In a consultation launched on 14 December 2010, HM Treasury outlined proposals for the development of "Simple Financial Products"(click here for a copy of the consultation), in particular payment protection insurance (PPI) products. The proposal set out the Government's belief that financial products which can be easily understood and compared by consumers will simplify decision making, enabling consumers to take greater financial responsibility and encouraging competition among product providers.
In its response to the Government's consultation (click here for a copy of the response), dated March 2011, the Association of British Insurers (ABI) stated its support for the initiative, agreeing with the Government's suggestion that savings and protection products be the initial focus, in particular the development of a straightforward standardised loan protection insurance policy. However, the ABI also raised concerns, questioning the Government's definition of "simple" and warning that a "one-size-fits-all" approach to simple products is not appropriate. It suggested instead a different approach depending on the characteristics of the product and the target audience, with a range of initiatives including voluntary standards, benchmark products, increasing access to advice and developing new ranges of simple products.
The Treasury is analysing the responses received to this consultation process and, as stated in the consultation paper, now expects industry providers and other interested parties to take forward the initiative.