This week’s Personal Column features:
Get the full picture: tip #009 | Amazon ordered to pay €250m in back taxes | New Buy To Let rules | Use Royal London reports to highlight the need for income protection | Uinsure have updated eligibility around subsidence, all thanks to your feedback! | Don’t forget to cancel – are you wasting money on subscriptions? |
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Personal Touch News
Get the full picture: tip #009
Every week for the next two weeks, we’ll be bringing you tips on making sure you get the full picture with Insight.
This week we focus on reputation.
Some of the best sales opportunities come when customers are happiest. Sometimes that’s just after you’ve helped them create a solution for one of life’s many challenges. By checking the advice your business is providing is to the level you would expect, you can spot not only problems, but also new opportunities.
Everyone gets a real boost when a customer gives you praise. It provides you with confidence that your service is on the right track, peace of mind that you placed another client at the heart of your business and provides increased morale and motivation.
Source: Personal Touch Update
Amazon ordered to pay €250m in back taxes
The EU said the online giant had been allowed to pay “substantially less tax than other businesses as a result”.
“This is illegal under EU state aid rules,” the European Commission said.
Amazon is the latest big US company to be reined in by the EU competition regulator, which also told technology group Apple to pay back up to €13bn.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” European Competition Commissioner Margrethe Vestager said in a statement.
The €250m is less than an estimate of €400m last year.
Source: BBC News (published 04 October 2017)
Social Media Post: Amazon is facing a bill for hundreds of millions of euros in back taxes linked to an alleged “sweetheart” tax deal with Luxembourg.
New Buy To Let rules
New rules starting from 30th September 2017
The “minimum expectations”, as the Prudential Regulation Authority (PRA) refers to them, can be broadly summarised as follows:
Affordability assessments – should account for a borrower’s costs, verify their personal income, and suitably ‘stress-test’ against the effect of possible future interest rate increases.
Lending to ‘portfolio landlords’ – to be defined as those with four or more mortgaged BTL properties – should be assessed using a specialist underwriting process.
Loans to small businesses – the provisions which reduce the capital requirements on loans to small businesses by around 25% should NOT be applied for BTL borrowing purposes.
These plot twists don’t create new protection needs, but do provide excellent new opportunities to introduce protection into discussions with BTL mortgage clients.
Since you’ll be having in-depth discussions about clients’ costs and income, what better excuse can there be to ask how they could cope if they were to suffer a critical illness, or be unable to work due to long-term illness or injury?
Their costs can be protected with Family Income Benefit, and their income with Critical Illness Cover and/or Income Protection. And don’t forget we have Key3 and CIC Start for those who need to keep costs low (as covered in Part 2).
Lending to ‘portfolio landlords’
Usually when I talk about ‘portfolio protection’ I mean underpinning an investment portfolio against the consequences of it not reaching the required level before retirement, if a client dies or suffers a critical illness.
But it’s relevant here too. I assume a client who has 4+ mortgaged BLTs will be relying on the rental income to support themselves – they might argue the rental income will continue after they die, or if they are critically ill, but how can they be sure?
Our premiums are guaranteed, but is it guaranteed there will always be rent-paying tenants? Even if there’s no-one alive or well enough to maintain the properties?
Loans to small businesses
As this article comes to a close, I’ll throw in a flashback to Part 1 to tie all the plot strands together. In that we considered the increase in popularity of holding BTL properties in a company, and what that means for protection.
When a mortgage is taken out by a company the protection need is Business Loan Protection – which is effectively just mortgage protection, but with the company owning the policy rather than the life assured. Otherwise the principles are the same.
Getting ready for the new rules may have kept you busy for the last few months, but hopefully they will at least give you some new ways to increase your protection business.
For more information, visit AIG website or get in touch with AIG Business Development Team on 03456006829
Source: AIG e-newsletter (received 29 September 2017)
Use Royal London reports to highlight the need for income protection
We know it can sometimes be difficult to make the case for income protection. Clients think they don’t need it, they can’t afford it or they’ll rely on their employer to support them if they’re unable to work due to sickness or injury.
With Royal London income protection report, you can show your clients their chances of being off work long-term compared to sudden death. And give them a personalised summary of how long-term sickness could affect their finances.
Source: Royal London e-newsletter (received 02 October 2017)
General Insurance News
Uinsure have updated eligibility around subsidence, all thanks to your feedback!
Previously, if there were any signs of subsidence to a property in the last 25 years, they were not able to accept this on a standard basis. The only option was to refer the business to our non-standard and commercial referral service.
They were aware that a number of our competitors could write business on a standard basis, if the movement was long standing & non-progressive, so we reached out to you – our panel insurers – to make sure that we could do the same.
The great news is that their insurers are now happy to adopt this approach – subject to a RICS HomeBuyer Report, RICS Building Survey or Structural Engineers Report being completed in the last 6 months.
they’d like to take this opportunity to thank you for your help in getting this change made – you told them that our subsidence criteria needed fixing, and that’s exactly what they’ve done.
Source: Uinsure e-newsletter (received 28th September 2017)
Investment giant Fidelity tears up its fund fees to charge investors more for success but less for failure
The recent overall wealth management review by the FCA and the whole question of active and passive funds both bring a fee related focus to the debate.
It is therefore interesting that Fidelity are breaking new ground by looking to move to performance related fees in respect of their actively managed funds.
The new innovative structure aims to reduce the flat base management fee, which investors are charged regardless of performance, in favour of bringing in a variable one which will be lower if a fund fails to perform but higher if it does well.
To make it simpler, when a fund outperforms its benchmark Fidelity will share in the success by collecting more money from an investor.
Fidelity International President Brian Conroy believes that these changes will more closely align the performance of Fidelity with the performance of their clients’ portfolios and deliver what they believe clients and regulators are looking for. Their fee structure will give back for underperformance of the benchmark, whereas others do not.
According to Conroy the European MiFID II regulatory changes and the FCA asset management market study are also driving forces behind the move. In fact, the FCA study claimed that investors often did not know how much they were paying, or what they were paying for.
Conroy explains that ‘Having looked at the implications of upcoming regulation, as well as taking into account feedback from the UK regulator in its recent market study on the lack of pricing innovation in our industry, we believe that a far more fundamental change to how clients are charged needs to be instituted.’
Read more: http://www.thisismoney.co.uk/money/diyinvesting/article-4943846/Fidelity-charge-variable-fund-fees-based-performance.html#ixzz4uXWqNzxo
Source: This is Money News (3rd October 2017)
Don’t forget to cancel – are you wasting money on subscriptions?
UK adults are spending an average of £56 a month on subscription services – but are you paying for things you don’t use?
Click here to read the full article on how to make sure you are not wasting your money on unused subscriptions.
Source: Money Advice Service Blog (published 28 September 2017)
Social Media Post: Don’t forget to cancel – are you wasting money on subscriptions?