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Treasury Cat stance another example of reckless action

The Treasury&#39s decision to outlaw fees for recommending a Cat-standard

mortgage reveals its complete ignorance of financial services. It is the

flawed logic of stakeholder taken to its absurd conclusion.

The Treasury is under the impression, not just that IFAs should do charity

work in their “spare time” but that they should operate their businesses as

charities too.

In practice, this will see IFAs examining a client&#39s circumstances but if

they recommend a Cat-standard loan, they cannot charge a fee and may have

worked for free.

On a business level this is not a disaster. The Cat-standard mortgage is

not expected to take off. Those who consult an IFA probably have special

circumstances or requirements. If clients do want Cat-standard mortgages,

IFAs can still use it to establish a relationship and sell other products

in future. But as an example of Government thinking, the decision is

appalling. It sends contradictory signals about paying for advice when the

regulator is supposedly encouraging a shift from commission to fees.

It also smacks of vindictiveness and prejudice. The principle being

established is an alarming one which, if extended further, could

irreparably damage thousands of small businesses.

This decision is unlikely to come from the top of the Treasury. Details

like this, however crucial, are probably worked out by officials. But

perhaps it is time Chancellor Gordon Brown looked at just who is

responsible for such recklessness.

Outlawing businesses from making money is hardly the action of a

Government that is pro-business. The Treasury should start living up to its

rhetoric.

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