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Government sets out plan for simple financial products
The Sergeant Review has outlined plans for three simple financial products that everybody should have.
by Michelle McGagh on Aug 02, 2012 at 14:26
The financial services industry launches a plethora of new products every year, each promising better rates and terms than the last. This abundance of options can be overwhelming, but the government may have found a solution with proposals for a new range of 'kite-marked' accounts.
An independent steering group led by former Lloyds banking executive Carol Sergeant was set up by the government last year to develop a range of simple financial products.
It has now published its interim report, the Sergeant Review, detailing a suite of products it believes will help consumers better engage with financial services.
Restoring trust in financial services
Mark Hoban, financial secretary to the Treasury, said: ‘The government is committed to putting the consumer back at the heart of the financial system, but we understand that restoring public trust in financial products is not an easy take at the moment.
‘I am pleased to say that "simple" financial products offer a unique opportunity to demonstrate that products can both be easy to understand and meet customers’ most important financial needs.’
The Sergeant Review set out recommendations for a suite of products and a rating system that will be consulted on in time for a final review to be published in the summer of 2013.
What types of products are there?
The review has looked at delivering three simple products that most people should have and ‘address some of the financial issues people will face during their working life, before they take their pension’.
Two of these are savings accounts. The report sets out details for the creation of both an easy-access savings account and a 30-day notice account.
The easy-access account is described by the report as a product for ‘everyday savings that can be accessed immediately if needed for an emergency or rainy day’.
What the accounts will offer
The minimum deposit would be £1, but a maximum balance has not been recommended. There should be no restriction on how money can be deposited or withdrawn or how frequently it must be paid in.
Neither will there be any day-to-day charges on the accounts, although charges would be allowed for exceptional items such as duplicate statements or other administration requests.
The 30-day-notice account would follow much the same rules as the easy-access account, with the one difference being that if the saver wants to withdraw money from the account they would have to give 30 days’ notice. The review described this account as ‘for savings that can be accessed with 30 days’ notice for expected expenditure’.
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