Simple products given cautious welcome

However, IFAs raised concerns about how the products will be used and were divided over potential negative impacts on their businesses.

The Treasury's steering group will examine how to bring simple products to market, including how they should be structured and marketed to ensure consumers get the most appropriate deal.

According to a poll by Avelo, nearly three quarters of all IFAs have positive feelings towards simple products, but the scale of this approval is split.

A quarter (25%) said the initiative was great news and long overdue, while almost half (43%) said they had a role but it was not quite clear what that is yet.

Only 15% said simplified products were an unnecessary step.

And the vast majority of advisers (91%) recognised the need to make financial services simpler, agreeing that the industry was too complex.

Almost two thirds (60%) believed the biggest issue was with regard to the mass market's limited access to professional advice.

Only one in 10 (9%) believe that the industry is clear enough for consumers.

The uncertainty surrounding simple products became clear when intermediaries were asked how the introduction would impact on their business.

One third (29%) said it would have no impact and a quarter (26%) said it would help them deliver a better service to clients.

However, a quarter (26%) believed simplified products will result in increased complexity as well as costs, while one in five (19%) forecast that some of their core business will ultimately be served by others.

Paul Yates, strategy and product development director at Avelo, said: "The introduction of simplified products to reduce complexity within financial services and encourage greater understanding and product take up in the mass market is long overdue.

"The key challenge for our industry is ensuring that these products really meet the needs of consumers whilst generating enough value for those selling or advising and those manufacturing."