No-frills accounts are on the way

Last updated: Mar 14th, 2013
Pound coins

Simple financial products that do what they say on the tin are to get a special seal of approval from the government so customers know they're not in for any nasty surprises.

The Sergeant Review of Simple Financial Products recommends the first products to be kite-marked will include an easy-access savings account, a 30-day notice savings account, a regular savings account and a fixed-term life insurance product. The review also suggests a whole of life insurance product should be included at a later date.

Products won't be able to include bonus or introductory interest rates and all customers – new and old – will get the same rates.

The British Bankers' Association, Building Societies Association and the Association of British Insurers have all agreed to bring about the changes.

Long overdue

Christine Farnish, chairperson for Consumer Focus, said: "Simple products are long overdue. They would, at long last, provide consumers with the option of no-frills, no-catch products that people can understand and buy with confidence.

"Because they would have some standard features designed to meet consumers' needs, it would be possible for consumers to shop around and compare similar products, thus aiding effective competition."

 

"Consumer Focus hopes and expects the financial services industry, encouraged by the Regulator, to get these products up and running."

The review's author, Carol Sergeant, a former chief risk officer at Lloyds Banking Group, said: "We have known for a long time that being able to manage your finances effectively leads to increased well-being and a better quality of life, at every given level of income.

"I hope that the simple financial products initiative will make it easier for people to understand and compare the key financial products they need and make good choices with confidence."

 

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