As the Government launches a consultation on simple financial products, Which?s Peter Vicary-Smith says, “For too long the financial services industry has traded on complexity, rather than offering simple, transparent products that consumers need. The government must give the new Consumer Protection and Markets Agency the power to either set minimum standards or to ensure that it is easier for customers to compare products.”
Which? believes that the Consumer Protection and Markets Agency (CPMA) should embrace the role that product regulation can play in addressing conflicts of interest, disciplining markets and aligning the interests of producers with consumers. Product regulation could be used by the regulator to address three key issues:
- Ensure minimum standards for key products
- Minimise the toxic aspects of products and in some cases prohibiting a particular type of product or specific product (for example single premium payment protection insurance) as product regulation can play a valuable role in limiting the harm that certain products can cause
- Ensure the availability of simple, straightforwardly priced ‘vanilla’ products.
Experience has shown that the financial services industry alone will not develop simple, good value for money products that meet consumer needs. We believe the regulator should pursue the idea that providers and intermediaries should offer these alongside their additional product offerings.