HM Treasury (HMT) is suggesting simplified financial products should be defined as sellable without advice.
Speaking at reinsurer Gen Re's "Simple" seminar today, Maggie Craig, managing director of life and savings at the Association of British Insurers (ABI) gave a progress overview of HMT's simple products consultation, which began in July 2010.
She said: "HMT suggest a simple product would be as straight forward as possible, would aid the understanding of features and comparison and ought to be possible to be bought without regulated advice."
She added: "This will excite debate. There is a question mark over does it mean "must" be purchased without regulated advice - as in execution only, which I don't think it does - or without regulated advice in any form, or without full advice?
Craig noted that HMT suggests that the initial products should be those that carry no risk to capital, so would be term life, critical illness or income protection.
"We are not talking about investment products yet," she said.
Simple products should also be capable of sitting alongside standard products or could act as a benchmark for non simple products There are three objectives: people should understand the product they need, should be helped to make a better choice and to encourage competition in the market.
Craig concluded: "Although we are talking about simple products, we can see this starting point is a lot more complex than just simplifying an existing product.
"HMT is suggesting these products be heavily marketed and branded. There could be challenges there, but I think they have in mind CAT standards and stakeholder products."
She also said: "I have been impressed by the officials at Treasury. They are open minded, willing to listen and genuinely understand that they need industry help. They are aware that they are only part of the jigsaw."
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