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NU slashes Isa Catmarks

The Government&#39s Cat standards suffered a further blow this week after Norwich Union said it was slashing the number of Catmarked Isas it offers because they are too expensive.

NU is stripping Catmarks from all eight of its actively managed funds from February because it says the 1 per cent cap is uneconomic and hinders its efforts to move further into the IFA market.

The funds, which include UK equity income, UK growth, European equity and UK ethical, will switch to annual charges of between 1 and 1.5 per cent with initial charges of 4 or 5 per cent.

The only NU funds to keep the Catmark are trackers – blue-chip, UK index and international index funds. They will continue with a 0.9 per cent annual charge and no initial charge.

Head of collective investments Cuimin Macmahon says: “The current price cap makes it uneconomic for us to continue to offer actively managed funds within a 1 per cent charge. We are changing the pricing structure to better reflect the true cost of selling and managing them.”

Bates Investment head of research James Dalby says: “It was inevitable this would happen. It is impossible to deliver all financial products with advice under the 1 per cent cap.”

Scott in plea to follow Irish cap example

Norwich Union executive chairman Philip Scott has called on the Government to consider replacing the stakeholder price cap with the model being introduced in Ireland that allows a 5 per cent charge in the first year and 1 per cent thereafter.

At the ABI Saver Summit last week, Scott poured scorn on the 1 per cent cap, arguing that it is more economic to sell alcohol than stakeholder pensions. Scott said that somebody supplying £480-worth of drinks could charge £240 while a firm offering the same amount of stakeholder provision could only charge £4.80.

Scott said: “If we do not continue this debate on the 1 per cent cap with Ruth Kelly, then we will end up with a severely distorted market.”

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