The simple financial products initiative is already proving contentious in the protection market. Carol Sergeant, the leader of the steering group, tells Owain Thomas the industry needs to think differently if it is to succeed.
This month saw the official launch of the steering group for the simple financial products initiative. Initially orchestrated by HM Treasury, the project has now been passed over to industry bodies and representatives to discuss and formulate plans on how best to proceed.
Overseeing these groups is Carol Sergeant, former chief risk officer at the Lloyds Banking Group.
She has been charged with providing the first report from the working parties back to the Treasury in July, a remarkably rapid turnaround for a project of this scale.
But while this might appear a quick fix, Sergeant is taking a wholly different view, as she told COVER at the launch.
“I’ve looked at some of things that have gone wrong before (such as Stakeholder and CAT standards) and I think it’s because people have tried to solve too much at once and haven’t seen it as a stepping-stone approach,” she said.
“I see this ultimately as a very long-term project – let’s start here and then move on through. But if you don’t start in the right place, then you’ve got a bit of an issue,” she added.
“Here” is currently targeting simple savings and protection products to a wider range of consumers in a wholly non-advised space.
This initial commitment to the non-advised space, which was confirmed at the launch, has unsurprisingly proved somewhat controversial among much of the protection market’s adviser force.
Many have questioned whether consumers are aware enough of their needs and the potential vagaries in coverage to buy protection without advice. Sergeant is less concerned about this, suggesting IFAs will eventually be part of the process and that people will use simple products for different reasons. “One of the reasons I wanted to start with a non-advised product was that it’s a real discipline,” she said.
“If it’s going to be non-advised, it has to be simple. You cannot be messing around. That’s pretty critical. Eventually, these products are going to become part of the advice process because if you are advising somebody, you are going to have to be mindful of the benchmark product.
“If you have someone who comes through the door and understands the benchmark product, then if they want extra features, they will understand what the extra cost or benefits will be. So, I do think as a very important side effect, we will hopefully get a better informed and more confident consumer.
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