HM Treasury believes simple products by definition should be allowed to be sold without advice.
What are your views on this approach? Does it have implications for mis-selling?
Paul Doyle, Net Worth Planning
The two key words here I believe are ‘sold’ and ‘advice’. Simple products should be able to be sold with a sensible minimal level of sales and compliance procedures.
However, the role of the adviser to act as a catalyst for guidance and positive action is more vital than ever if we are to properly address the current protection gap.
Whilst simplification ‘where appropriate’ is an extremely important step in fighting the current trend towards ‘complicated product extension’, the need for advice, simplified products or not, will always be paramount when it comes to helping the vast majority of clients achieve properly structured financial planning which is aligned and relevant to their personal circumstances and needs.
The cynic in me wonders if the Treasury’s interest to have simplified products sold with no advice coincidently falls around the same implementation time as RDR.
After which the majority of the population may be left high and dry, struggling with the means to pay fees for financial advice.
Enter ‘simplified products sold with no advice’. How convenient, I can hear the banks licking their lips already.
Therefore, great thought should be given before simply turning the clock back to the days of selling high yield commission producing products with little or no bearing on advice and client suitability, as this may have exactly the same miss-selling implications as it did first time around.
Perhaps there is more to consider here than first meets the eye. So let’s ‘simplify, advise and sell’, but in that order.
Richard Verdin, Aviva
Research from Aviva’s Family Finances Report at the start of the year revealed only 7% of families feel adequately protected financially.
Despite the best efforts of advisers the protection gap still remains. The problem is not that advisers are discussing protection with customers and they’re not buying rather it is that simply there aren’t enough advisers talking about it.
Post-RDR we may see more attention given to customers’ protection needs by more advisers. However, we may also find there are fewer advisers in total.
I think most would agree that the issue of unprotected, uninformed consumers needs addressing, if we are to combat it once and for all and probably in a way that has not been tried before.
Simplified products with either no advice or simplified advice may well prove to be exactly what some, indeed many, need.
It is widely known that many consumers are put off by what they view as complicated financial products so the more we can do to help customers, the better chance we may have of closing the gap.
I would encourage anyone who really cares about financial protection for consumers to support the initiative and help to steer the development in a way which makes sense for all stakeholders, (government, consumers, regulators, providers, advisers and other retailers) with a view to avoiding the potential risks, including mis-buying and mis-selling.