long time that being able to manage your finances effectively leads to increased well-being and a better quality of life, at every given level of income. I hope that the simple financial products initiative will make it easier for people to understand and compare the key financial products they need and make good choices with confidence.

"The recommendations have the full support of consumer and industry representatives, Government, the Financial Conduct Authority and the Money Advice Service, and my thanks go to the very many people who have been involved with this project."

She added: "It is now really important to make the recommendations a reality."

About the Author

Andrew Eagle has worked in the Finance Industry for over 26 years, currently specialising in bridging loans. He regularly contributes to blogs on bridging finance. Find him on Google +

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