§ 3.25 p.m.
§ Lord Chesham asked Her Majesty's Government:
§ What steps they intend to take to ensure that all savings and investment accounts offered by National Savings meet the benchmark standards for the individual savings account.
§ Lord McIntosh of HaringeyMy Lords, the CAT benchmark standard is a voluntary set of requirements designed specifically for the new individual savings account. Its purpose is to support savings through ISAs by encouraging minimum standards for charges, access and terms. There is no intention that the CAT standards 1563 should apply to other forms of savings, whether those savings are provided by National Savings or anyone else. There is a huge range of savings products catering for many different needs. Many national savings products are bond or certificate products which are mainly lump sum investments at fixed rates. It is wholly inappropriate to compare the CAT standards designed for cash ISAs against such products. I am pleased to be able to announce that National Savings plans to introduce a new savings account specifically for inclusion within an ISA which it fully expects will meet the CAT standards.
§ Lord CheshamMy Lords, in the light of the report that all existing 18 products of National Savings do not meet the Government's criteria that savings plans must be approved by the Treasury and the disquiet in the industry about these criteria, ironically, cannot the Government review the criteria rather than the individual savings plans?
§ Lord McIntosh of HaringeyMy Lords, there are not 18 but 11 National Savings products. All but three of those are bond or certificate products that are strictly non-comparable with cash ISAs. Of the three that are account products offered by National Savings, one is designed only for charities. The second is the individual account which is designed for quick deposit and withdrawal and quite different from ISAs. The third is the investment account which is designed for a quite different purpose since half of the investors are children who are not able to benefit from ISAs. The comparisons are entirely inappropriate.
§ Lord NewbyMy Lords, given the uncertainties that have surrounded the development of the CAT standard to date, can the Minister give any indication as to when the regulatory authorities may be in a position to decide whether individual ISAs meet the CAT standard?
§ Lord McIntosh of HaringeyMy Lords, it will be in good time before introduction.
§ Lord Mackay of ArdbrecknishMy Lords, despite the Minister's robust defence of National Savings, do not the Government find it a little embarrassing that so many of the accounts fail to meet the benchmark standards? In particular, is it not embarrassing that the National Savings investment account fails on all three counts? Should not the Government do either as my noble friend suggests and look again at the benchmark standards or ask National Savings to come into line with those standards as an example to other providers?
§ Lord McIntosh of HaringeyMy Lords, I am glad that halfway through his Question the noble Lord began to recognise that the comparison between ISAs and the bond and certificate products of National Savings was entirely inappropriate and therefore concentrated on the investment account. The investment account is not required to meet CAT standards; nor was it ever intended to do so. That product is designed for a different purpose. At least half of the holders of 1564 investment accounts are in any event ineligible for ISAs. As for the CAT standards themselves, I do not believe that their status should be exaggerated. These are benchmark standards. There will be perfectly acceptable ISA products, or products incorporating ISAs, that are appropriate to individual savers all of whom have different needs and will not necessarily conform to the CAT standards.
§ Lord RazzallMy Lords, does the noble Lord agree after a moment's reflection that his response to my noble friend Lord Newby was somewhat inadequate? Does the Minister agree that the likely date is a matter of public interest? Even if he cannot give a firm commitment, is he able to indicate whether it will be this year, next year or never?
§ Lord McIntosh of HaringeyMy Lords, ISAs are to be introduced by April 1999. I have given the commitment that matters: that the regulatory standards will be available in good time. Anything beyond that is pure speculation and technical, and does not need to concern the noble Lord in the way that he seems to be concerned.