HM Treasury News Release
159/98 1 October 1998
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MAKING SAVING EASY
Patricia Hewitt Launches CAT Standards for the
Individual Savings Accounts
Savers looking for a fair deal from the new individual savings
accounts (ISAs) will be helped by new voluntary standards
announced today by the Economic Secretary Patricia Hewitt.
The CAT standards concentrate on three features:
fair Charges;
easy Access and
decent Terms.
There will be three sets of CAT standards, one for each kind
of ISA:
one for the cash (or deposit);
one for the insurance and
one for the stocks and shares ISA.
Announcing the standards, Ms Hewitt said:
"This Government wants to help people who aren't saving
to get started and people who are saving to save more.
That's why we are introducing the new Individual Savings
Account (ISA). But we know that many ordinary savers are
concerned about getting a poor deal or what might be
hidden in the small print.
"Consumers, especially those new to saving, need help in
this jungle, and as a Government we need to find a way of
shedding some daylight. CAT standards will be clear and
straightforward so ordinary savers can easily spot deals
worth considering."
A recent poll, commissioned by the Treasury, shows that 90 per
cent of people said it was important to have easy access to
their savings, two-thirds said they were worried about the
small print and a third were concerned about high charges. In
response the Minister said:
"We are determined to get decent treatment for savers.
Our CAT standards will get rid of the small print and
hidden charges that worry people so much.
"If you're saving money or investing your savings, the
CAT standards will give you fair charges, easy access and
decent terms. The CAT standards will increase
transparency, empower consumers and help more people get
the savings habit."
The Minister took the opportunity to thank organisations for
their input to the consultation on the CATs. She said:
"I am very grateful for all the contributions we have had
on the consultation on the standards. It has been very
useful to be able to draw upon such a wide range of
expertise in framing our decisions."
"This is now the opportunity for the financial services
industry to produce a range of products which are
straightforward, clear and fair. By doing away with the
small print we will help savers understand what they are
buying."
The Minister was keen to stress that the CAT standard will not
be a kitemark. She said:
"Of course, the Government can't guarantee the return
from the Stock Market, but the CAT Standards will help
you get a fair deal."
Ms Hewitt also announced that there will be a Government
advertising campaign informing consumers about the individual
savings account. This will also include information on the CAT
standards. She said:
"We want to ensure consumers know what they are buying.
This campaign will help consumers be better informed
about the ISA products."
The CAT standards will be voluntary - there is no compulsion
for every ISA to meet the standards. Companies will be
required to state in their advertising whether their ISA
products meet the CAT standards or better them.
NOTES TO EDITORS
1. In his Budget on 17 March, the Chancellor Gordon Brown
announced details of the tax breaks which will be
available to people who use individual savings accounts
(ISAs). These accounts will be available from 6 April
1999.
2. The Government consulted on the CAT standards on 18 May
1998 (Treasury News Release 80/98) in a paper entitled
'Making Saving Easy'.
3. Details of the CAT standards are available from the
Treasury. Media copies from the Press Office on 0171 270
5185, non-media copies from Janet Robbins on 0171 270
5294. They are also on the Treasury website.
4. If you have access to the Internet, you can find this
news release and other Treasury information at
http://www.hm-treasury.gov.uk
CAT STANDARDS - THE DETAILS
CAT standard for the cash ISA
Charge - No one-off or regular charges of any kind eg no
charge for withdrawal, except charges for
replacements (duplicate statements, lost cards)
are permitted.
Access - Minimum transaction size no greater than £10.
Withdrawals within 7 working days or less.
Terms - Interest rate no lower than 2% points below
base rate.
Upward interest rates to follow base rate
changes within one calendar month. Downward
changes may be slower.
No other conditions e.g. no limits on frequency
of withdrawals.
CAT standard for the insurance ISA
Charge - Annual charge no more than 3% a year of the
value of the fund.
No other charges eg no separate charge for the
guarantee on surrender values.
Access - Minimum premium no greater than £250 lump sum a
year, or £25 a month.
Terms - Surrender values should reflect the value of
the underlying assets.
After 3 years, and thereafter, surrender values
should at least return the premium.
CAT standards for the stocks and shares ISA
Charge - Annual charge no more than 1% of net asset
value.
No other charges to be paid by the saver.
Access - Minimum saving no more than £500 lump sum a
year, or £50 a month.
Terms - Authorised unit trust, oeic or certain
investment trusts.
Fund at least 50% invested in shares and
securities (satisfying the requirements in the
tax regulations) which are listed on EU stock
exchanges.
Units and shares to be single priced at mid
market price (as in Financial Services
Authority regulations for authorised funds).
Investment risk highlighted in literature.
Common requirements for all three kinds of CAT standard ISAs:
commitment to decent straightforward treatment of
customers e.g. using plain English;
no bundling e.g. no requirement to buy another linked
product, no limitation to existing customers;
consistency: undertaking to keep to the benchmark
standards after the product is sold.
# = pounds sterling