Monthly Archives: October 2015

Weekly Round-up, 30th October, 2015.

20/20 vision on lending.

The Council of Mortgage Lenders, the trade body representing the majority of UK lenders, estimates that gross mortgage lending reached £20 billion in September – 2% higher than August’s lending total of £19.7 billion. In addition to the month-on-month rise, lending rose 12% year-on-year, from £17.8 billion in September 2014. This is the fourth month in a row that there has been a sharp improvement in year-on-year lending.

Gross lending in the third quarter of 2015 was therefore an estimated £61.4 billion. This is 18% higher than the £52.2 billion advanced in the second quarter, and an increase of 12% on the third quarter in 2014, when lending totalled £55 billion.

According to the CML mortgage lending is currently enjoying its best spell since 2008they expect to see further modest growth towards the end of the year, with the proviso that affordability pressures may be likely to limit gains for home movers and first-time buyers.

Education needed.

Leading figures from across the financial services industry, government, third sector organisations and charities have come together to launch a major initiative to address the stubbornly low levels of financial capability in the UK. The Money Advice Service, in conjunction with the UK Financial Capability Board, has this week published a 10 year Financial Capability Strategy which aims to improve people’s ability to manage money well day to day, prepare for and manage life events, and deal with financial difficulties. Its focus will be on developing people’s financial skills and knowledge as well as their attitudes and motivation.

Based on extensive research among 5,000 people and consultation with key organisations and institutions, the Financial Capability Strategy spells out in stark terms the problems the nation faces and the approach we must take to resolve them. Key research suggests only half of families have any life cover, 21 million don’t have a modest £500 in savings to cover unexpected bills like replacing the fridge or mending the car, 19 million don’t have an approach to budgeting that they feel works and around 8 million have problems with debt: of those, just one in six is seeking help.

To address this, MAS has built a strategy around creating a collective impact and cross-sector co-ordination rather than isolated interventions alongside testing and learning to determine what works in order to deliver evidence-based interventions. Their resources will be steered towards activities on the basis of what is proven to work.

Overall progress will be monitored by a Financial Capability Survey and on-going evaluation of specific interventions.

House fall.

Home insurance premiums continue to fall despite industry concerns that claims costs will soon exceed premium income. That’s the news according to the latest AA British Insurance Premium Index, Shoparound quotes for buildings, contents and combined policies all fell over the three months ending 30 September 2015, continuing a fairly steady downward trend that began at the end of 2012.

Average buildings policies fell by 1.4% to £107.39 (down 3.1% over the year) , the average contents policy fell by 2.1% to £60.00 (down 5.6% over the year) and a combined buildings and contents policies fell by 2.4% to £149.30 (down 6.3% over the year).

AA Insurance noted that the past couple of years have seen very few serious weather claims – mild winters, and little serious flooding or property-damaging storms which has led to the continuing easing of premiums and a rise in competition.

Not to be ignored.

To coincide with World Stroke Day this week Scottish Widows has highlighted the importance of financial protection. Approximately 152,000 strokes are reported in the UK every year, often resulting in a disruption to an individual’s ability to work. In 2014, it was the third largest cause of critical illness claims at Scottish Widows, which paid £5.6M in response to stroke-related critical illness claims – the equivalent of £22,000 every working day.

Scottish Widows supports the Seven Families campaign, which has provided a tax-free income for one year to seven families who have lost income because of a serious or long-term illness or disability – is also raising awareness of the importance of financial protection by supporting the Seven Families Action Day which took place on 29 October.

Throughout the day, social media users were encouraged to share information and videos about the Seven Families initiative, including case studies about the families themselves. There are two families in particular which have been affected by stroke, and by highlighting the potential impact of a loss of income, and sharing the ways in which the income provided by Seven Families has supported these families through difficult situations, everyone can be encouraged to consider the benefits of financial protection.

Haunted houses make a come-back

A ghost in residence, documented poltergeist activity and “over-looking a cemetery” are not commonly found on most home buyers’ wish lists, but it seems the haunted house is making a cultural comeback.

Although haunted houses have long been a staple of world folklore, they seem to have faded from pop culture over the past few decades as our scary-story tastes have favoured vampires, warewolves, killer clowns and invaders from other galaxies. But according to the Guardian newspaper, haunted houses are making a cultural comeback thanks in part to films such as The Woman in Black, based on the novella by Susan Hill. This Halloween, Hill is just one of many popular novelists publishing ghostly volumes, including the much anticipated novelisation from David Mitchell of Slade House, based on the short story he originally published on Twitter in 2014.

Given our re-kindled love for haunted houses, and with house demand out-stripping supply in many areas, perhaps developers will follow the example of architects Elridge Smerin, the award winning team responsible for The Grey House at 85 Swains Lane, a striking four storey home that sits high on Highgate Hill, encased on three (mostly glass) sides by the historic Highgate Cemetery.

Of course, as with any home, living in such close proximity to the dead has pros and cons. On the one hand, I imagine your neighbours would be largely amenable and quiet. On the other, I’m not sure I’d want to be home to find out if they rise up this Saturday night to celebrate All Hallows’ Eve.

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Are we flicking the right switch?

Last week saw the results of an 18 month enquiry by the Competitions and Markets Authority (CMA) which has concluded that the average customer could save £70 per year by switching bank accounts – the equivalent of the cost of filling the average family car with petrol, a weekly shop or the price of 2 tickets to a premier league football match.

The interesting question that the CMA research doesn’t address is about trust. If the perception is that every bank is the same, is £6 per month a significant enough incentive for someone to change the cards in their wallet or purse, direct debits and passwords to their on-line bank accounts? I’m not sure the lack of switchers is necessarily a price issue. We have a similar issue in the mortgage market but one where the incentive is a lot greater yet the apathy attitude exists. A £6 per month saving drops into insignificance when you could see a change in your interest rate from 3.99% to 1.5% irrespective of the fees being charged.

I appreciate that not everyone has a mortgage and that encouraging all those that could save money to make the change could bring the system of providing advice crashing down – too many people wanting advice, not enough time in the day to deliver it. But in terms of value to the consumer, by examining why there appears to be a barrier to remortgaging at present, surely as an industry we should be encouraging reviews of sectors that have a material impact on consumers’ lives.

Are Lenders making it easy for people to switch mortgages or interpreting the transition rules in such a way that customers end up with the same attitude to their mortgage as they do to their Bank Account? The next question then is if it takes 18 months to look at the bank account switching market, how long will it take to look at the re-mortgage market? In 18 months we have seen the impact of the Mortgage Market Review, in the next 18 months it will be the Mortgage Credit Directive and, of course, there could be an interest rate rise which changes the dynamics all together. So there we have it everyone is telling me to switch, switch my energy company, switch my bank account, switch my mortgage, switch my broadband, switch my TV supplier, switch my mobile, I think it’s time now just to switch off.

Neil Hoare

Commercial Director, HLPartnership

Weekly Round-up, 23rd October, 2015.

Empty Nester times two.

It is no longer just first-time buyers relying on the ‘Bank of Mum and Dad’ for a financial foot up, nearly a fifth (17%) of homeowners trying to take their second step on the housing ladder are considering turning to their friends or family to help fund the move, as trading up costs rapidly increase, according to the latest Lloyds Bank Second Steppers report.

Despite increasing house prices boosting equity levels for Second Steppers, the latest estimates shows people living in their first home still have to find an extra £125,694 to plug the gap between the sale price of their current property and the cost of the house they would ideally move to – typically a detached property. This gap reduces to £17,370 if the Second Stepper moves to a semi-detached home. Meanwhile the research also reveals that the size of the deposit required is still seen as the biggest barrier to moving home (44%).

While almost three in four (71%) intend to raise the deposit required for their next property purchase from equity in their current home, and over half (57%) will raid their savings, some 14% said they were considering returning to family members to help them out – typically asking for £22,480. This is up from £21,080 in 2014 and ££21,273 in 2013. Half (50%) of these Second Steppers feel that they wouldn’t be able to make the next move on the property ladder without this financial assistance.

The research revealed that almost half (48%) had also required help with the deposit on their first property. The average loan size first-time buyers received from family and friends the first time around reached almost £24,000, only slightly more than they are hoping to borrow again from parents or grandparents to take their next step on the housing ladder.

Of those considering asking for financial support four in 10 (43%) admit that parents have had to make sacrifices to help them get on and move up the ladder, although this has significantly fallen from 70% in 2013. One in five (20%) also said that they will now have children later in life due to the challenges of moving up the housing ladder into a family home.

Flick the Switch.

Publishing its provisional findings as part of an in-depth investigation into the £16 billion current account and business banking sectors, the Competition and Markets Authority (CMA) has found that banks do not have to work hard enough to compete for customers.

The investigation identified a number of competition problems in both the personal current account (PCA) and small and medium-sized enterprise (SME) banking markets. 57% of consumers have been with their PCA provider for more than 10 years, and 37% for more than 20 years. Bank customers fear that switching their current account to a new bank will be complicated, time-consuming and risky. The Current Account Switch Service (CASS) was set up to make the process easier and is functioning reasonably well, but awareness and confidence remain low. Only 3% of customers switched their PCA in 2014 and just 16% looked at alternative accounts.

The CMA found that overdraft users are even less likely to switch PCAs than other users. Heavy overdraft users, in particular, could save up to £260 a year if they switched. On average, current account users could save £70 a year by switching.

The lack of competitive pressure in SME banking is highlighted by the fact that more than 50% of start-ups looking for a SME account choose the bank with which they have a personal current account, over 90% stay with their BCA when the initial free banking period comes to an end, and around 90% then go to their BCA provider when they are looking for business loans.

The CMA investigation did find a number of positive developments: new entrants into both PCA and SME banking, innovative products becoming available, the digital innovations associated with online and mobile banking, and new tools like Midata and CASS, which have the potential to increase searching and switching.

Winter blues.

Figures from The Co-operative Insurance have shown a huge spike in home and motor claims when the clocks change and daylight saving time ends.

After analysing claims data since 2013, The Co-operative Insurance can reveal that home theft claims increase by 38% in the five months after the clocks go back – this year scheduled to be on 25 October. Thefts are most prevalent in the winter months on a Friday.

With winter nights often making it easier for burglars to hide under the cover of darkness and unoccupied houses easier to spot as they may not have lights on theft claims increase. According to the data, home thefts between November and March are more likely to be via forced and violent entry than in the summer months. In comparison thefts which are more opportunistic or deceptive, and are non-forcible are more prevalent in summer than winter months.

Motor insurance claims including thefts of, or from, cars also increases by 6% when daylight savings time ends. Claims analysts have found that in addition to the more difficult driving conditions such as icy, wet roads claims increase due to drivers forgetting to turn their lights on and vehicles being badly maintained leading to mechanical failures.

Are we there yet?

Parents are feeling pressured into sending their children on school trips even if they cannot really afford them, new research from Nationwide Building Society shows. Seven in ten polled (71%) admitted they felt compelled to send youngsters on trips, despite the average cost being £222 a year for every child. For a typical family with two children, this means the annual cost would be nearly £450.

According to the national survey, which polled 2,000 parents of school-aged children, the average parent spends £222 a year on sending a child on trips, of which £95 is for compulsory excursions. However, the total spend rises to £338 for parents living in London (£118 of which is for compulsory trips). Parents of those aged 12-16 incur the highest costs, averaging around £279 per year.

Nearly three quarters of parents (72%) didn’t want their child to feel left out by not going, six in ten (60%) wanted their child to have the best education and experiences in life, more than a quarter (27%) didn’t want to be seen as a bad parent by not sending them and around a quarter (24%) maintained they did not want to be perceived as struggling financially.

Any changes in the next 5 years?

In a move which will delight many lenders and regulators around the world trying to predict the future financial security of an individual wanting to buy a home, Ali Razeghi, a Tehran scientist has registered “The Aryayek Time Traveling Machine” with the state-run Centre for Strategic Inventions. The device can predict the future in a print out after taking readings from the touch of a user, he told the Fars state news agency.

Razaeghi, 27, said the device worked by a set of complex algorithms to “predict five to eight years of the future life of any individual, with 98 percent accuracy”. As the managing director of Iran’s Centre for Strategic Inventions, Razeghi is a serial inventor with 179 other inventions listed under his own name. “I have been working on this project for the last 10 years,” he said.

Razeghi continued “My invention easily fits into the size of a personal computer case and can predict details of the next 5-8 years of the life of its users. It will not take you into the future, it will bring the future to you.”

The product is not in mass production stage as yet due to the fear of the inventor that the Chinese will steal the idea and produce it in millions overnight. It’s not sure whether that’s what the machine has predicted itself when Razeghi used it himself but Crystal Ball manufacturers watch out, you may have some competition. It hasn’t been disclosed whether the 2 per cent inaccuracy rate refers to the effort that’s gone in to predict the National Lottery bonus ball.

Cyber life.

Last week saw the Office for National Statistics publish eyebrow raising estimates of the level of fraud in the UK, a figure of 5.1 million incidents with 3.8million victims in England and Wales over the past twelve months.

Despite the constant warnings over changing passwords, not to open phishing emails and to update anti-virus software, it seems those intent of taking money are still finding a way to circumvent the hurdles we put in place.

The good news is that where a loss was reported, three quarters of the victims received some level of financial compensation and over half were reimbursed in full. But, of course how long will this last?

How long will those paying compensation keep accepting that having a password that is easy to identify or that not having the right level of security on your laptop does not impact on their ability to help out.

If you leave the front door to your house open, the home insurer won’t pay if you get burgled; if you miss your pre-booked train because you didn’t leave enough time to get to the station, you don’t get to use the ticket – so why is it, if I use ‘password’ as my password or leave a laptop lying around for others to see, that I expect that I will be protected financially against any loss by my bank?

We have experienced mortgage fraud in our industry for many years and that fact suggests we are still struggling to get on top of the problem. Yes we know people’s lives are a lot more complicated these days, and that many lenders have decided that shifting the administration of the mortgage to the adviser or applicant is more cost effective, but how do we bring home the reality of living our lives across the internet, transmitting personal details in email, or downloading software that looks great but we don’t have a real clue where it has come from?

It is reported that there were 1.3 million fraud offences on UK-issued cards and bank accounts in the UK, the majority of which were where the cardholder and card are not present at the point of sale, and it’s estimated that overall card fraud losses as a proportion of the amount spent on cards in the UK represented 6.9p per £100 in the year ending June 2015. I assume we are all picking up the cost of this crime in our interest rates and card charges so there is a tangible benefit to drive down fraud, to take care with our personal information and treat our internet enabled devices with respect and not as a toy.

We know from our own implementation of a cloud based system that we have the opportunity to improve security, not having data stored on a hard drive that can be interrogated by unwanted guest programmes marks a step change in our industry. It’s time for us all in financial services to look to invest in a safety first mentality and not let those who wish to do us financial harm have the upper mouse.

Neil Hoare

Commercial Director, HLPartnership

Weekly Round-up, 16th October, 2015.

Pace maker.

The pace of economic growth slowed across both England and Wales in September, to its weakest level since early-2013, according to the latest Lloyds Bank Regional Purchasing Managers’ Index. However, employment levels continued to rise, led by strong job creation in London.

Business activity in the combined manufacturing and service sectors in England rose at its slowest rate since April 2013, with the index registering 53.8, dropping from 55.7 in August. The index, while remaining positive and above the ‘50-no change’ mark has fallen for three months in a row, signaling a sustained loss of growth momentum.

All regions in England recorded weaker business activity growth, the worst performing being the North West where the index dropped to a 33-month low of 50.2. Most regions recorded growth rates that were the slowest since 2013, although for London (55.6) and the East Midlands (55.4), the two best performers, the latest increases were the weakest for just 11 and four months respectively.

The employment index in England rose to 54.9 in September, its highest level for three months, largely on the back of strong job creation in London (57.8). Wales similarly recorded slower growth in business activity and saw its index drop from 53.9 in August to a 31-month low of 53.0. Wales, meanwhile, recorded its weakest rise in employment since June last year (52.3).

September’s survey continued to show low inflationary pressures, with businesses’ input and output prices both rising only slightly and at rates that were little-changed from August. Lower prices in global commodity markets and fuel reportedly acted to offset rising wages, with the still-strong pound also keeping costs down.

Piggy in the middle.

One in 10 UK adults is using a piggy bank to save for their retirement, according to new research from Aviva. A delve into the nation’s savings habits shows that UK adults mostly class themselves as savers (56%) rather than spenders (44%) and incredibly, almost one in 10 UK adults (8%) actually keep some of their retirement savings as cash, using a piggy bank or similar. A further 7% say they are investing in property for their retirement – rising to 11% in the 35-44 age group – and 2% are investing in the likes of art and antiques to secure an income in their later years.

The research suggests that four in 10 UK adults (40%) are not saving for their retirement at all. Unsurprisingly, this peaks amongst those aged 18-24 (58%) and those over 65 (55%), but between ages 25-64, a worrying one in three say they are not saving for retirement at all.

When it comes to saving more generally, bank and building society savings accounts are the most popular places to save, with two thirds of the nation (66%) using them. Cash ISAs are a preferred option for nearly half of UK adults (46%) but a third (32%) are shunning potential interest gains by keeping some savings in a piggy bank.

Almost half of the nation’s adults (45%) say that they save on a monthly basis, with one in three (32%) saying they have a specific purpose in mind for their savings. Holidays and rainy day funds are the most popular reasons for saving across all age groups, but purposes vary according to life stage.

Hitting the right note.

Bank of Scotland has unveiled its first polymer banknote, a limited edition fiver which will be going under the hammer to raise money for BBC Children in Need. The banknote was designed by Kayla Robson, a 13 year old school pupil from Dundee who won a competition which challenged children to design part of the note with the theme ‘What does BBC Children in Need mean to you?’.

The note will be a one off limited edition, with circulation limited to just 50 notes to make it popular among collectors, and hopefully raise as much money for BBC Children in Need as possible. The serial numbers on the note will also be unique with the first 40 notes using the serial code PUDSEY01 – PUDSEY40. The remaining 10 banknotes will be available for personalised serial numbers such as initials and date of birth. Given the rarity of the notes it is likely they will be sold for hundreds of pounds more than their face value.

Most of the notes will be auctioned in December by the prestigious auction house Spink’s, renowned for its sales of banknotes and coins.

Can’t wait won’t wait.

Use of the urgent referral pathway (often called the two week wait system) by general practices for patients with suspected cancer is saving lives, according to a study in the British Medical Journal. The results suggest that use of the urgent referral pathway is effective, say the researchers, and general practices that consistently have a low propensity to use urgent referrals could consider increasing its use to improve the survival of their patients with cancer.

Early diagnosis of a disease may mean more effective treatment and better outcomes. So, where there is a possibility that symptoms could indicate cancer, people are referred urgently to see a specialist or take a test to confirm or exclude a cancer diagnosis.

The urgent referral pathway for people with suspected cancer has been available in England since the early 2000s, but its use among general practices varies considerably and its impact on cancer survival is unknown. So a team of researchers, led by Professor Henrik Møller at King’s College London, set out to assess the overall effect of the English urgent referral pathway on cancer survival.

Using national records on cancer waiting times, diagnoses and deaths, they analysed data for 215,284 cancer patients from 8,049 general practices in England who were diagnosed or first treated in 2009 and followed up to 2013. The research team found that practices with a high referral ratio and those with a high detection rate had reduced cancer mortality, although the conversion rate showed no association.

For example, patients from high referring practices had a 4% improved mortality rate, while patients from low referring practices had a 7% worse mortality rate, compared with patients from practices with intermediate referral rates.

What’s in a name?

It all started with an mice infestation and the discovery of a vermin control company in the North East called Auf Wiedersehen Pest. Ever since, the Newcastle Chronicle has been collecting business names that are less a global branding opportunity.

From Middlesbrough’s Cod Almighty to Newcastle-based heating engineers RU Cold, a sandwich shop Great North Bun to the Bonnie Tiler (a female tiler from Gateshead), to hairdressers called Curl Up ‘N’ Dye or Curls Aloud, it appears pun related creativity is rife in the North East.

Gardening firms also seem fond of plays-on-words, with Lawn In Order and the Ace of Spades both being admirable. In other sectors there was Singhsbury’s in West Allotment, North Tyneside, a vehicle hire firm called PG Trips and the Baguette Me Not sandwich shop in Redcar.

Weekly Round-up, 12th October, 2015.

No Change, no change.

At its meeting this week the Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8-1 to maintain Bank Rate at 0.5%. According to the MPC, with the twelve-month Consumer Price Index inflation at zero in August, well below the 2% target rate, and with the likelihood that at least some spare capacity remains in the economy, the MPC has set its monetary policy so as to ensure that growth is sufficient to absorb any remaining underutilised resources.

As in recent months, the outlook for growth remains characterised by a number of opposing influences. On the one hand there has been resilient consumer spending whilst global growth has continued at below-average rates. The most recent official estimates and survey data are consistent with a gentle deceleration in UK output growth since its peak at the beginning of 2014. The sharp declines in the unemployment rate seen since the middle of 2013 now appear to have levelled off.

Some slowdown in the pace of the expansion and employment growth had been expected by the MPC indeed, there is increasing evidence of developing capacity pressures in some segments of the economy, and of labour skill shortages in particular. Annual regular pay growth in the private sector has risen and now exceeds 3%.
There remains a range of views among MPC members about how each of the factors relevant for the outlook for inflation might evolve in future with just one member, Ian McCafferty preferring to increase Bank Rate by 25 basis points.

Growth unabated.

According to the Halifax, house prices in the latest three months (July-September) were 2.0% higher than in the preceding three months (April-June). The quarterly rate of change fell from August’s 3.0%, to its lowest since May (2.1%). Prices in the three months to September were 8.6% higher than in the same three months a year earlier. This was lower than August’s 9.0%, but in line with the average so far this year.

Separate research showed that there has been a 60% increase in the average price of a flat over the past ten years; significantly higher than the 38% rise for all residential properties. Detached homes (21%) and bungalows (28%) have recorded the smallest rises over the last decade.

According to HMRC, UK home sales increased by 3% between July and August, to 106,480. This was the highest monthly total since February 2014 when sales reached 109,030. Sales in the three months to August were 6.5% higher than in the preceding three months. This is supported by data from the Bank of England which showed that mortgage approvals increased for the third successive month in August. The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 3% in August to the highest level since January 2014. Approvals in the three months to August were 6% higher than in the preceding three months (March-May) and 6% higher than in the same three months last year.

The challenge for the housing market? New instructions by home sellers declined in August for the seventh consecutive month. This helped to push down the stock of homes available for sale again in August, reducing it to a new record low for the third successive month according to the Royal Institution of Chartered Surveyors in their latest monthly report.

Costa Coffin.

New research by Royal London – the UK’s largest mutual Life, Pension and Investment Company – reveals the cost of an average, basic funeral in the UK has increased by 3.9%. This is higher than annual UK inflation of 1% (as measured by RPI). The average funeral is now – up £140 from £3,562 in 2014. The Funeral Cost Index 2015 reveals the price of a funeral has risen almost as rapidly as house prices since 1980. Since last year’s Index (October 2014), cremation costs have risen more than burials: the average cremation has risen by 4.2% to £3,294, while the average burial is up by 3.7% to £4,110.

The new Index reveals the cost of a funeral continues to be a postcode lottery. Funerals range from £2,976, for a cremation in Greenock, to £7,216 for a burial in Beckenham, Kent – a difference of £4,240.

On a national scale, Wales saw the most significant cost rise between 2014 and 2015: 5.2%. This compares to a rise of just 2.4% in Scotland, perhaps due to the removal of doctors’ fees in May 2015. On a regional level, costs rose most in the West Midlands and Yorkshire and Humberside – over 4% in both regions. The mutual says, given the price rises it is not surprising to see funeral debt rising in UK households. A survey of 2,000 people by YouGov found more than one in ten people (13%) struggle to pay for a funeral today. On an individual level, funeral debt is £1,318 – collectively, across the UK this equates to £98.9m. Royal London says to cope with rising costs people are cutting-back when it comes to paying for essential items. The most striking example is coffins: last year’s Index found people spent £1,108 on average, but the 2015 report shows this has dropped to £989, a decrease of 11%. People are also exploring alternative burial options – 8% are now ‘woodland’ or ‘‘natural’.

Calling time on PPI.

The Financial Conduct Authority has now decided to consult, by the end of the year, on the introduction of a deadline by which consumers would need to make their Payment Protection Insurance complaints or else lose their right to have them assessed by firms or by the Financial Ombudsman Service (the Ombudsman).

The FCA intends to consult on a deadline falling two years from the date the proposed rule comes into force – which, subject to consultation, would not, they anticipate, be before spring 2016 – hence PPI consumers would have until at least spring 2018 to complain. The consultation will also set out their plans for a proposed FCA-led communications campaign designed to prompt consumers to complain in advance of that deadline.

The evidence so far indicates a high and growing proportion of complaints are made via claims management companies, with fee costs to the consumers who use them and many relate to older sales (pre-2005 and even pre-2000), where the documentary evidence held by firms and consumers is likely to have significant gaps and recollections and oral evidence are becoming increasingly stale. A significant proportion of complaints made turn out not to have involved a PPI sale. The FCA also found that the open-ended nature of the complaints-led approach appears to contribute to this consumer inertia and a number of those consumers who told us they intended to complain, said that they had not yet got around to doing so.

The search goes on.

A man owned Google.com for a matter of minutes after successfully buying the domain name of the world’s most popular website for just $12.

Sanmay Ved was scrolling through Google’s new domains sale service when he typed in the address and discovered Google.com was available to buy. Assuming there must have been a mistake, Mr Ved tried to add the domain to his cart – and was shocked to find he could.

Writing in a LinkedIn post , he said: “I was hoping I would get an error at some time saying transaction did not go through, but I was able to complete the purchase, and my credit card was actually charged.”

Once the transaction was complete, Mr Ved received two emails confirming his purchase. Further inspection confirmed that ownership of Google.com had indeed been transferred to him. But minutes later, he received an email from Google saying they had cancelled the order. Mr Ved – a former Google employee – says he then alerted firm’s security team to the breach. He says the company acknowledged the incident.

Have we missed an interest-only trick?

Last week saw the Prime Minister become David the Lionheart as he announced a new crusade to the fields of Brown to release those imprisoned by the lords of the land. His impassioned speech at the Tory Party Conference in Manchester suggested rigid council policies meant less house construction which, in turn, has led to men and women in their 20’s and 30’s waking up each morning in their childhood bedrooms.

He obviously hadn’t watched the insightful sitcom, Sorry, where Ronnie Corbett played the role of mild-mannered librarian Timothy Lumsden, still living at home despite having arrived in his forties. Lumsden finally escaped the clutches of his bedroom in series 7, a good indication of the length of time it would take to save up the deposit to move in today’s MMR world.

The Government understands the need to build more homes, with so many at the later stage of life living longer and choosing not to downsize to release equity for that cruise round the med which was so attractive in the early eighties. The cycle of property ownership has got longer hence the need to build more and not swap empty nesters with spare bedrooms into family homes which are fully booked.

Perhaps the evolution of the company Airbnb has demonstrated a new vision of home ownership for the older generation which splits a single property into part home, part income earner. The world is moving on a pace and, as Bob Dylan sang, “times they are a changing” so the old ideas should be challenged. Why is renting such a bad thing, after all it’s only an interest-only mortgage with no repayment plan or responsibility for the boiler breaking down? And of course the demise of interest-only mortgages hasn’t helped with so many homeowners hitting the point at which they can retire safe in the knowledge that the mortgage has been repaid. Not being forced out of the home due to over indebtedness or a lack of a repayment vehicle has its pros and cons. The pros: a more affluent and financially stable elderly population, a valuable inheritance to pass on at some point; the cons: a property market that is stagnating and with little cyclical movement.

George Osbourne suggests he has the answer. The Chancellor is apparently going to create a vast pot of building money by accessing small local pension funds who supposedly ‘lack the expertise’ to invest in infrastructure which could see £180 billion of assets unlocked or locked, dependent on what side of the door you are on, and used for housing – or could it be called council housing, I wonder? So off we go to the fields of brown and convert them into just brown – all field lovers beware.

Neil Hoare

Commercial Director

Weekly Round-up, 2nd October, 2015.

Losing Interest.

Over the past two years, the total number of interest-only loans outstanding has fallen by over a quarter, according to the Council of Mortgage Lenders – with a 16% reduction in the number of loans over the past year alone.

As at the end of 2014, CML members reported that there were around 1.9 million pure interest-only mortgages outstanding, and around 460,000 part interest-only mortgages. This was around 300,000 fewer pure interest-only mortgages and 160,000 part interest-only mortgages than a year earlier.

A quarter of this reduction is down to natural attrition (loans maturing and repaying at the end of their term). Around a third can be attributed to full redemption of loans not set to mature until at least 2028 – suggesting that many borrowers are taking action well before problems could arise. This also suggests that a significant group of borrowers are successfully remortgaging onto full repayment terms without falling foul of new affordability rules.

Of those loans that have matured, few have failed to repay. In total, there are fewer than 16,000 loans outstanding which have matured but not yet repaid or restructured – and previous experience shows that most such loans subsequently redeem within a relatively few months of maturity. Lenders contacted around 427,000 interest-only customers between April and December 2014 (about 17% of all interest-only borrowers). During 2014, the focus of lender communications moved beyond those whose mortgages are due to mature by 2020, and included borrowers whose mortgages are not due to mature until after this.

Response rates by borrowers varied. Around 27% of those contacted whose mortgages are due to mature between 2021 and 2028 responded , but only a disappointing 2% of those whose mortgages are not due to mature until after 2028 did. However, where lenders did succeed in getting customers to respond, 86% of those who responded had a repayment strategy, and those who did not appeared responsive to making changes (such as switching to repayment terms, overpayments and term extensions).

London Double.

According to the Nationwide, UK house prices increased by 0.5% in September, with the annual pace of house price growth picking up modestly to 3.8%, from 3.2% in August.

The Chief Economist of the Building Society highlighted that the data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth. However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability. In recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead.

The annual rate of price growth in London is currently the highest in the country and actually accelerated to 10.6% in Q3, up from 7.3% in Q2. The gap between London house prices and the rest of the UK has continued to reach new highs, he price of a typical home in the capital is more than double the UK aggregate and more than three and a half times the price of the typical property in the cheapest UK region being the North of England.

Never get tired of flats.

The average price of a flat in the UK has risen by £87,550 (£730 per month) over the past decade, from £145,874 in 2005 to £233,424 today, according to latest research from Halifax.

The 60% increase in the average price of a flat is significantly higher than the 38% rise for all residential properties over the same period. However, a big proportion of the national rise in flat prices since 2005 is due to the rapid increase in flat prices in London (67%), where flats represent a relatively high proportion of the overall property market (49% of sales compared with the UK average of 17%).

Detached homes (21%) and bungalows (28%) have recorded the smallest rises over the last ten years although semi-detached and terraced homes have remained the most popular types of property purchased over the past ten years. Combined, these two types represent 59% of all home sales in 2015; up marginally from 58% in 2005.

Semi-detached homes have risen in popularity among first-time buyers, accounting for 28% of purchases in 2015 compared with 21% in 2005. However, flat sales have fallen from 20% of all property sales to 17% over the past decade.

Breast Cancer Awareness.

Ahead of Breast Cancer Awareness Month in October, Aviva and Friends Life have released new critical illness claims statistics which reveal that over £62.8 million was paid out last year to critical illness customers with breast cancer. Data from the insurers shows that breast cancer is the single most common condition amongst critical illness claims, accounting for nearly a quarter (22%) of all claims paid in 2014. In terms of claims by females, this figure rises to 44% of all claims.

The data also shows that amongst claims for cancer, over three times as many claims are made for breast cancer (36%) than the second most common cancer claimed for, gastrointestinal cancer at 11%. Amongst women, breast cancer accounted for 58% of all cancer claims, with gynaecological cancer the second most common at 10%.

During 2014, Aviva and Friends Life paid out over £62.8 million to critical illness customers with breast cancer, with an average payment of £72,500. This includes six cases of male breast cancer.

And finally…Not very convenient.

A passenger has been banned from flying with Dutch airline KLM for five years after he attempted to open a jet’s door at 30,000ft. James Gray, who claims he mistook the main door for the toilet door during a KLM flight from Edinburgh to Amsterdam, was arrested by police and escorted from the plane at the Dutch city’s Schipol Airport following the incident.

He said airline staff accused him of trying to open the door of the plane. “The crew told me to stay in my seat, keep my legs crossed and I was to be arrested when the plane landed,” Mr Gray said. “I tried to explain it was a simple mistake. It was a misunderstanding. The police came and arrested me. They weren’t too friendly.” Mr Gray was feeling a little flushed after the incident.

After a night in a detention centre, rather than spending a penny, Mr Gray, from Alloa in Scotland, received a £434 fine and was stopped from boarding a KLM flight back home and told he wouldn’t be able to fly with the airline for five years. He maintains he only touched the door’s handle and added that he wouldn’t intentionally open a plane door.

What do the Protection Market and Car Manufacturing have in common?

In a week where the question of trust moved from the financial services industry to the car manufacturers, the fact that we are all suddenly worrying about the impact of diesel engines on the environment is an interesting analogy for the protection market.

When cars are sold, the emissions tend to influence the amount of tax we pay to keep the car on the road – the lower the emissions the less tax so, ultimately, the better we feel as we don’t see the tax going to someone fixing a pot hole in the road. And of course no-one likes paying too much tax.

We also tend to close our eyes to the impact of our purchase on the environment but get upset when we find out that perhaps it’s worse than we thought because the statistics in the brochure aren’t accurate. Would we have paid a little more to make sure the engine manufacturers could invest a little technology in making their engines do what they say they do, deliver tax benefits and protect the environment?

So why is this situation similar to the protection market? Well, we have a problem of trust – PPI has embedded a sense of scepticism in the general public. There is the opportunity to save tax through putting policies in trust, although we don’t know in many cases what the money will do, and we feel good when there is a legal wrapper around an intangible piece of paper that says I’ll promise to pay if you can’t. Indeed the amount of tax that could be saved runs into the thousands and not the hundreds. And we tend to close our eyes to the impact of buying a cheaper product will have on the family environment we have around us – that is until it comes to light that what was a healthy individual running round the streets finds out there is something wrong with their statistics.

So why don’t we spend more on protecting ourselves? We sit in a family car that takes us and our loved ones to the places we want to get to, why is it that people buy just term assurance that effectively excludes one member from arriving at the right destination? According to the Association of British Insurers, protection insurers pay out more than £9m every day to families to help them cope with illness, injury or the death of a loved one whilst £7m is paid to help private health insurance customers receive medical treatment. Clear fair and not misleading might not be a principle in the Motor Industry but it certainly is in the world of protecting people, children, lifestyles and the future wellbeing of the UK population – perhaps now is the time to remind customers about the ethos of our industry.

Neil Hoare

Commercial Director