An independent steering group set up by the government has published its final recommendations, Sergeant review of simple financial products, on simplifying financial services products, such as life insurance products and savings accounts.
While the report does not immediately change anything for employers, it does indicate that they should play a growing role in facilitating access to protection benefits, such as group income protection through an employee benefits programme, said Katharine Moxham, spokesperson at Group Risk Development (Grid).
She added: “The onus will continue to build on employers to actually encourage their employees to take greater personal responsibility.
“The workplace has been recognised as a great conduit for simple financial products. There’s generally trust in employers, and that they will do the right thing for their workforce. Employees will generally buy in to a workplace offering.
“This gives us all a huge opportunity to bring protection to a greater proportion of the workforce.
The group, chaired by Carol Sergeant, consulted with a range of groups and industry representatives.
Its 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; and 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 four 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.
Sajid Javid, economic secretary to the Treasury, 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 people, and I look forward to discussing progress made with the industry next year.”
Carol Sergeant, steering group chair, added: “We have known for a long time that being able to manage your finances effectively leads to increased wellbeing 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.”