A set of simple financial products designed to help consumers navigate the financial services market more easily is a step closer today, following publication of final recommendations by an independent steering group set up by the Government to look at this issue.
The group, chaired by Carol Sergeant, was asked to look at how financial products such as savings accounts and life insurance products could be simplified. It has published its final report following consultation with a wide range of consumer groups and industry representatives.
Economic Secretary to the 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.
Steering Group Chair, Carol Sergeant, 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.
It is now really important to make the recommendations a reality.
The report’s eight 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.
- The first set of simple financial products developed will be:
- an easy access savings account
- a 30-day notice savings account
- a regular savings account
- a fixed term life insurance product
A whole-of-life insurance product should be the next product added to the suite. The Association of British Insurers (ABI) will lead further work on a simple income replacement product and report back in six months.
A simple financial products badge will 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.
- Credit unions will be invited to develop credit union specific simple financial products.
The report also proposes five next 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.
The Money Advice Service will provide support and guidance about simple financial products when these are available.
HM Treasury will organise a progress review of simple financial products in twelve months.
Notes for Editors
- The final report is available in full online in our Independent Reviews section
- Over 50 organisations have been involved in the Sergeant Review, including trade associations, financial services providers, regulators, government departments, consumer groups, research bodies and consultants.
- Carol Sergeant has held a range of senior positions in both the public and private sector, including at the Bank of England, the Financial Services Authority and Lloyds Banking Group. She currently chairs the whistle blowing charity Public Concern at Work and holds a number of non-executive director positions.