Today the Treasury published the Sandler Review of the market for medium and long-term retail investment in the UK. It focuses on issues of industry economics, competition and efficiency, and recommends ways of making retail savings 'products' more accessible, particularly to those on lower and middle incomes.

There is a clear echo here of the Government's original target market for stakeholder pensions. It is surely questionable whether stakeholder can yet be counted a success in this market. Nevertheless, Sandler recommends extending the stakeholder brand to a suite including as well as a pension a mutual fund or unit-linked life fund, a with-profits product (a new model is described) and perhaps also a protection product. Simpler products with much shorter Key Features Documents and a fundamental switch to tight product regulation will, it is suggested, dramatically slash the cost of the whole sales process.

The Review rejects the idea that new tax incentives could significantly stimulate saving. This conclusion is perhaps surprising in view of the history of the early years of personal pensions (remember the '2% bribe'?) and more recently the success of the ISA regime. Fortunately Sandler does not go so far as to suggest ISAs need a major make-over, although the maxi-mini ISA distinction is criticised. He does think there is life in the much-derided IPA concept, however, and that more should be done to change the tax rules to assist non-life companies to provide pensions. In addition, the review recommends abolition of the qualifying life policy and the 5% withdrawal rule, on the grounds that they distort the market.

The fact is that saving is a voluntary exercise in deferred gratification, accompanied by considerable risk that there may not be any jam tomorrow, or much less than fondly anticipated. The Review recognises that the natural reluctance to save, on the part of those consumers who can, is compounded by their lack of understanding of the 'products'. Ironically, the fact that many would not recognise savings vehicles as "products" in the first place goes unrecognised, although the Review does criticise advisers' product-focused training and the strong focus of the advice process on product categories rather than on the underlying assets. Although consumer education in "financial literacy" is part of the FSA’s brief, Sandler notes that resources committed to these activities are inadequate [just 3% of the FSA’s overall budget, in fact].