At last, today, 14 December 2015, a ministerial order comes into force that will oblige all insurance companies to report the profitability of their savings products, in terms T.A.E. (Annual Percentage Rate of Charge), ie, net of expenses and other fees. In other words, what the customer takes away clean.
Why it was necessary to provide APR information
This will make it much easier to compare life-savings products offered by insurers and banks. This will make it much easier to compare life-savings products offered by insurers and banks, We will make it easier for savers to make their investment decisions. This was announced by Flavia Rodríguez-Ponga, Director General of Insurance and Pension Funds.
In this way, we forget about the “technical interests” which, in many cases, meant distorting the real profitability figures, which made it very complicated for the client, but also for the intermediary, to explain the real yields of the insurance.
It is, of course, a measure which mainly concerns the advertising of guaranteed savings products, in which the risks are borne by the insurance companies, not the saver. The customer is guaranteed his principal and the announced return.
We are talking about Assured Pension Plans, PIAS that are not Unit-Linked (i.e. that have neither fixed nor variable income) and SIALPs and other savings products that are not linked to investment funds. If you are not clear about the difference between these products, we will publish a post explaining them in a few weeks.
Comparison with bank savings and investment products
It is clear that this is a step forward, This will help to encourage customers to take out more savings products. This will also allow direct competition with bank deposits. And, although many already knew about these products, as well as their better profitability, it will now be easier to check them out. The question is whether the banking sector will also become more transparent in all its products, and when the regulator will stop being so lenient with them.
For their part, insurance companies are relaxed about the change, as they know that their products are more competitive than many of those offered in bank branches.
For more information about savings and investment products, do not hesitate to contact us. First we will listen to you, then we will advise you.
The increase in current account balances
While all this is going on, customers are leaving their cash in current accounts.
Why is this happening?
- Due to the decline in the yields offered by bank deposits.
- Because the only alternative presented by the banks themselves are investment funds, in which the risk of loss is borne entirely by the customer.
- Due to people's lack of knowledge of existing alternatives, which do offer more interesting returns, through entities with greater solvency than the banks themselves (this is where the savings products offered by insurance companies come in).
Don't hesitate and find out about all the options offered by insurance companies. PIB Group Iberia e Inversión will help you find the product you need.
