The government is encouraging banks to offer customers basic financial products that come with a similar theme as the ‘no frills’ products we are all familiar with in supermarkets.
The Treasury is looking to get banks and insurance companies to develop a range of basic savings accounts and insurance policies that simplify personal finance.
The government hopes that this will encourage people to get into the habit of putting money aside on a regular basis.
However, the previous government failed to get a similar idea off the ground.
The government said in a that the sheer choice of different financial products available on the market each with a different set of terms and conditions could be confusing to consumers.
For example, according to a newly-published consultation paper, there were 2,000 different savings accounts offered through 150 providers.
Comparing such products has proven difficult for some, which means people were unlikely to switch bank accounts and instead stick to the status quo which may cost them more or not be the rightaccount to suit their needs.
The consultation paper said: “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’”.
Treasury Minister Mark Hoban said the basic range products could include savings accounts that come without the confusing bonus introductory rates that change after 12 months.
He also spoke about the introduction of basic life assurance deals as well as reliable insurance policies that would provide an income in the event of policyholders being made redundant or falling ill. Many banks are also currently offering free business accounts to small businesses.