Government says introducing new “no frills” products for UK consumers could encourage saving in 2011.
Banks and insurance companies are being urged to encourage a “basic” range of saving products for UK consumers following a government consultation paper.
The government has called for banks and insurance companies to introduce a new “basic” range of products and accounts for UK savers.
The Treasury believes introducing a new range of “no frills” products which consumers can understand could encourage more saving in 2011. They believe there are currently too many products on the market for consumers to fully comprehend.
In a recently published consultation paper the government report there are currently 2000 different savings products on offer for consumers from 150 providers. They feel a lack of information and a plethora of names can leave consumers feeling confused and unwilling to look for different accounts.
To solve the problem, the government are calling for a range of basic, standardised products to be introduced from the UK’s top banks and insurance companies.
“It is not the government’s intention that simple products should restrict consumer choice. It believes that they should sit alongside existing products similar, for example, to supermarket ranges which carry labels like ‘essential’ or ‘basic’,” the consultation paper said.
Treasury Minister Mark Hoban is encouraging the introduction of basic life assurance deals and the abolition of savings accounts with confusing bonus rates that quickly disappear.
Despite the proposals, the government have said they do not want to interfere in the current market.
In 1999 the Labour government introduced a similar programme called the CAT (fair Charges, Access and Terms) scheme. The aim of the scheme was to encourage take up of savings accounts by low income families, however it failed to make a significant impact.