This week’s Personal Column features: This week’s column… | Government borrowing falls in December | Over £9.2 billion accessed through pension freedoms | Over 3.5 million have switched bank account.
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This week’s Column…
This week’s top stories
Earlier this week, the Supreme Court gave their much anticipated verdict on Brexit. Parliament will have to vote on whether the government can start the Brexit process – not the outcome Theresa May was hoping for. It’s not all doom and gloom for the government, as figures this week show that borrowing fell in December. And a staggering £9.2 billion has been accessed through pension freedoms.
Although the government received disappointing news from the Supreme Court this week – they did receive some positive encouragement from the ONS, as government borrowing fell by £0.4 billion in December. Read more..
News revealed by HMRC this week shows that savers have accessed a staggering £9.2 billion through pension freedoms since the reforms began. However experts are wondering whether people are simply spending their money while they can – or investing it for the future. Read more..
Thank you to everyone that attended last week’s Personal Touch LIVE! It was a huge success once again. We’d really appreciate your feedback so that we can continue to improve. You can access the feedback survey here. Read more..
From time to time a lot of consumers are left frustrated with their current account. New figures show that over 3.5 million have successfully switched – this may be to move over to high interest current accounts… but which bank has seen the most uptake? Read more..
Government borrowing falls in December
Government borrowing fell by £0.4 billion in December to £6.9 billion, compared with 2015.
The figures, from the Office for National Statistics, means borrowing for the year is £63.8 billion, £10.6 billion lower than for the same period a year ago.
The last Autumn Statement indicated that the government would borrow £68 billion over the full financial year to the end of April.
The government typically receives more money than it spends in January, when a high number of tax bills are paid.
The ONS revised the borrowing figure for November down from £12.6 billion to £11.3 billion, which will help the Chancellor, Phillip Hammond, to keep to the Autumn Statement target.
However, even if he meets it, the total will still represent about 3.5% of economic output.
A spokesman for the Treasury said the government had made “significant progress in repairing the public finances” by pushing down the deficit from 10% of GDP six years ago to 4%.
The government has abandoned the previous chancellor’s aim of balancing the budget by 2020.
“The continued, albeit modest, monthly declines in public sector borrowing are encouraging and mean that the government remains on course to meet the [Office for Budget Responsibility]’s forecast for 2016-17, as set out in the Autumn Statement,” said Suren Thiru, head of economics at the British Chambers of Commerce.
“The UK’s fiscal position, which was weakened significantly by the financial crisis, is likely to come under increasing pressure in the near term if UK economic growth weakens as expected.
“A slowing economy would further restrict the UK’s capacity to collect enough tax revenue to consistently achieve deficit reduction in the coming years.”
Source: BBC News (published 24 January)
The article is now available to share with your clients! Here’s the link for you to share on social media: Government borrowing falls in December: http://buff.ly/2jb0kOW
There’s a lender that expects the unexpected
Virgin Money’s flexible tracker mortgages are ideal for customers looking for more flexibility. Their two year tracker deal is fully flexible so your customers can make almost unlimited overpayments, redraw their funds and even take payment holidays.*
► Two year tracker rate up to 65% LTV at 1.69% (BoE + 1.44%) with £995 fee (free legal and valuations for remortgage customers)
Customers can pay the balance down to just £1 – overpayments are a great way for your customers to reduce the amount they owe, save interest and potentially repay earlier than planned. Take a look at Virgin Money’s overpayment calculator to see how much your customers could save.
If your customer has made overpayments, they can apply to make a lower monthly payment, apply to borrow back some or all of the overpayments they have made (£500 minimum), or stop their monthly payment until the overpayment is used up.
And from parental leave to emergency boiler repairs, payment holidays are a great way for your customers to free up some money when they need it most. So for every nine consecutive full mortgage payments, your customers can arrange one payment holiday (up to a maximum of three payment holidays after 27 consecutive full payments).
To find out more about how you can help your customers looking for flexibility, talk to your dedicated Virgin Money BDM or visit virginmoneyforintermediaries.com
*Flexible features are subject to Virgin Money’s agreement and the terms and conditions of your customer’s mortgage.
Source: Virgin Money e-newsletter (received 23 January)
Precise Mortgages – Residential Product Launch
Precise Mortgages have an exciting new range of residential products that will be launched on Friday 20 January 2017. Please note that all current residential products will be withdrawn as part of this update, including any exclusives or semi-exclusives. Take a look at their new product guides here:
Source: Precise Mortgages e-newsletter (received 23 January)
Metro Bank – Improvements to their fixed rate residential products
Metro Bank have made significant improvements to their three and five year fixed rate residential products.
This includes five year rates from 1.84%.
Overview of changes:
- Rates reduced across 3 and 5-year fixed rate products
- Reduction in both the Core range and the Re-mortgage only offerings
- A new 5-year tracker available in our Core range with a reduced early repayment charge period
- The changes to the Core range products are also reflected in our range for existing customers – when carrying out a rate switch
Read the product update here.
Source: Metro Bank e-newsletter (received 24 January)
Trusts. Easier than you think?
Protection providers often extol the benefits of placing plans in trust. The advantages for clients are widely recognised and numerous – inheritance tax mitigation, avoiding probate delay, controlling claim proceeds, and so the long, familiar list continues.
Yet, dismissed as unnecessary form-filling, or simply viewed as irrelevant in the context of a mortgage sale, less than 5% of their personal protection plans are written in trust.
Source: Royal London e-newsletter (received 23 January)
Critical illness cover from Aviva – a solid foundation
Aviva’s critical illness cover offers a solid foundation for your clients who would like a level of financial protection against unpredictable ill health. With so much included, their core cover is anything but basic.
It provides a great base from which you can build cover to suit the requirements and budget of each individual client – choosing from Aviva’s range of options and upgrades that come at an additional cost.
The graphic below summarises what has been created here, and some of the options they’ve made available to build upon this cover.
If you’d like to find out further information about their critical illness cover you can in their latest blog, here.
Source: Aviva e-newsletter (received 24 January)
Insurance Premium Tax Changes
The UK Government announced on 16 March 2016 that it would be increasing the standard rate of Insurance Premium Tax (IPT) from 9.5% to 10% with effect from 01 October 2016 for all new business and renewals.
A four-month concessionary period began on 01 October 2016 and allowed for mid-term adjustments (MTAs) for policies with term start dates before 01 October, which continued to be liable to IPT at 9.5% provided the premium was booked in insurers systems by 31 January 2017.
However, this concessionary period will end next week on 31 January 2017.
From 01 February 2017, all taxable premiums with the exception of some return premiums will be subject to the new standard IPT rate of 10% (except for certain risks that may be either exempt or subject to the higher rate of IPT), regardless of when the policy was entered into.
Return premiums will always use the IPT rate that was applicable at the time of the original premium.
If you have any further questions, please read Zurich’s full communication they issued in July, which includes FAQs, or contact your local Zurich contact.
Source: Zurich e-newsletter (received 23 January)
Over £9.2 billion accessed through pensions freedoms
Savers have accessed a total of £9.2 billion through pension freedoms since the reforms were announced, with around £1.61 billion taken from pension pots in the last three months.
Figures published by HM Revenue & Customs show a total of 516,000 payments were made from pension pots between April 2015 and March 2016, and over one million payments were made between April 2016 and the end of last year.
The number of individuals accessing their pension on a quarterly basis has almost doubled from 84,000 in the three months to June 2015 to 162,000 as at the end of 2016.
The data from HMRC covers “flexible payments” from pensions, which include full or partial withdrawals, flexible drawdown and buying a flexible annuity.
The Treasury says guidance service Pension Wise has had over 3.7 million visits to the website and carried out over 100,000 appointments since pension freedoms was introduced in April 2015.
Treasury economic secretary Simon Kirby says: “Giving people freedom over what they do with their hard-earned savings, whether it’s buying an annuity or taking a cash lump sum, is the right thing to do.
“We’re working with our partners, including Pension Wise, the regulators and pension firms, so that savers have the support they need to understand the options available to them.”
Just group communications director Steve Lowe says: “We’re now nearly two years into the new rules and, despite the official figures, we remain in the dark about how many of those taking pension cash lump sums are thinking about their long-term financial security and how many are grabbing it to spend while they can.
“We need a lot more detail if we are going to identify and head off any future problems.”
AJ Bell pension expert Gareth James says: “Whilst it’s good to see the pension freedoms are being utilised by a large number of people, it’s dangerous to use the £9.2 billion as a measure of success when it doesn’t tell us what people are doing with that money.
“Are they using it to provide a regular and sustainable income as pensions are designed to do, or are they spending it too quickly and likely to run out of money too quickly?”
He adds: “It’s important the Government carries out a more detailed analysis of how the pension freedoms are being used before any realistic assessment of their success can be made.”
Source: Money Marketing (published 25 January)
The article is now available to share with your clients! Here’s the link for you to share on social media: Over £9.2 billion accessed through pension freedoms: http://buff.ly/2kaajnr
Personal Touch LIVE 2017 – Feedback Reminder
Thank you to both our delegates and our provider and lender partners for once again making Personal Touch LIVE such a huge success!
If you haven’t done so already, we’d really appreciate your feedback to support our continuous improvement. Access the survey here to tell us what you thought about the day and evening celebrations.
Why I had to change, and what happened next
A must-read, in case you missed it…
Whilst conducting a member review the compliance monitoring team (CMT) acknowledged the inspirational journey of one of its members.
As a sole trader, Richard Cornwell (Richard Cornwell Independent Mortgages) increased his business’ rolling annual turnover fivefold in a little over two years.
CMT asked Richard to share his journey and to describe some of the key changes and driving forces behind this new found success.
Source: Richard Cornwell of Richard Cornwell Independent Mortgages (published 16 January)
Over 3.5 million have switched bank account
The Current Account Switch Service is in full swing, and since its launch in September 2013, more than 3.5 million people have taken the plunge and switched current account.
New figures show that 3,520,190 successful switches have taken place since the Current Account Switch Service launched, with 1.01 million of those being in the last year (01 January to 31 December 2016), and 208,387 taking place in the last three months alone.
Not only that, but awareness of the service currently stands at 77%, with the recent multi-million pound media campaign thought to be the key driver behind this boost in awareness. Confidence is on the up, too, with 80% of respondents saying it would be easy to switch banks, and 77% saying it would be quick, highlighting the success of the scheme.
The whole system appears to be working well, with more than 99.5% of switches being completed within the seven working day timescale – as promised under the Switch Guarantee – and more than 18.2 million payments being successfully redirected.
So just where are all those customers going? Well, looking closer at the figures suggests that many people could be switching to high interest current accounts, perhaps in an attempt to beat the paltry savings rates currently on offer.
After all, the figures show that the banks to see the strongest net gains during the second quarter of 2016 – the most recent figures available for this measure – were Santander (+46,208), Nationwide (+24,999), Halifax (+22,101) and TSB (+1,467). Given that these banks were sitting pretty at the top of the high interest Best Buy chart for much of last year – and many of them still are, except for Santander, which has recently cut its in-credit interest rate and moved down a few places as a result – we can assume that such deals are proving a huge incentive to switch.
It isn’t hard to see why. Average savings rates are on a continued downward spiral, which means high interest current accounts could prove to be the perfect home for at least a portion of your savings.
Source: Moneyfacts.co.uk (published 25 January)