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Moore&#39s code

To its detractors, it is the latest example of a Government stomping

willy-nilly over the decaying corpse of financial advice. A hopeless

example of ministerial arrogance and naivety. Catmarks for financial

advice. Whatever will they think of next?

Let us look at Catmarks in the round.It has not always looked that way but

this Government has always had a rather clear agenda when it comes to

financial services and no, for the paranoid tendency among the IFA

community, that is not the elimination of independent financial advisers.

The agenda has actually been to bring down the cost of financial services

for the consumer, to stop them being ripped off and, by the by, restore

confidence in the industry. No really, it&#39s true.

Ministers have no interest in destroying this industry because they need

it far too much. It is the measures they have taken towards achieving these

aims which are open to question.

In the field of pensions, they have treated the industry like a utility

and imposed price controls. The result is the stakeholder pension which has

a compulsory Catmark. Only time will tell whether this will work.

Elsewhere, the tactic has been to introduce voluntary Catmarks.

This has not been the greatest of successes. There are very few Isa

providers that have bothered with them, even where they have products which

comply.

There have been all sorts of arguments against them but the most powerful

one is they would be misinterpreted as some sort of Government guarantee as

to the performance of an equity-linked product – that Catmarks would become

confused with kitemarks. These fears have been groundless.

There have been any number of surveys which have shown the public

awareness of Catmarks is, well, pretty minimal. Far from mistaking them for

a guarantee, most punters have no idea what they are.

Nonetheless, just in case there was any doubt, I took a wander around

Norwich Union&#39s website before writing this. NU is unusual in actively

promoting Catmarks. It even has a number of active managed funds which

boast them. Whether these make a profit or not, I have no idea, but the

company&#39s results have been looking decent enough.

Having looked at the site,I do not believe anyone could come away with the

impression that a Catmark was some sort of guarantee of performance. The

explanation of what they are was remarkably clear and cogent, something

this industry has not always excelled at.

The explanation would, in fact, tell me that a Catmark, while interesting,

was not really something I should be bothering about too much.

In terms of the Government&#39s aims, it has done very little. It is not

compulsory so most fund managers have ignored it. But advice, well that is

something different, isn&#39t it? Not necessarily.

I fail to see the harm in setting out some basic criteria for a visit to a

financial adviser.

If set up right, it could even be a godsend. As Garry Heath intimated in a

recent issue of Money Marketing, the term “independent financial adviser”

is not one which conjures great confidence in the mind of the public at the

moment.A Catmark scheme could change that.

A sensible scheme might posit Mr and Mrs Smith walking into the IFA for

the first time for a financial healthcheck. They are told that the IFA has

a Government Cat standard. This means they can expect to get X and Y for no

more than cost Z. If they want more, it can be discussed afterwards.

Such a scheme may even be able to be used to introduce the idea of

charging a small fee for the healthcheck and help to get the public used to

paying fees for financial advice, which would be no bad thing.

Of course, that is a very idealised view. As I have said, the Government&#39s

Catmark scheme for Isas has not been a roaring success.

It is too prescriptive, the charges it enables a company to levy are just

that little bit too low to allow for anything other than plain vanilla

products to come under its aegis. This a major reason for fund managers

ignoring it and a major reason that it has had little or no effect on the

majority of Isa pricing.

There are grave dangers that the Government&#39s scheme for Catmarked

financial advice will make the same mistakes. But in that case what is all

the worry about? The IFA community will be able to do exactly what the fund

management industry has done and ignore it.

James Moore is a finance reporter on The Times

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