This week’s Personal Column features: This week’s column… | Tax burden ‘to be highest in 30 years’| Rise in grandparents helping first-time buyers | Savers can access £1,500 tax-free for pensions advice | Open banking revolution on the way.
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This week’s Column…
This week’s top stories
After the government produced a white paper on the housing market this week, many experts believe they’ve missed an opportunity and the proposed policies won’t actually solve the housing crisis. Meanwhile, there’s been a rise in grandparents financially supporting first-time buyers. And is a new age of banking upon us?
In order for Philip Hammond to meet his target of reducing the deficit, taxes are expected to rise and spending will be fall. However, forecasts estimate the UK economy will grow by 1.6% in 2017. Read more..
Welcomed news for pension savers – soon they’ll be able to withdraw up to £1,500 tax free from their pension, and it could be used to pay for financial advice. Experts believe it’s a great idea that the government are allowing people to access their money to pay for advice. Read more..
This year is all about taking control, seizing each and every opportunity and making 2017 your best year yet. Our new series of workshops echo this vision with a tailored agenda of sales and business growth inspired content from some leading market experts. Take your first step towards making 2017 your best year yet and register today for a workshop near you… Click here to register. Read more..
Changes to the banking industry are upon us. An investigation has found that there’s a concerning lack of competition and changes must be made to ensure a fair and level playing field. But what changes are being made, and how can your client benefit? Read more..
“Knowledge is the only form of capital that doesn’t get smaller when you share it.” – Unknown
Do you frequently use advertisements to promote your business? Maybe you haven’t tried it before, but it’s on your list?
Whichever camp you fall into, we’re proposing something for everyone: an Inspiration Library.
What would it look like?
This would be a membership-wide effort, designed to involve businesses of all shapes and sizes. It’d be a place to display a variety of advertisements and ideas to inspire you and help you grow your business.
How can you get involved?
If you’re interested in sharing some of your inspiration, please e-mail email@example.com.
Tax burden ‘to be highest in 30 years’
Tax is set to rise as a share of the UK’s income to its highest level since 1986, according to a think tank.
Higher income from taxes and relatively low growth will combine to create this effect, according to the the Institute for Fiscal Studies.
Chancellor Philip Hammond’s decision to scrap a target of balancing the nation’s books mean spending cuts will continue into the 2020s, it said. The Treasury said it was committed to repairing Britain’s finances.
Forecasts by Oxford Economics, which contributed to the report, estimate the UK economy will grow by 1.6% in 2017.
In 2018, growth in gross domestic product will slow to 1.3%, Oxford Economics said. Growth is expected to be dulled as a result of inflation prompted by the decline of the value of the pound after the EU referendum.
While a weaker pound is likely to improve the performance of manufacturers and exporters, higher costs for consumers will more than erase this gain, said the report.
“Though the UK economy has continued to achieve solid growth, it has been almost entirely reliant on the consumer,” said Andrew Goodwin, Lead UK Economist at Oxford Economics and co-author of part of the report.
“With spending power set to come under significant pressure from higher inflation and the welfare squeeze, the consumer won’t be able to keep contributing more than its fair share. Exports should be a bright spot, but overall a slowdown in GDP growth appears likely.”
The UK’s economy could be 3% smaller by 2030 than if Britain had voted Remain, according to forecasts in the IFS’s annual Green Budget.
In a statement, the Treasury said: “The government is committed to repairing the public finances and living within our means so that we can build an economy that works for all. That has required some difficult decisions on spending, but we’re determined to deliver efficient public services which provide maximum value for every pound of taxpayers’ money.”
Spending on public services dropped by 10% since 2010, the report said, after adjusting the figures for inflation.
To meet his target of eliminating the deficit during the next parliament, which is from 2020 to 2025, Mr Hammond will probably have to find a further £34bn in tax rises and spending cuts, extending austerity.
The report said £17 billion of tax rises could be needed to contribute to closing the gap for government between outgoings and income.
Source: BBC News (published 07 February)
The article is now available to share with your clients! Here’s the link for you to share on social media: Tax burden ‘to be highest in 30 years’: http://buff.ly/2kVPn3X
Rise in grandparents helping first-time buyers
Nearly half of all estate agents have recorded a rise in first-time buyers relying on financial support from their parents and their grandparents, according to equity release referral service Key Partnerships.
The research was conducted among 104 estate agents with 32% recording support for first-time buyers coming from grandparents.
Will Hale, director at Key Partnerships, said this was putting a great deal of financial strain onto parents and grandparents and that equity release could ease such pressure.
Key Partnerships recorded that just 36% of the estate agents who were quizzed were aware that equity release plans, which enable over-55s homeowners to access property wealth, can be used to help first-time buyers raise deposits.
Hale said: “Estate agents are valued as a source of financial guidance and it’s clear that those who can discuss equity release as a potential alternative fund-raising solution will be able to benefit from an additional revenue stream by referring potential clients to a specialist as well as securing more house sales.”
However, the downside of equity release was highlighted by Kusal Ariyawansa, a chartered financial planner at Appleton Gerrard Private.
He sees the potential for a significant detriment to wealth due to the interest paid over time.
“Unless equity release is essential for an individual I wouldn’t advise it to buy a property,” he said.
“It’s important when these things are done that it should involve inter-generational planning, especially if there is a potential inheritance about to be depleted.”
Source: FT Adviser (published 07 February)
The article is now available to share with your clients! Here’s the link for you to share on social media: Rise in grandparents helping first-time buyers: http://buff.ly/2lv8ApA
Making life easier for you
At Bank of Ireland for Intermediaries they work hard to improve their products and services. Their multi-million pound online application system has received multiple awards. With automatic document packaging and application acceptance for straight forward cases, they’ve made the process quicker and more cost effective for you. One of the highlights of the system is case messaging, giving you direct access to the underwriter managing their case.
Head of Corporate Accounts, Iain Smith comments: “We’ve made significant investment in our application system because we know how important it is to use technology to improve our service. The flexibility of the system means we can continually develop and during 2017 we’ll be expanding our offering”.
They recently improved their criteria, with no minimum income for Buy-to-Let mortgages, a maximum age at end of term of 75 for residential and allowing child maintenance and foster income to be included in affordability calculations. Their retention offering means you’ll be paid a procuration fee for processing existing customer transfers or ports of Bank of Ireland mortgages.
Your feedback helps drive their developments in their quest to make life easier for you.
Source: Bank of Ireland e-newsletter (received 08 February)
Royal London: their online definitions search tool is now available
Royal London have created an online definitions search tool to make it even easier for you to find out the conditions they cover and to see if (and how) the definition wording has changed over time.
They’ve also included a simple summary which gives a quick overview of any changes made by year as well identifiable badges that confirm if the definition is ‘ABI +’ or if it’s one of their additional covered conditions.
Source: Royal London e-newsletter (received 06 February)
And the 2016 Aviva Community Fund winners are…
The 2016 Aviva Community Fund opened for project submission back in September. After a hard-fought campaign, they’re delighted to announce the winners of the funding.
They were offering funding ranging from £1,000 up to £25,000 for projects in six categories. All in all, nearly 4,000 projects applied for funding, all of them working hard to get enough votes to put them in the finals.
With over five million votes cast in total, competition was fierce even before the most popular projects went through to the finals. The judging panel had some tough decisions to make, but make them they did.
Thank you to everyone who took part in the 2016 Aviva Community Fund. You all helped to make it a great success.
They’ll let you know later in the year how our winners are making a difference in their local communities.
Source: Aviva e-newsletter (received 06 February)
Updated contact details for our GI providers
Below is a full list of contact details for our GI providers:
Intermediary Sales Team – 03448443844
Home Insurance – 03301026047
Email – firstname.lastname@example.org
Home underwriting services – 03302210444 email@example.com
Home Claims – 01422286304 firstname.lastname@example.org
Large Home Claims (25k plus) – 01189140971 email@example.com
Customer Service Team – 03456011050
Policy admin queries – 08009234206 firstname.lastname@example.org
Claims report/advise/assistance – 08000261799
24hr emergency helpline – 08000261798
GI queries – 03709008829
GI queries – 0345 6006001
GI Queries – 0345 122 3288
Claims – 03451223019
01244421167 – email@example.com
Source: Personal Touch Financial Services
Savers can access £1,500 tax-free for pensions advice
Pension savers will soon be able to withdraw up to £1500 tax-free from their pension pot to pay for financial advice, under plans unveiled by the government on 03 February.
The final policy, an elaboration of the original policy announced in August last year, will allow savers to withdraw £500 from their pension three times in their life.
Economic secretary to the Treasury Simon Kirby, said savers would only be able to make one withdrawal, of up to £500, in any given tax year. He said it would be available at any age, and could be used to pay for robo-advice as well as traditional face-to-face advice.
However, it would only be available for defined contribution pensions or “hybrid” pensions with a DC element. It wouldn’t be available for defined benefit pensions.
Economic Secretary to the Treasury, Simon Kirby, said: “Pensions and savings decisions are some of the most important a person will make during their lifetime. This allowance will help people get the vital financial help they need to plan for their retirement.”
Life company LV, which has one of the more comprehensive robo-advice services on the market, welcomed the announcement.
David Stevens, director of advice strategy at LV, said: “The Government is absolutely right to allow people to access money from their pension pot to pay for advice and it’s positive this reform covers both traditional and ‘robo-advice’ to meet consumers’ changing habits.”
He said the upfront cost of advice could be a “major barrier” to consumers seeking “vital” professional financial advice.
But Tom Selby, senior analyst at AJ Bell, was less enthusiastic, saying “we need to be realistic about what this will achieve”.
“According to the Treasury’s own analysis, face-to-face advice costs £150 per hour on average, and can take up to nine hours for pensions – meaning even with the allowance you still might have to make up a shortfall of £850,” he said.
“The sector is clearly evolving and innovative ‘robo-advice’ models may develop to help people assess their retirement options.” But he said we’re “some way from that point” at the moment.
Source: FT Adviser (published 03 February)
The article is now available to share with your clients! Here’s the link for you to share on social media: Savers can access £1,500 tax-free for pensions advice: http://buff.ly/2lvaGpJ
Personal Touch Workshops 2017 – You’re invited
This year is all about taking control, seizing each and every opportunity and making 2017 your best year yet. Our next series of workshops echo this vision with a tailored agenda of sales and business growth inspired content from some leading market experts.
Take your first step towards making 2017 your best year yet and register today for a workshop near you…
Here’s a preview of what the events will bring:
- How to grow your business through protection.
- Meet some of our panel’s specialist lenders.
- Updates on the upcoming Buy-to-Let changes.
- Presentations by subject matter experts.
- Buzz sessions giving insight into various hot topics.
- Networking opportunities with the key Personal Touch staff, as well as other successful advisers.
Dates and Venues
The full list of dates and venues are:
- Tuesday 07 March – North East (Wetherby Racecourse, Wetherby).
- Thursday 09 March – North West (The Mere Golf Resort & Spa, Knutsford).
- Tuesday 14 March – Scotland (Houstoun House Hotel, Livingstone).
- Thursday 16 March – Midlands (Windmill Village, Coventry).
- Tuesday 21 March – South (Apollo Hotel, Basingstoke)
Thursday 23 March – London (Victory Services Club, London)
Open banking revolution on the way
It’s been announced that the move to open banking is officially underway, which should hopefully make the banking sector a lot simpler for consumers. But what do the changes mean, and how can you benefit?
The changes follow an investigation undertaken by the Competition and Markets Authority (CMA), which found that competition was lacking and consumers were paying the price. That’s why they’re introducing changes, with the report formally implementing new banking reforms and setting out the timetable for introducing key advances.
These advances include open banking, a monthly maximum unarranged overdraft charge cap, standardised business account opening procedures, and the requirement for banks to publish service quality statistics. A “technological revolution” will give people greater control over their money, the CMA said, by making it easier for personal customers to manage their money, find the best deal for their needs and avoid overdraft fees, while small businesses will be able to benefit from greater competition and better access to finance.
The reforms are expected to save overdraft users an average of £180 a year, and other current account holders an average of £92, so it could prove fruitful for many – but have the reforms gone far enough?
Rachel Springall, finance expert at Moneyfacts, doesn’t think so. “The CMA’s investigation into the retail banking sector was a golden opportunity to force a crackdown on excessive charges overall, not just for those who borrow over their pre-arranged limit,” she said.
“It’s therefore unfortunate that the new monthly maximum charge is aimed solely at those customers who exceed that limit (above their arranged overdraft), and it will be down to the banks themselves to decide by August 2017. This won’t help those who may borrow using their arranged overdraft from time to time and are hoping to compare accounts on this basis.”
Even so, other areas of reform could prove to be beneficial for all, with banks being required to provide overdraft alerts and grace periods by the start of next year. It may not be ground-breaking, with some banks already providing this service, but the rollout to all banks will mean more customers can benefit.
However, there are still issues with fees and associated overdraft charges, as Rachel explains: “There are still accounts that charge daily usage fees, which can add up to an eye-watering amount if customers have no way to immediately credit their account, and there doesn’t appear to be any force to drive these charges down or make it any easier to compare the various charges.
“In recent years, many banks have altered their overdraft structure to create greater transparency, by removing interest charges and replacing them with a flat fee. However, in many cases this will actually be more expensive for consumers. [Our figures show that] the average monthly usage fee on authorised overdrafts has shot up from £4.08 five years ago to £6.04 today, while the average monthly usage fee on unauthorised overdrafts has risen from £48.65 five years ago to £53.61.”
Source: Moneyfacts.co.uk (published 03 February)