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Nuki&#39s Eye

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

promotion.

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
confidence.

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

margin.

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

market.

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

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

money.

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.

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