View more on these topics

Nuki&#39s Eye

The Government&#39s Catmark scheme is in urgent need of consolidation and


Introduced first for equity savings plans and soon for mortgages and

pensions, the scheme was designed to inj-
ect greater competition into

the booming personal fin-
ance market.

By giving a Government stamp of approval to products with reasonable

costs, access and contract terms, the Chancellor hoped to spark a

dem^_and-led revolution in the retail financial services marketplace.

Consumers would get better value for money, product providers would become

more efficient and, over the very long term, the number of people turning

to the state for financial assistance would dwindle.

The Cat scheme is an excellent concept. The UK market for savings plans,

mortgages and pensions is far too complex for the vast majority of ordinary

investors to negotiate with

Instead of making informed purchasing decisions, consumers find themselves

blin^_ded by a tyranny of choice. Most freeze and do nothing and so store

problems up for themselves (and the state).

The rest jump – on a hunch and a cold call – into products which boast

little more than good marketing support and
high sales commission.

The Chancellor decided that this farce should now be ended, hence the

Catmark scheme. With value for money products clearly flagged, inf^_ormed

purchasing and genuine competition would bec^_ome
the norm.

Alas, as with many things New Labour, things have not worked out as

planned. There has been far too little minis^_terial attention given to the

detail and implementation of the Catmark scheme.

Most important of all, virtually nobody knows about it, allowing the

industry&#39s sharks to ignore it and continue as they have always done. For

example, one Halifax mortgage adviser told an undercover reporter last week

that “Cat-marks have nothing to do with mortgages”. Was he fibbing or did

he really not notice that the rules for the new mortgage Catmark had been

announced by the Treasury only days before?

Another big problem with the scheme is that its requirements are not

rigorous enough. As in many policy areas that New Labour has entered with

good intentions, ministers have ended up frantically watering down their

plans in the face of spurious opposition from civil servants and industry.

Just as the Home Office is about to give us a Freedom of Information Act

which provides no statutory right to view most Government documents, the

Treasury has been launching Catmark schemes which do not necessarily

guarantee value for money.

It is now possible, for inst^_ance, to buy a Catmarked mortgage which has

a three-year early redemption penalty and a 200-basis-point interest rate


All is not lost, however. Cat- marks can and should be made to work. The

way forward is for the Treasury to tune up the schemes it has already

laun^_ched and then to relaunch
the entire project with a promotional

bang that pen-
etrates every house and office
in the country.

Ministers should start by screwing down the qualification criteria for

each scheme so tight so that only five or six of the most competitive

product providers in each category are able to put a product on to the


Anyone buying a Cat^_^_-
mar^_ked Isa, mortgage or pension would

therefore be guaranteed both a choice and the best possible value for


Once the improved schemes are on the launch pad, an effective ad strategy

should be planned. TV, radio, newspapers and billboards should all be

exploited in an effort to make sure that every consumer in Britain

understands what
a Catmark looks like and what
it means.


IFA sales buoyant but Pru total dips

Prudential business fell during the first quarter of this year despite agreater con^_-tri^_bution from IFAs.New life and pension sales were down to 1.47bn from 1.55bn in the sameper-iod last year.Total insurance and investment sales through the life office&#39s retailsection were down by 15 per cent on the first quarter of 1999 at 494m.But the Pru […]

Schroder prescribes medicine for new fund

Schroder is kicking off the second Isa season with the launch of a globalhealthcare fund and a European technology fund.The medical discovery fund, supported by cancer research, aims tocapitalise on companies creating new advances in the field of medicine andtakeover activity in pharmaceutical stocks.Half of any retained initial charge together with a percentage of theannual […]

Stakeholder-friendly choice

Scottish Amicable has introduced the Premier group personal pension, a“stakeholder-friendly” plan.The panel compare the plan with Clerical Medical&#39s Staff-Link companypension plan and Scottish Mutual&#39s Universal group personal pension.Looking at the market suitability of the plans, Cotter says: “The ScottishAmicable plan offers all the elements you would expect from a prov-iderwhich is trying to make a […]

Life offices refute claims of clawback blundering

Life offices deny that they are making a huge number of commissionclawback claims in error despite the findings of network DBS.As reported last week in Money Marketing, DBS discovered that half ofcommission clawback claims made to its members were not genuine. Theanomaly was discovered when it set up an online service enabling IFAs tocheck on […]

Parental leave and pensions

Fiona Hanrahan  – Senior Product Insight and Technical Support Analyst We are often asked how parental leave impacts workplace pension schemes in terms of funding in general, auto enrolment and salary exchange. This article will explain each of these. How does parental leave impact the funding of workplace pension schemes? A member of a defined […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm