The Financial Services industry has announced its first “simple product” in accordance with the recommendations of the Sergeant Review for Simple Products (March 2013). It is supported by an independent certification process run by BSI (British Standards Institution).
The Sergeant Review concluded that lack of transparency, complexities in product design and the inability to make straightforward comparisons in a complicated marketplace undermined consumer confidence and trust, with the result that too many people are saving too little and do not have enough protection. The Sergeant Review recommended a suite of simple and transparent savings and protection products that “do what they say on the tin”
.A set of nine principles guide the development and sale of these products including their features, language and purchasing process. Providers will have their products rigorously and independently assessed against the nine principles. Each product will then be subject to on-going audits against the same principles, in addition to post purchase surveys. If compliance with these principles is not maintained, the certification will be withdrawn. The BSI certification process is open to any provider to use, subject to meeting the required criteria.
The first product to be certified by BSI to the Sergeant Review principles will be a Fixed Term Life Insurance product from Barclays, underwritten by Aviva.
Carol Sergeant, Chair, Simple Products Steering Group, said:“Navigating the financial marketplace and making good choices with confidence remains a challenge. Just a year on from the conclusions of our review I’m delighted to see the first simple financial product independently certified and our recommendations become a reality. And there are several more Simple Financial Products in the pipeline. These products will be easy to understand, easy to buy and easy to manage. The BSI certification process will ensure that the products do what they say on the tin and the BSI Kitemark will be available to any financial services company that meets the standards. All mainstream providers of financial services should offer their customers the opportunity to buy independently certified simple financial products, and I look forward to more firms introducing these products.”
Howard Kerr, Chief Executive of BSI, said:“Last year’s Sergeant Review highlighted the need for transparent, easy to understand savings and protection products that the public can trust to meet their essential needs. The new BSI certification process - BSI Kitemark - gives consumers the confidence to make an informed and straightforward purchasing decision. The BSI name and BSI Kitemark is recognized as a symbol of trust and we have a growing track record in promoting excellence across the services and financial sectors.”
Catherine McGrath, Managing Director, Barclays Personal Banking, said:“We know that customers want their bank to be upfront, clear and transparent. We are pleased to be able to offer the first certified product and see this as an important step forward for the industry. We are determined to drive simplicity across our product range.”
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Notes to Editors
Simple Products initiative
In November 2011 the former Financial Secretary to the Treasury, Mark Hoban, asked Carol Sergeant to Chair an independent Steering Group to develop a suite of simple, transparent and easy to understand financial products. More than 50 organisations (including consumer groups, regulators and industry representatives) worked together to produce the final Sergeant Review of Simple Financial Products in March 2013.
Principles in Simple Financial Products Review
All Simple Financial Products must comply with these principles which cover product features, language, pricing transparency, purchasing process, and regular information and product updates.
1. Essential product features that are simply explained, useful for the consumer and meet the needs of the target market.
2. Clear, straightforward and standardised language and presentation so that all firms are using the same language and presentation for product information to enable consumers to understand and compare products.
3. Standardised product names that clearly identify the nature of the product.
4. Conditions, options and exclusions are limited to what is appropriate, reasonable and necessary for the product, and are simply explained.
5. A straightforward and clear purchasing process for the consumer.
6. A clear pricing and return structure which is easily understood by the consumer and allows products to be compared with one another. This would include standard methods to calculate prices, interest, charges and appropriate notice for fair and reasonable changes in price, term or conditions.
7. Ancillary fees and charges for exceptional items are transparent, reasonable and predictable.
8. Clear methods of informing the consumer about the current prices and returns and any changes, as well as appropriately regular updates on the status and benefits of their product.
9. If a product loses its accreditation/certification the consumer should be told and there should be no penalty or charge for the consumer to exit the product.
The Review set standards for a first set of Simple Financial Products:
- Easy Access savings account;
- 30 day notice savings account;
- Regular Savings Account; and
- Fixed Term Life Insurance.BSI certification
The Review also recommended that “the British Standards Institution should take on responsibility for the Simple Financial Product principles, for developing specific product standards and for the accreditation process”. Financial products that go through it come with the reassurance that they have been independently audited against the nine principles of the Review. The BSI certification scheme looks at:
- The product against the principles of the Sergeant Review
- Whether the product provider has a documented procedure supported by experienced staff
- If customers have seen the product as simple by using a post-purchase survey
Once a product is certified, the BSI Kitemark™ symbol can be used for publicity purposes. The BSI Kitemark™ is awarded to a specific product based on successful completion of a robust audit process. It is then retained as a result of a continuing auditing plan. The BSI Kitemark™ can be withdrawn if the required high standards are not continuously met.
The BSI Kitemark™ provides comfort and confidence to users of products or services across a whole range of sectors. Recognition of the BSI Kitemark™ is high. Two thirds of all UK consumers associate it with quality, assurance, reliability and trust. 93% of adults believe BSI Kitemark™ products are safer and 75% say the BSI Kitemark™ will help make choosing between products easier.
BSI (British Standards Institution) is the business standards company that equips businesses with the necessary solutions to turn standards of best practice into habits of excellence. Formed in 1901, BSI was the world’s first National Standards Body and a founding member of the International Organization for Standardization (ISO). Over a century later it continues to facilitate business improvement across the globe by helping its clients drive performance, manage risk and grow sustainably through the adoption of international management systems standards, many of which BSI originated. Renowned for its marks of excellence including the consumer recognized BSI Kitemark™, BSI’s influence spans multiple sectors including aerospace, construction, energy, engineering, finance, healthcare, IT and retail. With over 72,000 clients in 150 countries, BSI is an organization whose standards inspire excellence across the globe.
Details of the Barclays Fixed Term Life Insurance product
Barclays Fixed Term Life Insurance product, through the removal of complex features such as decreasing term and cover for joint applicants, not only meets the review principles but the recommendations in the product specification.
Sergeant Review Fixed Term product specification:
- Pay out a pre-agreed lump sum in the event of death
- Premiums are set at outset and are guaranteed for the life of the policy
- Cover available for a specified term in years
- Policy will only cover one person
- Only general exclusion is for suicide within the first twelve months of the policy
- Terms and conditions for this product would be uniform across providers
Product will be able to be safely sold on a non-advised basis.