Thursday, 23 January 2014

Huge cost of pension charges

Paying 1% a year on your pension savings, rather than 0.5%, could cost you £77,900.

Paying 1.5% rather than than 0.5% would cost you £144,200.

That is how much less your fund would be worth because of higher charges -assuming you started putting in £100 month and raised contributions gradually over 46 years and got some decent investment growth.

The analysis comes from the DWP's consultation on capping charges at 0.75% or 1%.

The Pensions Minister, Steve Webb has put off imposing a cap until after April 2015

The average charge for new savers is 0.51% but thousands are already on higher rates.

Monday, 13 January 2014

Homeserve faces record mis-selling fine

My understanding is that it is a minority of Homeserve's 2.7m customers (at the time of the mis-selling) who might get compensation. That's likely to mean tens of thousands at least, but perhaps not hundreds of thousands.

The payments, or refunds, could amount to hundreds of pounds but are unlikely to be in the thousands. Some customers may have stayed for several years but the Homeserve cover in question cost a few pounds a month.

It appears that the process of contacting the victims of the mis-selling has already started and should be completed by the spring. So, in theory, if you are affected you don't need to do anything - in practice, if you are worried about being missed out you can get in touch with the company or the FCA to make sure you aren't.

The home repairs and insurance company, Homeserve, could end up paying the biggest fine ever imposed on a retail financial firm in the UK.

Homeserve revealed to the stockmarket this morning that it had been put on notice by the financial watchdog, the FCA, that it faced a fine for £34m for mis-selling.

Homeserve had 2.7 million customers when news of the investigation emerged nearly two years ago, but it is unclear how many are affected and how much compensation might be paid.

The company provides emergency repairs and insurance cover for boilers, electrics and plumbing.

It said in a statement that the issues under investigation "relate to historic sales and marketing, controls and governance and complaints handling".

Homeserve can now discuss or challenge the fine if it chooses to, so it's likely to be weeks or months before the full details of the inquiry are published.

Last year, Lloyds Bank was fined £28m for pushing staff to sell customers insurance they didn't need.

Wednesday, 8 January 2014

At last, people might decide to sell the house

There's a turnaround in the number of people thinking it's a good time to put their homes on the market, according to the Halifax.

It says 51% see the next 12 months as propitious for selling, against 39% who don't agree. Three months ago it was the other way round.

The finding is based just on a MORI survey of 1,984, adults around Britain, but this is an important issue, because the dearth of sellers has been holding back transactions.

Plenty of experts warn that there is a shortage of homes, which is exacerbating the jump in prices. One reason is that we haven't built enough, but another is that owners are reluctant to become vendors.

Some suggest caution about the Halifax survey, arguing there hasn't been much of an increase in homes coming on the market...yet.

But the stats are interesting:

*There's a North/South divide. 69% in London think it is a good time to sell, 64% in the South East of England. Only 30% think so in Scotland, 40% in the North East of England and 41% in the North West.

*Those who actually own something are more optimistic. 56% of owner-occupiers (versus 51% overall) and 58% of people with a mortgage.

*Older and better-off people are more likely to think 2014 is a good time to sell.

Why have people been reluctant up until now? Well, part of it is just the general gloom which prevails when the market is seen to be in a trough.

But there are also specific reasons:

*transaction costs, including stamp duty which can be tens of thousands of pounds in higher-value areas.

*the fashion for extending the house rather than selling

*some are trapped (or think they are) in interest-only mortgages

*or they took out a huge mortgage and that's still weighing them down.

*older people not downsizing because they think prices will go up, while savings rates on any profit they'd make are still derisory

Even so, if 2014 became a year for selling it would make a big difference to house hunters and might make a house price bubble less of a danger.

PS - thanks to @HenryPryor for his thoughts!