Consumer Panel rejects ‘simple’ labelling for products
Despite a regulatory focus on so-called ‘simple’ financial products, consumers would benefit more from a kitemark that could be applied to products that have ‘straightforward outcomes’ irrespective of their underlying complexity, according to the Financial Services Consumer Panel.
In an interview with FTAdviser, Kay Blair, vice chairperson of the consumer body, said the drive to improve consumer outcomes would be best served by highlighting products that “are actually quite complex in their make up” but that “delivered what they promised”.
Ms Blairs comments come following the publication earlier this week of the interim report from the Sergeant Review, commissioned by the Treasury, which recommended creating an easy access savings account, a 30-day notice account and a simple term life insurance product.
These would be backed backed by a “Simple Products” accreditation body and a kitemark badge.
Ms Blair said that FSCP had already done quite a lot of work looking at ‘straightforward outcome products’ and what products could fall under this banner, including basic insurance products and some basic savings products including “quasi-savings and investment-type products”.
She said: “In our view it would be much better if the products that were on offer were better products and designed with consumer needs in mind and delivered what they promised.
“There is a lot of talk about simpler products but we actually think that a better term would be ‘straightforward outcome’ products, as some products are actually quite complex in their make up but as long as they deliver that’s what is important.”
Ms Blair said that FSCP had “identified risk criteria for what a straightforward outcome product would be” and that this “wouldn’t necessarily mean that these would be new products”.
She added: “As we have seen throughout this crisis there has been a huge focus on financial innovation, but our concern is that a lot of the financial innovation as we have seen... is not in consumers’ interest.
“There are more sophisticated investors who will always be better able to understand risk and who will want to take more risk searching for higher return but we think in the main stream for lower and middle earners there is a gap.”