The move comes as part of the Sergeant Review of simple financial products which last summer put forward a number of suggestions to develop a range of simple products, headed by former FSA director and Lloyds Banking Group chief risk officer Carol Sergeant.
The Sergeant Review steering group has published its final recommendations today, which pave the way for a simple financial product badge which will be awarded to qualifying products via what the Treasury calls a “robust accreditation process”.
Simple financial products will carry this badge, the brand of the provider, and a British Standards Institution “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.
Products will have standardised features, simplified terms and conditions and pricing transparency, as well as regular information and product updates.
Last year’s interim report, proposed a template for an easy access savings account, a 30-day notice account and simple life cover. It also consulted on developing a simple income replacement product for those who have lost their income due to sickness.
In line with the interim report, the group has recommended 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; and a fixed term life insurance product. A whole of life insurance product will be added next.
The Association of British Insurers will lead further work on a simple income replacement product and report back in six months.
Treasury economic secretary Sajid Javid says: “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 such a diverse group of organisations has worked together to develop them.
“The challenge now is to ensure 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 says: “I hope 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 Treasury will carry out a progress review of simple financial products in 12 months time.
Building Society Association director-general Adrian Coles says: “The BSA welcomes the publication today of the final report from the Sergeant Review of Simple Financial Products. We have been pleased to participate throughout this review and remain supportive of the concept of simplicity. Clearly, putting consumer’s interests at the heart of the financial system is important and a good fit with the existing approach taken by building societies and other mutual deposit takers.
“One of the main aims of this review is to encourage more people to save and it identifies complexity as one of the barriers. We understand that the current economic climate is challenging for savers and that squeezed household budgets, coupled with lower interest rates, are currently a disincentive to saving. Nevertheless, the Report makes some helpful proposals, based on consumer research for the further development of products under the Simple Products banner.”