Wealth Design News

07/12/18
House prices are now lower than they were a year ago for properties being put up for sale, according to new research. The average asking price of a newly marketed property in the month to mid-November, was 0.2%, or £607, less than at the same point last year. This is the first year-on-year fall in asking prices since 2011 and the decline in confidence is accelerating. But there’s an interesting game of two halves afoot in London, with average asking prices in outer London holding steady while central London flounders. The best performing locations are Bexley, where asking prices are up 2.8% year on year, and Bromley, up 2.1% according to Rightmove’s house price index. However Rightmove found that asking prices in more unaffordable inner London are down 2.5 % year on year.
05/12/18
Banks are "pickpocketing" bereaved families caught between long-standing inheritance tax and probate rules. This is because they are increasingly being forced to take out expensive loans to gain access to their inheritance - or fund death duty bills themselves. Experts highlight that he problem is not new but increasing house prices are dragging more estates into the IHT zone - the taxman received a record-breaking £5.2bn in IHT receipts in 2017/18, some £400m up on the previous year. Contrary to popular belief, IHT must be paid before a grant of probate gives recipients access to an estate. Quirks exist in the inheritance system and paying IHT to access the estate is one of them. Sometimes the bill can be insurmountable for a family already stretched and having to consider the cost of funeral arrangements. Some financial offerings look to capitalise on the system, such as high-rate loans to pay the IHT bill, which at its worst is akin to, according to some commentators (albeit rather emotively) pickpocketing a widow.
03/12/18
An inquiry into consumers' access to financial services has been launched by MPs amid concerns some vulnerable customers are finding it increasingly difficult to access the supports and services that they need. The Treasury Committee will scrutinise whether certain groups of people are excluded from obtaining a basic level of service from providers. It will also examine whether vulnerable consumers pay more for financial services products. This is in the face of new data that shows that just a third of the UK’s bank branch network remains compared with three decades ago, meaning people have further to go to access basic financial services. There were 20,583 bank branches in 1988 but today, there are just 7,586, according to research by campaign group Which? This means 19% of the population now have to travel more than 3km to their nearest branch while one in 10 have to travel more than 5km.
29/11/18
The crypto market is in many ways a classic pyramid scheme: early adopters are incentivised to recruit others by telling them a particular cryptocurrency is going "to the moon". Those others rush to buy, driving the value up and giving the earliest adopters the ability to sell for the heftiest gains. Initiative Q is a bit different though. For a start, "Q" is not actually a cryptocurrency. Instead, it's a private currency that won't even use the blockchain technology which is supposedly the point of most tokens. Instead it will use a regular database! The Q token is a centralised private currency issued by Initiative Q. It’s presently worthless, and not exchangeable even on Initiative Q’s own servers — but they aspire to it being used in their planned future payment network. At that point, they intend it to be freely exchangeable with dollars. Most experts believe the founders are completely sincere in their ambitions but doubt the quality of their ideas.
27/11/18
HMRC is considering refunding some parents and guardians who were fined for not registering for the high-income child benefit charge. The department has said it will review cases in the 2013/14, 2014/15 and 2015/16 tax years and will offer refunds to taxpayers who it finds had a reasonable excuse for not registering to pay the high-income child benefit charge (HICBC). Alongside this, HMRC is writing to taxpayers who might be liable to pay the HICBC for 2016/17 and 2017/18 to explain the rule and help them avoid having to pay a penalty.
24/11/18
You may have heard about the enormous gains marijuana stocks have generated over the past couple of years. You might also be aware of predictions about how large the marijuana industry could become, including a recent projection that the U.S. marijuana market could more than triple, reaching $22 billion by 2022. Many companies in the cannabis industry have opted to go public, making their shares available for purchase on public stock markets, to raise cash to fuel additional growth. But there remain two fundamental arguments against investing in marijuana stocks. One is the risk that the projected growth won't materialize – it remains illegal! Another is that marijuana companies' growth potential may already be reflected in their stocks' high valuations.
23/11/18
In 2015 the Government made it easier to access pensions cash after the age of 55 which, in turn, had a significantly negative impact on annuity sales. One of George Osborne’s promises was to let pensioners who are stuck with poor annuities sell them in exchange for cash, but the plans were shelved a year later (ironically due to fears that consumers would not get a good deal). This left millions with sub-optimal policies – either because they were sold contracts that failed to take into consideration wider health conditions that would have boosted payments or because they failed to shop around and were left with policies paying as little as a few pounds a week. Many of these retirees, backed by Your Pension, are now calling on Chancellor Philip Hammond to revisit the proposals.
21/11/18
The glare has been on asset managers’ fees to date but the FCA has now announced it will investigate the pricing practices of general insurance firms. The news was released on the same day that Citizens Advice lodged a ‘super-complaint’ with the Competition and Markets Authority (CMA) over dual pricing. The charity claims that loyal customers across five market sectors, including home insurance, are losing out on £4.1bn a year to what it calls a loyalty penalty. Specifically, research found that 8 in 10 people are paying a significantly higher price, in at least one of the mobile, broadband, home insurance, mortgage and savings markets for remaining with their existing supplier. In response the FCA said it has long been concerned about dual pricing and in its 2018/19 business plan would be looking at the pricing practices of general insurance firms.
19/11/18
An increasing number of workplace pension schemes will come under greater scrutiny from The Pensions Regulator (TPR) from next month as part of a significant shift in its approach to protect savers.

To reflect major changes in the political, economic and pensions landscape, TPR will be working proactively with more pension schemes through a new range of interventions to address risks sooner, clearly set out its expectations and take action where necessary.

The changes result from TPR’s major review of the way it does regulation, which is now transforming how the organisation works to safeguard member benefits. An update on the programme has been published today.

Key to the new approach is the introduction of a supervision regime to monitor schemes more closely, which will include higher and lower intensity interventions depending on the risks identified.

Chief Executive Lesley Titcomb said: “Following a complete review of our entire approach to regulation, we are now implementing a radical shake-up of the way we regulate to embed our pledge to be clearer, quicker and tougher.

“Schemes across all sectors, whatever their size, can expect the volume and frequency of their interactions with us to increase so that potential risks to pension savers are identified early and put right before it becomes necessary for us to use the full force of our enforcement powers.”

“Our new model is flexible – we will take a systematic approach to set out our expectations and will respond swiftly to emerging risks, taking tough action where necessary to tackle bad behaviour, including by corporate entities.”

“An important element of our new approach will be the use of a broader range of communication channels to drive behavioural change by promoting greater understanding of what schemes need to do in order to comply with the law and demonstrate high standards. This was a vital ingredient in the success of automatic enrolment amongst employers and we look forward to developing a closer relationship with schemes, both large and small.”

Dedicated, one-to-one supervision will be introduced for 25 of the biggest defined contribution (DC), defined benefit (DB) and public service pension schemes from next month, with this approach being rolled out to more than 60 schemes over the next year.

TPR will maintain ongoing contact with these schemes and in some cases their sponsoring employers, reflecting their size and strategic importance within the pensions landscape.

In addition to one-to-one contact, higher volume supervisory approaches are also being introduced from next month to address risks and influence behaviours in a broader group of schemes.

This second type of intervention will be piloted with approximately 50 DB schemes to assess compliance with messages in TPR’s 2018 annual funding statement, specifically concerning whether schemes are being treated fairly when it comes to dividend payments to shareholders. Hundreds of schemes are expected to experience higher volume supervisory approaches over time to tackle different risks across the pensions landscape.
16/11/18
HMRC have updated their salary sacrifice guidance for advisers and employers. The guidance also reminds of the state benefits that may be affected by salary sacrifice which reduces national insurance contributions below the threshold on which certain state benefits are accrued, for example:
• State pension
• Statutory pay such as statutory sick pay
• Earnings related benefits such as maternity allowance
Also consider if the definition of pensionable salary is based on the pre or post sacrificed amount as this will have an impact on the contributions being paid to a pension scheme. It can be worth reviewing the wording of salary sacrifice arrangements to check that they are operating as expected and can cope with changes such as a change in the level of sacrifice without requiring an amendment to the members contract.