The Government's 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-
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
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's 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
a Catmark looks like and what