The Government's new range of low-cost savings products will do little to plug the country's £27 billion annual savings gap, a report claimed today.

Market analyst Datamonitor said the range of simplified stakeholder products would fail to appeal to their target market of people on low incomes and were unlikely to inspire consumers to reverse their spend, spend, spend mentality.

It added that the products had done little to excite providers, with most saying they would have little or no impact on their business.

Research carried out for the group found that 60% of independent financial advisers (IFAs) did not think the new products would have much impact on their business, while half do not plan to sell them.

Half of banks and building societies and a third of life insurers questioned by the group said they did not think the products would have any impact on their business, while 15% of life insurers even thought they would have a negative impact.

Despite the Government raising the price cap on the products from 1% to 1.5% following industry pressure, a third of IFAs said they would still need premiums on the products of £200 a month to make it worthwhile for them to sell them, while banks and insurers said they would need premiums of between £50 and £100 a month.

Datamonitor said this placed the products out of reach of the lower income groups which the Government had hoped to target with stakeholders.

Wednesday August 18, 2004