Sergeant simple products must be the beginning, not the end

clock • 2 min read

The excessive complexity of many financial products has dogged the financial services industry for as long as anyone can remember. I hope the publication of Carol Sergeant's Review of Simple Financial Products proves to be a watershed for the industry and especially the insurance sector.

Scandals such as PPI in particular have compounded general mistrust. Consumers, quite rightly, are wary of the legalese of policy documents and indeed of the companies behind them. Confusing product wordings and heavily caveated communications have actively contributed to consumer uncertainty and poor take up of many financial products.

Rebuilding trust in the industry is therefore fundamental to deliver growth in the sector, and embracing product simplicity must be central to that effort. Some providers have made efforts to tackle it but to continue to be successful as an industry, we must adapt to our clients' needs, and in this new landscape product simplification will not just be innovative, it will be vital.

For those of us who have followed the genesis of the Sergeant review, the final suite of products recommended was widely anticipated. Banking products - current and savings accounts - were always going to be the prime focus of the report. The inclusion of life insurance in this initial suite of products was also widely predicted.

While IP hasn't been included in the initial suite, it is encouraging that it has been clearly endorsed as a ‘high priority' that would offer real benefit to consumers. It also indicates that group policies - either through the workplace or trade bodies - are likely to prove to be the right channel to deliver the necessary protection for employees.

Having reached that conclusion, it's perhaps surprising then that the review does not go on to take the logical next step of recommending its inclusion. Ultimately our view is that it is more important to get the product design right, than it is to be among the first products to go to market.

Sergeant's work has been invaluable in raising awareness of the issue of excessive product complexity. How the industry responds now is vital. The challenge will be to use the review as a catalyst for positive cultural change towards simpler, clearer financial products.

If the process is considered finished and the report left to gather dust, yesterday's announcement will go down as a real missed commercial opportunity. The Sergeant Review must be seen as the beginning, not the end, of the simple products agenda.

John Letizia is head of public affairs and CSR at Unum

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