Investments could be made simpler

SWEEPING changes to simplify the way in which customers buy basic investments are to be proposed in a Government-commissioned-report into savings. Ron Sandler, former chief executive of the Lloyd's of London insurance market, is due to deliver the report next month.

He is expected to call for far greater transparency in 'with-profits' investments, typically endowment policies and pensions, so that customers can see more clearly what their holdings are worth and what charges are being levied.

Sandler is also likely to recommend a huge cut in red tape when an adviser sells a basic product such as a CAT-standard Isa or a stakeholder pension. Under present rules, advisers have to fill in a questionnaire on their client's financial position and aims. This may run to more than a dozen pages.

Sandler is thought to have concluded that it is unnecessary for simple investments such as stakeholder pensions and investments meeting the CAT standard. To earn the CAT mark, an investment must be subject to low charges, it must be accessible so that customers can get at their money quickly and there must be no onerous terms and conditions.

Under the system to be proposed by Sandler, potential clients will need to be warned only that any investment based on shares may fall as well as rise. And in the case of pensions, they will need to be told that they cannot withdraw their money early without a penalty.