|CAT STANDARDS - 20 QUESTIONS|
What is an ISA?
An Individual Savings Account - the new method of savings with tax breaks which starts on 6 April 1999.
What are the CAT standards?
How will an ISA qualify for the CAT standard?
Easy: just measure the ISA against the figures the Treasury has set.
How will I know if my savings account qualifies for the CAT standard?
The advertising will say if it does.
If it's so easy to qualify, can I trust the advertising?
Yes. If firms make false claims, the Financial Services Authority (the City watchdog) can stop them.
Is there just one CAT standard?
No, there will be three. One for each kind of ISA: cash, insurance, and stocks and shares.
What does the CAT standard offer?
A straightforward no nonsense way of saving. It may not be the best available but it will give you a fair deal.
So what's so good about the CAT standard?
Any product that meets the CAT standard will be straightforward, clear and fair and offer decent value. This will help ordinary savers decide whether CAT standard savings are for them.
So is the CAT standard a guarantee?
No. It is important that savers understand that, particularly where the stocks and shares ISA is concerned, the Stock Market can go up and down. But the CAT standard should mean peace of mind that you won't get ripped off.
Will CAT standard products be suitable for everyone?
Not necessarily. Savers should judge for themselves, or get advice, on whether any particular method of savings fits their circumstances. The great thing about CAT standard products is that it should be easy for people to work that out for themselves.
Will all ISAs have to meet the CAT standards?
No. CAT standards are voluntary.
Can savers trust the CAT standards?
One of the conditions means that the saving product must stay at the CAT standard or better it. That means people won't need to keep checking whether they are still getting a fair deal for their money.
Will there be lots of CAT standard ISAs on offer?
That is up to provider companies. The CAT standards are challenging but sustainable. We would like to see competition among firms trying to beat the CAT standards.
Why is the Treasury doing this?
Because we want to see savings products on the market that are really straightforward, clear and fair. We are trying to help savers fathom out whether what is on offer is worth having or not. We want to help get rid of the small print, get rid of scams and get rid of hidden charges.
So will other ISAs be no good?
Not at all. We hope that lots of ISAs will be attractive. But ISAs without the CAT standard may not appeal to the ordinary saver with only small amounts of money to put away.
What about the firms that don't want to offer CAT standard ISAs?
That is their choice. But customers will have a choice between CAT standard ISAs and non-CAT ISAs and it will encourage savers to find out why non-CAT ISAs don't have one.
Can ISAs be missold?
Any financial product can be missold if advisers give wrong advice. But it is hard to missell a CAT standard ISA which will be so straightforward, clear and fair that anyone can judge for themselves.
Will people understand the CAT standards?
Yes, we have made them straightforward to help the ordinary saver.
What about PEPs and TESSAs?
You can take out a PEP or TESSA until 5 April 1999. And you can hang on to your existing PEPs and TESSAs outside ISAs.
You can also keep paying into any TESSA you start before 5 April 1999, for the full five years that the TESSA runs. When your TESSA matures, you can put the capital into a cash ISA, on top of any other money you are putting into ISAs that year.
Will there be CAT standards for stakeholders pensions or mortgages?
This announcement is just about ISAs. Lets see how the market responds
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