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Friday, 1 February 2013

Dead Simple Financial Products

The Treasury has just summarised the responses to the Sergeant proposals for simple financial products. 

You know, the idea that 'simple financial services' means an "Easy Access Savings Account" a "30 day Notice Account" and a life cover product...  

This from a group led by someone who recently made a rather startling admission before the Parliamentary Banking Standards Commission over her role in Lloyds Banking Group's PPI fiasco.

Apparently, the team is now to conduct 'consumer research'. In other words, they're following the same well-worn path to futility that the banks have followed in failing to offer simple financial products to date. Dream up something that should be profitable for the provider, then figure out how to persuade consumers to 'demand' it.

This is not how to simplify financial services, as I've explained elsewhere. The Treasury is flogging a dead horse.

If the Treasury really wants simple financial services (which seems doubtful on the evidence to date), then it should fix the regulatory framework and perverse incentives that are constraining innovation and competition.

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