Finance Matters

From Money Extra:

APACS, the UK payments association, has launched its latest report into transparency and responsibility in the credit card industry. ‘Sharing Best Practice’, details the steps the industry has undertaken to benefit the consumer, and provides an update on responsible lending initiatives such as increased data sharing. Over the past year the industry has focused its efforts on improving the information available to customers to help them make responsible borrowing decisions. Card companies have also continued to work together to agree guidelines for responsible lending. Industry initiatives over the last year include extending the idea of the Summary Box – first introduced in 2003 – and creating a version of the Summary Box for credit card cheques. To be included with all credit card cheques by the end of 2006, the Summary Box provides customers with clear information, and highlights key features like the Annual Percentage Rate (APR), interest rates, the length of the int…

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From Money Extra:

City watchdog, the FSA (Financial Services Authority), has publicly censured financial adviser GD Tancred Financial Services Limited (GDT) for not clearly explaining and documenting the risks of income withdrawal to customers with small pension pots (less than £100,000). Income withdrawal allows people to take a tax-free lump sum from their pension pot and receive an income from the rest. This is a high risk business, as people could end up with less income than expected in retirement, the impact of which is greater for those with small pension pots. Hence, income withdrawal is only suitable for a limited number of people. In addition to the censure, GDT has agreed to vary its permission so that any new income withdrawal business must be signed off by a suitably qualified independent person. GDT is also writing to all of its income withdrawal customers to make them aware of the risks of the product and offering them a review of their circumstances. GDT’s failings were discovered…

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From Money Extra:

Norwich Union reports that critical illness insurance payments in 2005 rose significantly compared to 2004. The insurers payouts on critical illness (CI) policies increased to more than £80m in 2005; up 23% on 2004. In total 1,123 claims were paid and the average payout was about £73,000. The top five causes for claims in 2005 were:Cancer 68.1%Heart attack 8.3%Multiple sclerosis 6.9%Stroke 5.6%Heart surgery 2.5%Almost nine times more men claimed for a heart attack than women, but twice as many women claimed for multiple sclerosis. In 2005, a typical critical illness policy had been in force for less than four years (average of three years and seven months) at the time of claim. Norwich Union declined 12% claims due to non-disclosure of medical facts at policy outset and a further 11% of cases were denied as policy conditions were not met. Critical illness cover can be an important contract for those concerned about protecting their finances in case of serious ill health. I…

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From Money Extra:

Following advice from the Environment Agency that higher than normal spring tides are expected on Britain’s coasts this week, insurer, Direct Line, is offering advice to homeowners in high risk areas on minimising the impact of flooding. The tides on the October 7, 8, 9 & 10 will be around four centimetres higher than normal for this time of year. Although not enough to cause a threat on their own, if these tides are combined with stormy weather or heavy rain, there could be a greater chance of flooding. If your home is flooded, you should contact your home insurer as soon as you can. While insuring your home and possessions it is essential to safeguard property, it makes sense for homeowners to take steps to limit any damage that might occur in the unlikely event of a flood: Firstly, find out if your home is in a flood risk area and be aware of flood warnings on your local TV and radio station. The Environment Agency has a 24 hour information service, Floodline,…

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From Money Extra:

Despite the total UK personal debt burden now approaching £1.2 trillion, major mortgage lenders have been relaxing their mortgage lending criteria by raising their LTVs (loan to value ratios). New figures from data provider, Moneyfacts, show that during September seven mortgage lenders increased their LTVs, some on selected products – others raising the minimum LTV limit on their entire product ranges by as much as 10%. This all comes against a backdrop of income multiples reaching an all time high, and an increasing number of borrowers opting for interest only mortgages and repayment terms in excess of 30 years. Bank of Scotland for example now has a minimum LTV of 85% on selected products – the previous rate being 80%. Other rates, with previous rates in brackets are: Bristol & West 95% (85%); Chelsea BS 85% (75%); Heritable Bank 80% (75%); Halifax 90% (75%), 95% (90%), NatWest 95% (selected products) – (75%) and Northern Rock 80% (75%), 90% (85%), 95% (90%). Putti…

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From Money Extra:

The Financial Services Compensation Scheme (FSCS) improved its service to consumers while cutting its costs during 2007/08, according to its annual report out today. At the same time, the Scheme passed the billion pound mark in compensation paid to consumers.
FSCS and the financial services industry faced enormous challenges in 2007/08, says the report. It was a year in which the markets suffered their worst turmoil in recent years. Despite this, FSCS made over 9,450 payments for insurance claims and completed close to 22,000 other claims, reduced waiting times for consumers and paid more than £82m in compensation. That brought the total amount of compensation paid by FSCS since it was set up to more than £1.04 bn.
FSCS received fewer claims overall during 2007/08 than originally projected. Most notably mortgage endowment and pension review claims – both major drivers of the Scheme’s work in recent years – continued on a downward trend. Following this reduction in the volume of claim…

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From Money Extra:

Thousands of families are in danger of being hit for an Inheritance tax (IHT) penalty because so many elderly parents cling on to tax free investment plans – without taking action to protect their estates on death. So warns investment adviser, the WAY Group. Based on Office of National Statistics (ONS) figures for holders of ISAs and PEPs, combined with its own research, the firm estimates that some 165,000 elderly investors (aged 70 or older) are holding ‘tax-sheltered’ portfolios in excess of £100,000. And, based on published mortality rates, this would mean that some £0.5 billion, or one sixth of the annual total IHT tax take of £3 billion, arises from IHT on PEPs and ISAs. Chairman of WAY, Paul Wilcox says: “Investors have been seduced by the Government into accumulating their investments within a ‘tax free umbrella’ but what so many don’t realise is that they will then suffer a punitive IHT sting at death, whereby they and their families potentially lose 40% of their…

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From Money Extra:

Norwich and Peterborough Building Society (N&P) has made additions to its mortgage product ranges for customers looking to buy in Gibraltar or Spain – the launch comprising a new buy-to-let mortgage for people looking to buy a rental property in Gibraltar, as well as a new further advance product and new base rate tracker for its Spanish home loans. The Gibraltar buy-to-let mortgage, for example, charges Bank Base Rate +1.00% for the term. And on a maximum LTV of 85%. A 0.50% reservation fee is in force, as is a valuation fee from £135. There are no early redemption charges. Rental coverage meanwhile is 125%. Minimum advance is £50,000. Alternatively, borrowers can opt for a 6.24%, 3-year fixed rate deal, followed by Bank Base Rate +1.00% for the term. Maximum LTV is 85%.A 0.50% reservation fee is in force, as is a valuation fee (from £135) and an early redemption charge of 5/4/3% in the first three years. Minimum advance is £50,000 with 125% rental coverag…

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From Money Extra:

When it comes to investing, emerging markets have been the best performing markets each year in the last decade, according to new research by fund manager, Fidelity International. Using MSCI indices, the research shows that emerging market countries have had the best performance each year, although the same country never tops the tables in consecutive years. The research also shows that emerging markets dominate the worst performers taking the bottom place in the table in 8 out of 10 years. Investors had to go off the beaten track to find the best performing developed markets as none of the larger, more established markets featured at the top of the table. The UK, US and Japan were noticeably absent while the likes of Finland and New Zealand triumphed. Although both Finland and New Zealand managed two consecutive years of top performance, they were the exception, and as with the emerging market winners, a number of the top performing markets also made regular appearances at th…

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From Money Extra:

A study of financial forecasting accuracy by management consultancy, Parson Consulting, shows that just 49 out of the FTSE 350 list of companies (14%) matched analysts’ earnings-per-share (EPS) forecasts in 2005, up three points from the previous year, but still way short of their US counterparts. Some 39% of S&P500 companies hit analysts’ expectations (plus or minus 1%), an increase from 34% in 2004. Companies in other leading stock exchanges around the world performed even worse in this respect than those in the UK. Less than 10% of those in the SBF120 (France), DAX100 (Germany) and HM (Hong Kong) matched analysts’ expectations. However, the study also found UK-listed companies were most likely to over-perform against forecast when compared to their foreign counterparts. Parson Consulting’s annual study, ‘Hits and Misses’ compares analysts’ forecasts of a company’s EPS against actual company results. This year’s study shows little improvement in EPS forecasting accuracy; 55…

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