Building Societies Association
The Saving Gateway is a saving scheme aimed at those on low incomes that the Government intends to launch nationally in 2010. Under the scheme, the Government offers to match a proportion of any deposits made by the saver.
In its submission to HM Treasury on the Saving Gateway, the BSA urges the Government to keep the scheme as simple as possible to benefit both savers and providers, and to expand the scheme to a wider target group. The BSA also suggests that participation in the scheme will be encouraged via a higher match rate.
Simplicity
The BSA supports the principles of the planned Saving Gateway scheme, and believes the general design of the scheme is well thought out. In particular, we support the idea that the scheme be kept as simple as possible to enable the target group to understand the scheme. The aim of the scheme is to get people who don’t save to do so. The group being targeted is therefore likely to find mainstream financial service providers unfamiliar and have low levels of financial understanding, so simplicity is key.
Keeping the scheme simple will also make it viable for those providers that choose to do so to offer the product.
Size of market
The BSA is concerned that the size of the market as limited by the proposed eligibility criteria will mean that the commercial case for providing the Saving Gateway is not immediately compelling. Demand for the product needs to be of sufficient scale for providers to commit resources to designing, implementing and administering the product, systems, training and associated marketing expenditure.
Match rate and commitment
Although the Treasury has concluded from the pilot schemes that a pound for pound match rate was overly generous, the BSA believes that the simplicity of this offer would help encourage take-up among the target group, as well as providing a greater incentive for people to save. A long term commitment to the Saving Gateway scheme from all political parties would increase the viability of the scheme.
The full BSA response can be viewed here
