The government is looking at an initiative to develop simple financial products that would include a “kitemark” to show consumers that a particular financial product reaches certain standardised terms and conditions.
The treasury is planning to develop a template to offer straightforward financial products that compete on costs, value and service under a new brand. These include an easy-access savings account, a longer-term savings account and life insurance.
The products would be designed to be less complicated than many rival offerings from other financial institutions. For instance, savings accounts would not include introductory bonuses that many people forget to switch from when they come to an end.
The aim is to make the new benchmark products easy to understand and compare against similar products and to encourage people to save. The new products would have the same terms and conditions but could compete on charges and rates.
This, it is hoped, will encourage people to switch to better or more suitable products rather than be put off at considering other options due to the complexity of the market.
Last year, the Treasury asked former FSA director, Carol Sergeant, to head up a steering group to develop a range of simple financial products and report back to the Treasury financial secretary Mark Hoban in July 2012. The full report will be published in February 2013.
Mark Hoban said: “The Government is committed to putting the consumer back at the heart of the financial system, but we understand that restoring public trust in financial products is not an easy task at the moment.
“Simple financial products offer a unique opportunity to demonstrate that products can both be easy to understand and meet customers’ most important financial needs.”
It is hoped that the scheme will be more successful than one launched by the last government that failed to catch on. In 1999, Labour launched a campaign known as the Cat, aiming to promote fair charges, access and terms which did not prove successful.
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