One of the authors of the controversial London Economics polarisation report has slammed Catmarked products, claiming they are seriously flawed.
Economic consultancy Charles River Associates principal Tim Wilsdon, formerly of the now defunct consultancy London Economics, makes his comments in a column in this week's Money Marketing.
He says there are three reasons why the concept is flawed:
l They restrict competition by raising barriers to entry by new providers.
l The 1 per cent limit makes it increasingly difficult for investors to seek out independent advice.
l Catmarks make consumers lazy and they assume that the cheapest product is the most suitable for them.
Wilsdon says no one has challenged the Treasury on the fundamental question of whether price caps are really a good thing.
He believes that until this is settled, there is no point in extending Catmarks into other areas such as long-term care or credit cards.
Wilsdon says: “Before new Catmarks are introduced, it is important to decide exactly what problems they are supposed to address and how important each of them are.
“Only then does it become possible to think constructively about what Catmark terms might be most appropriate.”
Outside Edge, p38