Product design to be regulated

Financial Services Consumer Pane (FSCP)l chairman, Adam Phillips, wants to regulate product design so they can be described simply and easily compared.

In a speech to the Building Societies Association, Phillips said: "We need to find a way to regulate product design which will provide better products that can be described fairly simply and which do ‘what it says on the tin'.

"Consumer confidence would be hugely improved if there was a range of financial products from different providers that were presented in a way which is simple and honest, with prices that can be easily compared with other products of the same type. The industry should consider developing design criteria for particular types of product which would guide ‘good' product innovation and restrict innovation that conceals cost or risk in the pursuit of providing an apparently better price or higher rate of return. Doing this would be a major step towards improving consumer confidence in financial services."

Product design regulation.

Phillips also said: “We need to find a way to regulate product design that will provide better products that can be described fairly simply and which do “what it says on the tin.

“That is; products that are presented in a way that is simple and honest with prices that can be easily compared with other products of the same type; ‘good’ product innovation, rather than innovation that conceals cost or risk in the pursuit of providing an apparently better price or higher rate of return. and third the widespread availability of competitively priced products that ‘do what it says on the tin’.

“We also create a way to produce products that are not generic, or price capped, some of which could be safely sold through a simplified process.”

Market changes

Phillips wanted further market changes that would help consumers. He said: “They need a retail distribution structure that provides real choice for the customer, a structure that operates through different channels and one where competition works effectively to hold down costs while, at the same time, meeting customer needs.” Competition between supermarkets was a good example, he said.

“People need access to independent advice, free from product, provider and sales bias and they need financial intermediaries who act as agents of the consumer.