HM Treasury believes simple products by definition should be allowed to be sold without advice.
Peter Lurie, Proactive medical and life
The question is, what is a simple product? What defines a simple product?
How is a simple product built, maintained and sold? I don't know, as every product in this industry has its complexities.
Explanation and avoidance of doubt is a key element to understanding the product in full, and this is a form of advice.
If an adviser has the capacity, understanding and resources to explain products, whether simple or complex so that the client is not left in the dark, then one could say it is simple for the adviser, but not for the client.
A simple product may give one the perception that the whole process of setting up the product is easy, however, this falls short on its clear explanations and so called small print, making the outcome or claim decline look like a potential mis sell.
So the Treasury should be aware of these issues.
Could we also be mixing the idea of self execution up with simple product?
The only way a plan could be sold as a simple product is one that speaks to you at every decision that's made when completing an application form or reading a policy document.
Even then a product like that could not even be called simple as the technical nature of the product would be complex in itself. The whole idea is complex in itself.
Neil Armitage, Foresters Friendly Society
Financial products confuse people, that is why there are IFAs.
The outcome of the Retail Distribution Review (RDR) will inevitably result in some people being ‘priced out' of financial advice and change the way people purchase financial products.
There will need to be greater clarity around just what ‘simple' means.
A lack of clear definition could risk an increasing number of products being classified as ‘simple' which are inappropriate for certain consumers' needs, thus undermining the purpose of ‘simple' products.
A note of caution would be that without sound financial advice consumers may not be sufficiently informed to choose the best product for their needs.
Instead of focusing on the customer's financial objective of the product, for example, saving for a child's education or saving for a wedding, the consumer may be led into the simplest product or a recognised brand rather than looking at the overall benefits to meet their needs.
Previous attempts at simplifying the financial services field for consumers have resulted in providers staying away from simpler products.
This time around, the RDR will pave the way for a move toward simplicity.
If providers fail to travel in the same direction they could find themselves ‘priced out' of consumers' pockets.
