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THE GOVERNMENT is this week set to unveil plans for two new financial kite marks for credit cards and basic bank accounts as part of its drive to put pressure on product providers to reduce costs and improve terms.

CAT standards, which stand for cost, access and terms, were one of the key recommendations in Don Cruickshank's critical report on the banking industry. Mr Cruickshank criticised some of the exorbitant charges financial institutions were levying on customers, leading to excess profits of pounds 5bn.

It is understood that Melanie Johnson, economic secretary to the Treasury, will use a Treasury select committee meeting tomorrow to reveal details of CATs for credit cards and basic bank accounts.

The Government has already launched CATs for mortgages, individual savings accounts and long-term care insurance products.

The credit card industry, which is dominated by a handful of companies such as Visa and Mastercard, was criticised by Mr Cruickshank for levying interest and charges at unacceptably high levels. A number of high street stores charge more than 30 per cent in interest. It is expected that the new CAT mark will lower the maximum interest that can be charged from its current level of more than 40 per cent.

Ms Johnson is also understood to be planning to launch a CAT mark for basic bank accounts, which the Government required banks to launch by last October. The accounts offer basic services with no overdraft facilities and are aimed at people who traditionally have been excluded from taking up financial services.

The Government is also threatening to introduce regulations which govern areas such as mortgages rather than continuing to rely on self- regulation by the banks. The possible action springs from initial findings of a public consultation led by DeAnne Julius, chairman of the Banking Services Consumer Codes Review group.

# posted by Medical Information : 4:18 AM