Simple Financial Products: Paws for thought?

10th August 2012

How many bankers does it take to design a simple savings account?  About 80, we reckon.

Sorry! Bad joke, serious point. 

There are 77 people listed as working on the Sergeant Review of Simple Financial Products: Interim report, issued last week.

The HM Treasury review was undertaken by the great and the good of financial services on the back of the obvious: not enough people have rainy day, easy access savings; people get confused when they try to compare and that puts them off.

Did we really need that many bigwigs to meet, discuss and write a 62 page report for that?

(Admittedly, they covered notice accounts and simple life cover too.)

We like where they are going with this, however.  Simple accounts should stick to standards of simplicity.  If they do, they get a badge showing they are simple - so everyone can compare like with like.

Yet simple ain’t so simple.  Who’s going to give out these badges?  Who’s going to make sure the banks and building societies stick to the rules?  Another 80 people?

Who pays for it all?  We already do the tricky comparison stuff on all existing savings accounts - for free. 

Charitable as we are, we wouldn’t give out SavingsChampion badges on principle:

  • First, a simplicity badge is not an indication that the savings rate is any good; But savers might think it is - and banks won’t discourage that notion.
  • Second, a badge looks like an endorsement;
  • Third, we haven’t got any badges;

M&S, Kent Reliance and Virgin Money all have simple accounts (no badge!) that we like.  We bet none of them needed around 80 people to design them.  Other providers are working on their own simple accounts too.  

Yet they could offer both simple and super-double-bonus-with-sprinkles-on top accounts if they wanted.  Surely all the banks and building societies could agree, amongst themselves what a simple account is?

Carol Sergeant CBE and co need to think about their badge system.  They should remember the CAT standards for Individual Savings Accounts.

Introduced in 1999, they set out standards for Charges, Access and Terms (CAT) – exciting stuff, but not too exciting as the terms didn’t determine competitive rates.  They flopped and disappeared in 2005.  The simplicity badge could too.

Ms. Sergeant’s Simple Financial Products Steering Group and four (four!) working groups might want to paws for thought - geddit?

CAT, paws... oh never mind.

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