Monthly Archives: September 2016

Weekly Round-up, 30th September, 2016.


High Street Banking statistics published this week point to a softer housing market, strong consumer credit and slightly weaker business borrowing in August. The data was collected before the Bank of England reduced interest rates to 0.25% and so give an indication of some of the underlying pressures that the Bank of England’s Monetary Policy Committee was responding to when it made this decision.

Mortgage borrowing appears to be growing at a slower pace than it has for the last few months reflecting both the slowdown in housing market growth after the April Buy to Let spike and broader trends in the sector. However, given the low interest rate environment and high levels of confidence during the summer, the strong credit growth can be interpreted as strong consumer sentiment.

House purchase approval numbers were 21% lower than in August 2015 but in the first eight months of 2016 they are 2% lower than in the same period of 2015. In comparison remortgaging approvals were 6% lower than the same month last year but so far this in 2016 are 16% higher than in the equivalent period of 2015.

Country Living

London workers could save themselves almost £450,000 (60%) on the cost of a home if they are willing to live outside of the city and commute daily for an hour each way, according to the latest research by Lloyds Bank.

Towns which are an hour’s commute from central London, such as Wellingborough, Southend, Sittingbourne and Rugby, have an average house price of £294,903: compared to the average of £741,919 for a property close to their place of work in central London (zones 1 and 2). This is equivalent to an average saving of £447,015 – or 60% – on property prices. Even when taking into account the annual rail cost for a one hour daily commute each way (£4,989), a commuter would have to make the same journey for 89 years for the total rail costs to wipe out the benefit in house prices.

Away from London and the South East however, for commuters to Britain’s second and third largest cities, Birmingham and Manchester, house prices are often higher outside the city. The average house price in Birmingham is around £172,000, but several towns around 40 minutes rail journey away – including Derby, Coventry, Burton on Trent and Leamington Spa – command higher average house prices of £211,661. Commuters from these towns also have to pay almost £2,221, on average, for an annual rail pass.


Annual growth of £198 million in equity release lending between the first halves of 2015 and 2016 is the highest level seen for over a decade, according to the latest research from the Equity Release Council (The Council). Consumer demand for releasing housing wealth to help fund later life is continuing to grow, with lending in the second quarter of 2016 exceeding £500m for the first time and setting a new record for the highest quarterly lending total. It meant the first half of 2016 saw £908m of lending from members of The Council: £198m or 28% higher than the equivalent period of 2015. In value terms, this £198m growth was the highest seen in the last decade, surpassing £160m in H1 2014.

The Council’s analysis shows that since 2007, equity release lending activity in the second half of each year has been 13% higher on average than the first half of the year. This has increased to 20% over the last five years (2011-2015) and reached 26% in 2015. The average age of equity release customers in H1 2016 remained just below 70 (69.9), with the age bracket from 65-74 remaining the most common for taking out a new plan.

No longer ideal

Younger people are more willing to buy a home prone to safety, flood or crime risks in order to get on the housing ladder, new research from Aviva reveals, as the ‘ideal’ home is replaced with what people can afford.

According to the findings, a third of would-be homebuyers aged 34 and under say they would buy a home in a high crime area (34% for both 18-24s and 25-34s). Across all age groups, only 19% would do the same, falling to just 7% of those aged 55 and above. Despite widespread coverage of damage caused by flooding in recent years, almost half of18-24s (44%) and 36% of 25-34s would consider living in a flood-risk area, compared to 23% across all age groups, and only 8% of those aged 55 and above. The nation’s love of ‘doing up’ homes is also highlighted, with more than six in 10 people across all age groups saying they would buy a property needing significant improvements in order to provide safe accommodation.

When asked about the five most important factors when buying a home, the price and affordability of a property unsurprisingly emerged as having the biggest influence across all age brackets (73%). While safety of the area doesn’t appear to be a focus for people aged 18-34, it seems to be a significant influence for older homebuyers. This could be because under 35s are more blasé about safety, or simply cannot afford to make this a priority.


This year’s winners of IG Nobel Prizes for 10 “improbable” research projects has been announced. The awards recognize researchers who conducted projects that “make people laugh, then make them think.”

The 2016 recipients included a team of U.K. and New Zealand-based researchers examined the perceived personalities of rocks, from a sales and marketing perspective, researchers received recognition for their work on why white-haired horses are the most horsefly-proof horses, and why dragonflies are fatally attracted to black tombstones, and Volkswagen took home the award for solving the problem of excessive automobile emissions by automatically, electromechanically producing fewer emissions when cars are tested.

A group of psychologists interviewed thousands of liars about their lying habits although researchers acknowledged that the study participants could have been lying.

The prize for biology was jointly awarded to Charles Foster and Thomas Thwaites. Mr. Foster was awarded for his work, “Being a Beast,” which documented his attempts at living in the wild as, at different times, a badger, an otter, a deer, a fox and a bird. Mr. Thwaites was awarded for his work, “GoatMan: How I Took A Holiday From Being Human,” a project where he created prosthetic extensions of his limbs that allowed him to move in the manner of, and spend time roaming hills in the company of, goats.

Researchers from the University of Waterloo and Sheridan College studied and identified traits that make some people more likely to believe empty, unproven statements. Fredrik Sjöberg was awarded for his three-volume autobiographical work about the pleasures of collecting flies that are dead, and flies that are not yet dead. There was also an award for a group who studied how people perceive distances when they bend over and look between their legs.

Finally, a prize went to a scientist who published a study on the impact of polyester underwear on male rats, the findings were pants.


HLP Compliance Blog

Debt Consolidation, Part III

This week we are presenting our third and final instalment of the ‘Debt Consolidation Trilogy’. Not quite up there with Fellowship of the Ring or The Forsyte Saga in terms of literary genius (sorry Bob), but we believe that the content is very important and highly topical right now; especially so given only a few days ago the FCA called me and invited me to a special network forum on the topic – coming up in October!

This edition focuses on the general risks of debt consolidation – looking at these from both the customer and the broker viewpoint, following on from a closer look at debt consolidation crossing into Debt Management and launching the network Debt Consolidation Calculator in
Part I and Part II.

Statistics show that debt consolidation levels have doubled since the implementation of the MMR and this is a shift from using it predominantly as a tool for reducing stressfully high outgoings (or for more ‘lifestyle’ oriented reasons), to a facility that reduces the customer’s outgoings to allow them to demonstrate affordability in order to obtain the mortgage. The FCA have noticed this.

I spoke a few weeks ago about the FCA’s recent work on
Compliance Q & A, 15th September, 2016 ‘Financial Distress’ and the signs that can help predict an individual’s predication to this. A key finding was the customer’s debt to income ratio (DTI), with the FCA citing those with particularly high levels of debt being particularly vulnerable. Combining this with the debt consolidation review suggests that there will be an effort towards encouraging customers to pay off existing debts before taking out new ones, rather than recycling and accumulating debt, which has been the way for so long now. We strongly recommend you take stock of this when designing solutions and strategies for your customers and to help keep your customers (and your business) safe from future problems.

Hopefully the way we have presented this important topic to you, in phases over a few weeks, has been a helpful way of developing your knowledge. Bob has combined this work into a 22-page Guidance document that will be released next week and will form part of an updated Network Procedures Manual that we will be releasing later this year.

We have also been busy working on updating the Introducer Application process, which will form our topic next week, with developments to the Product Transfer process to follow.

As ever, if you need help with this, or any of our procedures then do get in touch with your Regional Compliance Manager, the central office compliance team, Bob or myself.

Weekly Round-up, 23rd September, 2016.

High Five

More than 1 million incidents of financial fraud occurred in the first six months of 2016, according to official figures released by Financial Fraud Action UK (FFA UK) this week. Representing a 53 per cent increase compared to the same period last year, this means an incident happened in the UK every 15 seconds between January and June 2016.

The figures are released as FFA UK and all major banks and key financial services providers across the UK come together for the first time to launch a national campaign to combat financial fraud. The campaign – Take Five – aims to put consumers and businesses back in control with straight forward advice to help prevent financial fraud. New research to support the campaign reveals almost three quarters (73 per cent) of people claim they are aware of the methods fraudsters use. Yet, at the same time more than a quarter (26 per cent) of people admit they still provide personal details to people claiming to be from their bank even if they do not think they should.

The most common reason for respondents sharing their details was because they felt the person seemed genuine (43 per cent) while almost four in ten (39 per cent) said it was because they felt pressured. Almost four in ten (38 per cent) also said it was because they were busy/in the middle of something and wanted to get them off the phone quickly. Of those who have been a victim of financial fraud, almost a quarter (24 per cent) admitted the main reason was because the fraudster was extremely convincing. More than a third (37 per cent) of people thought they were being scammed during the conversation but still continued with the transaction and almost a quarter (23 per cent) realised after the conversation had finished.

The Take Five brand will be visible across many of the banks’ resources including in branches, on ATMs and their websites, and consumers and businesses can find out more by visiting the campaign website

Jingle Bells

Whilst it might feel a bit early to start thinking about your Christmas list, with only 14 weeks to go until the big day, those who haven’t already put any money aside will need to start budgeting around £36 a week to avoid being caught out by the cost.

According to the latest data from Halifax, people spent an average £506 on Christmas 2015, including all spending on gifts, food, drink and socializing – an eight per cent rise in spending since 2014. Despite the fact there was an increase in spending in 2015, 44 per cent of Christmas spenders said they spent the same as the previous Christmas. Almost a third (29%) admitted to spending more than they did in 2014, and of those who did increase their Christmas spend, nearly one in five (18%) spent over £200 more.

One in three (31%) consumers surveyed still had payments outstanding at the start of February, and of these, the Christmas financial hangover was expected to last until April. A third (34%) of festive spenders surveyed saved specifically for Christmas. Over half (55%) funded some of their Christmas spending through their salary and around one in three (31%) relied on a form of credit, with credit cards (26%) being the most popular choice. Seven per cent ended up dipping into savings that they were not planning to spend on Christmas.

In the North East, consumers spent the most money on Christmas (£591.08), 17 per cent more than the national average. Meanwhile, people in the South West were the most frugal and spending £415.08, 18 per cent less than the average. Christmas spenders who have never been married spent an average of £327.92, with those who are married or in a civil partnership spending close to double (£620.38). The average woman spent nearly £100 (£99.45) more than the average man.

Advice is key

As announced in the latest Budget the government has published its consultation document on amending the UK definition of financial advice. The objective is to give those firms involved the confidence to develop better and more tailored guidance services to help customers make informed financial decisions. According to the government, some consumers have relatively straightforward financial needs or small amounts to invest and for them the cost of full regulated advice may outweigh the benefits, or it may be uneconomic for firms to provide them with regulated advice. Currently, Investment firms are reluctant to offer guidance services to these consumers, increasing the risk of the consumer making poor investment decisions on their own. A key reason for this reluctance is uncertainty around what constitutes regulated advice and what does not.
The main reason for the uncertainty is the fact that UK firms face two definitions of financial advice. The UK currently defines regulated financial advice as ‘advising on investments’ which is set out in the Regulated Activities Order (RAO). This definition is broader and less specific than the definition used in the Markets in Financial Instruments Directive (MiFID), which is based upon a firm giving a customer a personal recommendation. Evidence suggests that the MiFID definition is clearer for firms and consumers and is also much easier for firms to build into their compliance processes.
The consultation proposes to amend the wording in article 53 of the RAO to reflect the text set out in MiFID, so that consumers only receive “regulated advice” when they are offered a personal recommendation for a specific product.

Coming of Age

Turning 18 may have once symbolised the beginning of adulthood, but the journey to financial independence is lengthier and more costly than parents may have bargained for. New research, commissioned to support Sainsbury’s Bank’s second Family Finance Report ‘The Family Lifecycle – The Learner Years’, reveals that on average parents in the UK expect to support their children until the age of 29, while 24% expect that 21-25 is the age when financial support will stop. There is a three-year disparity between how long both genders expect to have to financially support their child, with women expecting the cut-off point to be 30 years and men, 27 years.

The bank’s research into the cost of supporting children through adulthood shows that significant birthday parties such as 16th, 18th and 21st are the expenses most parents expect to cover (52%) followed by driving lessons (50%) and money towards their children’s wedding (40%). Other significant contributions include help to buy their first car (38%), putting them through university/living expenses (38%), money towards rent/ rent deposits (23%), deposits for property purchases (21%), regular financial top-ups to income (18%) and gap year travel plans (8%).

The analysis of Sainsbury’s Bank loans data reveals that last year parents in the UK took out nearly £2 million in loans to support their children. Nearly half of all such loans were for weddings, with the average value standing at over £12,000. Other popular reasons for taking a loan to support a child were education, including university fees, costs and trip expenses, with an average value of £13,000; loans for children’s cars (£9,500) and household expenses (£8,000). Sainsbury’s Bank’s analysis of ONS data also shows that around one in four young adults lived with their parents in 2015. Nearly half of 20-24 year olds lived with their parents, compared with a fifth of 25 to 29 year olds. For 30-34 year olds, this figure was less than one in 10.

Overall, there were more than 3.3 million adult children (aged 20 to 34) living with their parents in the UK last year, representing over a quarter (26%) of their age group. This is 618,000 more than in 1996, when 2.7 million adult children lived with their parents, representing just over a fifth (21%) of their age group and correlates with a decline in the number of young adult homeowners, which has decreased from 55% in 1996 to just 30% in 2015 for 25 to 29 year olds and from 68% to 46% for 30 to 34 year olds.

999 or 111

A concerned British road user got a surprise when she called police to report another motorist, only to realise she had phoned a force more than 3,000 miles away in the United States. The caller burst out laughing along with the confused police call handler in Massachusetts when they both realised the mistake after two minutes on the line.

The woman, who thought she was calling officers in Barnstaple, Devon, had actually contacted Barnstable police on the east coast of America. Confusion arose after the woman, who had explained that she had seen a car cross the white line in the road to hit another vehicle, tried to explain where she was.

After she told the call handler where the incident happened, he made clear his bewilderment and she said: “You’re not local then, you can’t be because Ilfracombe is the next town on from Muddiford.” When the officer informed her she had called Massachusetts she said with surprise: “Massachusetts? There’s no way you can help me then is there?” The officer replied: “It’s a different town, it’s twinned with Barnstaple, England. Our response time is going to be about six hours.”

HLP Compliance Blog

Debt Consolidation, Part II

This week we are setting out further details in relation Debt Consolidation in the second part of our three-part series. Last week, we talked about debts counselling and debt management and issued important guidance on how to avoid debt management advice, which is outside the scope of our permissions and therefore would be illegal activity. Click here if you missed it.

This week we are exploring one of the fundamental risks associated with debt consolidation. That risk is that the total amount payable on the individual loans when combined within the mortgage, compared with that which the customer would have paid had the loans/credit not been consolidated will in most cases be a greater amount. It is therefore important that the customer understands this. By showing a calculation of this difference will ensure the customer truly understands the risk and, by attaching the calculation to the customer record, will demonstrate that it has been fully explained.

This risk area is something the FCA were, in particular, keen to focus on as part of their review earlier this year. Please take the time to read the guide and download our useful calculator.

We strongly recommend that you review how you deal with debt consolidation in your regulated and unregulated loans and develop your strategy in accordance with these revised guides to help you stay safe in business.

Weekly Round-up, 16th September, 2016.

Time to move?

Children in Scotland’s Orkney Islands enjoy the best quality of life of any local area district (LAD) in Great Britain, according to the 2016 Halifax Children’s Quality of Life Survey.

The latest research placed the Orkneys, Shetland and Western Isles in the top three, while the top 50 best places for children to live were split evenly between southern England (South East, South West and East of England) and the North (Scotland, North West, Yorkshire and the Humber, West Midlands, East Midlands and Wales). Aside from the North East and London, all regions are represented in the top 50.

In the North of Scotland, according to the Bank, the average primary school class size (17.0) and pupil to teacher ratio (PTR) in secondary schools (10.0) in the Western Islands are the lowest in Britain (national averages of 26.9 and 20.9 respectively). The Orkneys follow with primary class sizes of 18.1 and a PTR of 14.0. An average school spend in the Orkneys of £9,281 per pupil is the highest in the survey – just over twice the national average of £4,623. The spending ratio in the Western Islands and Shetlands follow at £9,095 and £8,844 per pupil respectively.

Children can walk about in relative freedom with an average of 71 vehicles per square kilometre in the Western Islands, 142 in the Orkneys and 145 in the Shetlands, compared to 9,587 in Britain as a whole. Importantly, the ONS survey on personal wellbeing indicates the Orkney and Western Island adult populations are among the happiest, most satisfied, least anxious and content in Britain. This bodes well for those growing up on the isles.

On the flip side, there is bad news for kids who like online games, as between only 52% and 56% of households have access to fast broadband; significantly below the national average of 86%.

Muted Mortgages

The Council of Mortgage Lenders has published its latest lending figures for the first full month of lending following the EU referendum. The results on an unadjusted basis show a month-on-month decline in first-time buyer and home mover activity and muted activity on the BTL market. Remortgage lending on the other hand has continued to grow, and reacted with a 7-year monthly high.

Home-owners borrowed £10.6bn for house purchase, which is down 13% month-on-month and 12% year-on-year. They took out 58,100 loans, down 14% on June and 13% on July 2015. First-time buyers borrowed £4.4bn, down 19% on June and 4% on July last year. This equated to 28,200 loans, down 17% month-on-month and 6% year-on-year.

Those moving up the ladder borrowed £6.2bn, which was down 9% on June and 16% compared to a year ago. This represented 29,900 loans, down 11% month-on-month and 19% on July 2015. Remortgage activity totalled £6bn, a 7% rise on June and up 20% compared to a year ago. This came to 33,400 loans, up 3% month-on-month and 10% compared to a year ago. Landlords borrowed £3bn, up 3% month-on-month but down 21% year-on-year totalling 18,600 loans, up 1% compared to June and down 26% compared to July 2015.

On average

According to the Office for National Statistics, average house prices in the UK have increased by 8.3% in the year to July 2016 (down from 9.7% in the year to June 2016), continuing the strong growth seen since the end of 2013. The average UK house price now stands at £217,000 in July 2016. This is £17,000 higher than in July 2015 and £1,000 higher than last month.

The main contribution to the increase in UK house prices came from England, where house prices increased by 9.1% over the year to July 2016, with the average price in England now £233,000. Wales saw house prices increase by 4.0% over the last 12 months to stand at £145,000. In Scotland, the average price increased by 3.4% over the year to stand at £144,000. The average price in Northern Ireland is currently £123,000. On a regional basis, London continues to be the region with the highest average house price at £485,000, followed by the South East and the East of England, which stand at £313,000 and £274,000 respectively. The lowest average price continues to be in the North East at £130,000.

Slip up

The insurance industry’s ongoing crackdown against insurance fraud is highlighting the lengths some cheats will go to in making dishonest insurance claims according to latest data published by the Association of British Insurers this week. The commitment to fighting fraud is helping to keep insurance premiums as low as possible for honest customers.

Last year, Insurers detected more than 130,000 fraudulent claims, equivalent to 2,500 a week, up 6% on 2014. These frauds were valued at £1.3 billion, down 3% on 2014.

There was a significant rise in dishonest liability insurance claims detected, such as ‘slip and trip’ claims. The number, at 26,900, increased by 36%, and their value, at £391 million, was up 14% on 2014. This reflects the industry’s focus on this area that has increasingly been targeted by fraudsters, partly as a result of the Government’s clampdown on whiplash, and the reduction in legal costs for road traffic accident claims.

Dishonest motor claims remained the most common frauds and of highest value – 70,000 detected, down slightly at 2% on 2014, with a value of £800 million, down 10%. While the value of property frauds uncovered continued to fall – down 2% to £107 million on 2014, the number of detected frauds at 27,500 rose by 7%. Opportunistic property fraud remains an on-going threat.

Getting Social

British adults now spend almost half their waking hours consuming social media including online content with an “almost machine-like” ability to absorb information, according to a report.

That amounts to spend 7.37 hours a day – up 2% on last year and 9% on 2005 – according to the latest IPA (Institute of Practitioners in Advertising) TouchPoints survey. Appetite for online content of all kinds increased by 7% over the last twelve months, with adults now spending four hours and 16 minutes a day on it for work, browsing, shopping, banking or emailing.

The report suggest that this year has seen a “profound shift” to online media consumption lead by the millennial age group. The findings revealed a growing difference between millennials preference for online media consumption and that of the broader adult population across all the major categories including video and live TV and audio.

The Postman did it

Crime writer Agatha Christie’s murder mystery novels are getting a new outing – as stamps. Royal Mail is issuing six stamps to mark the centenary of the year Christie wrote her first detective novel, The Mysterious Affair at Styles, which introduced her much loved Belgian detective Hercule Poirot to the world.

The stamps come complete with hidden clues and references, printed in special inks and microtext, to murders and key scenes in the famous novels.

Novels featured in the stamps – which will be available for a year – include Murder on the Orient Express, The Body in the Library, And Then There Were None, The Murder of Roger Ackroyd, A Murder is Announced and The Mysterious Affair at Styles, which she wrote in 1916 but was published in 1920.

Amateur sleuths will be able to use UV light, body heat and a magnifying glass to uncover hidden elements and key scenes in the stamps. Clues and features include a figure, half-hidden and wielding a knife, letters, the names of the suspects and Poirot himself.

Royal Mail said it would also provide a special handstamp on all mail posted in a postbox in Christie’s town of birth, Torquay in Devon, for five days from September 15 to 19.

HLP Compliance Blog

Debt Consolidation

During 2016 the FCA has taken a special interest in debt consolidation and networks have been involved in a thematic review. This is hot on the heels of the Mortgage Credit Directive (MCD) implementation and is a process through which the regulator has been looking specifically at permissions, advising on debt consolidation and debt counselling.

HLPartnership extends the relevant Consumer Credit permission to Partner Advisers to enable debt consolidation discussions to take place. These permissions are limited for the purpose of mortgage broking, taking the network out of any potential scope for Debt Management services, which we have no interest in being involved in.

It is really important for mortgage advisers in the network to understand what these limitations mean and how to remain on the right side of the law. We have produced a helpful update which explains the background, the difference between debt counselling and debt management and how to stay safe. You can read the update here.

Whilst we have been doing this we have also been looking at the procedures and we will clarify the process expected for debt consolidation mortgages next week.

Read more:

Compliance Q & A, 15th September, 2016.

HLP Compliance Blog

Compliance Q & A, 15th September, 2016

This week’s question comes from Leanne Borthwick (LB), of Dartmoor Financial, who asked Gavin (GE):

WM: Can you make the Introducer Form less obstructive and more supportive for the business? At the moment it puts potential business prospects off from dealing with us.

GE: Hi Leanne. There is a lot of focus in the mortgage and protection industry on the subject of introducers as it seems there is an increase in both mortgage and protection/commission fraud that can be linked back to third party introducers. In fact, only in the last two weeks, we have had an investigation that found a third party was submitting client leads to a partner firm where (unknowingly to our partner) an accountant was providing the clients with good quality, but illegitimate supporting documents such as payslips. We managed to avoid a panel removal and a notification to the FCA for the partner firm, but the situation really highlighted the need to maintain a robust process for due diligence on introducers.

I have also, in recent years, investigated several instances where firms have had commission sharing arrangements for protection leads that have turned into a nightmare situation, with the introducer staging what appears to be legitimate leads and applications, only for them to turn out to be fake cases leading to significant amounts of claw-back and an introducer who then vanishes into thin air!

As painful as these situations can be, these are generally rare situations and I appreciate that there are many legitimate firms out there that want to provide genuine business leads in a controlled way. If possible we want to make their association with us as seamless as possible. What we need is a happy medium that will put off any one that would potentially do harm to our partners, but at the same time be straight forward for blue-chip, reputable and credible introducers. I shall therefore undertake to review the Introducer Application form to meet these objectives as well as for us to provide the form in an editable PDF format for electronic completion. Watch this space, Leanne!

Weekly Round-up, 12th September, 2016.

The cost of a good school

With schools across England opening their doors to pupils again this week after the summer break, new research by Lloyds Bank has revealed that parents are willing to pay an average of £53,000 more to live in an area close to a top performing state school – an increase of £13,000 (31%) from last year. Average property prices have now reached £366,744in the postal districts of the Top 30 state schools in England which achieved the strongest GCSE results in 2015, with homes typically trading at a premium of £53,426 – or 17% – compared to the county average of £313,318.

The postal districts of six of the 30 top state schools command a house price premium in excess of £150,000, compared to their surrounding areas. Properties in the postal district of Beaconsfield High School have the largest premium, with homes trading at £629,021 (171%) above the county average house price (£367,191), at almost £1 million.

In addition to securing a place for their children at one of England’s current Top 30 state schools, buying a home nearby is also proving to be a shrewd investment. Parents who bought a home near one of the Top 30 schools just before their child first entered secondary school in 2011 according to the Bank’s figures will have seen an average house price rise of £76,000, from £290,683 to £366,744, in 2016 – an increase of 26%. This is a significantly faster rise than in England as a whole, where the average house price has grown over the same period from £240,208 to £282,353 – an increase of £42,145 or 18%.

Stability returns

The Royal Institution of Chartered Surveyors (RICS) August 2016 housing market survey shows a pick-up in confidence, following a significant drop in activity and price expectations in the wake of the EU vote. At the national level, RICS predicts both prices and sales will rise over both the three and twelve month horizons as activity in the market stabilises.

During August, 12% more respondents nationally reported an increase in prices (up from +5% in July). Although this reverses a run of five consecutive surveys in which the net balance has decelerated (from a high of 50% in February), it is still the second weakest reading over the past eighteen months. In London, the price net balance remained in negative territory for a sixth consecutive month, with 30% more respondents noting a fall in prices over the period, as opposed a rise. By way of contrast, prices increased in most other parts of the UK.

Looking ahead, according to |RICS, price expectations over the next three months nationally moved into positive territory for the first time since April with 10% more respondents now anticipating an increase over the period. This slightly stronger picture is also reflected in price expectations for the coming year with modest increases anticipated in most parts of the country away from the capital.

RICS still highlight that a key factor in supporting the rising prices is the continued shortage of stock for sale, a position that looks set to continue as new instructions declined once more during August. As a result, stock on estate agents books slipped for the third month in a row and is now approaching the record low posted in December last year.

New buyer demand also decreased slightly across the UK as a whole, although the pace of this decline has eased significantly. A net balance of -7% more chartered surveyors have reported a fall in demand in August (up from a net balance of -25% in July).

I don’t believe it

Last week, The Financial Ombudsman Service released their latest six-monthly complaints data relating to banks, insurers and other financial businesses. The figures published show that the ombudsman took on a total of 169,132 new cases in the first half of 2016 – an increase of 3% on the previous period.

Of the total cases referred to the ombudsman in the first half of 2016, payment protection insurance (PPI) made up 54% of new complaints – with 91,381 new cases (92,667 in the previous period ). For complaints about financial products other than PPI, the number has increased by 8% to 77,751. This includes a doubling in the number of payday lending complaints, compared to the last six months of 2015.

The average uphold rate (where the ombudsman found in the consumer’s favour) over the six-month period was 48% – ranging from 3% to 92% across the individual businesses. 221 businesses feature in the data in total.

Careful what you phish for

One in three people would unwittingly transfer money to an unknown account if they were telephoned by someone posing as their bank according to new research from Nationwide Building Society. This is despite more than two thirds (67%) of people worrying about becoming a victim of fraud. The poll was conducted as part of the Society’s ongoing campaign to help people protect themselves from the growing threat of fraud. Despite criminals employing increasingly more sophisticated techniques to dupe their victims, there are a number of simple precautions and steps people can take to avoid becoming another statistic.

The research of 2,000 UK adults, shows that around a third of Brits (31%) could potentially become victims of vishing by stating that they would transfer their money to another account if they were called by someone purporting to be from a trusted organisation, such as their bank, building society or the police. Criminals often use this tactic, requesting their unsuspecting victims to transfer money into a ‘safe’ account due to suspected fraud.

Despite the terms and conditions of current accounts telling people not to share their PIN with anyone, half (50%) have disclosed their PIN to their partner. However, around one in 15 would share their PIN with their bank or building society (7%) or the police (6%). While no legitimate bank or building society employee or police officer would ask for this information, fraudsters often pretend to be from these organisations as a way of coercing the information out of their victims.

More than half (52%) of those aged 18 to 24 would transfer their money to another account if they were convinced that either the police, their bank or their building society was asking them to do so, compared to just one in five (22%) aged 55 and over. Equally, a fifth (20%) of 18 to 24 year-olds would share their PIN with their bank or building society and one in six (16%) would share the same information with the police. By comparison, just one in fifteen (6%) and less than one in 20 (4%) of those aged 55 and over would be willing to share the same information.

It’s a record

The youngest woman with a full beard, the longest pet cat and a llama who has made the highest jump are among the weird and wonderful feats which have made it in to the Guinness World Records (GWR) . This trio of UK record-breakers are among the latest stars of the GWR, which has been marking the extremes of achievement since 1955.

Ms Kaur, who is recorded as the youngest female with a full beard at the age of 24 years 282 days, has already made her mark as an anti-bullying activist and catwalk model. In March 2016 she became the first female with a beard to walk the runway at London Fashion Week.

Ludo the Maine Coon is a supersized cat measuring a whopping 118.33cm (3ft 10.59in) in length from his nose to the tip of the bone in his tail. Ludo was no bigger than the other kittens in his litter when he was taken home to Wakefield, South Yorkshire, by his owner Kelsey Gill in 2014.

Caspa, a nine-year-old llama who lives on a farm in Porthmadog, North Wales, takes his place in the book because he can clear a bar standing at 1.13 metres (3ft 8.5in) high.

Florida pensioners Charlotte Guttenberg and Chuck Helmke are named the most tattooed senior citizens – male and female – in the world. Ms Guttenberg, 67, has covered 91.5% of her body with tattoos since first being inked just 10 years ago. Mr Helmke, 76, who sat beside her in the tattoo parlour to help to ease her nerves as she had her first tattoo, has 93.5% of his body covered in tattoos. All of this work was done in the last 16 years apart from one army tattoo.

Standing 96.41cm (37.96in) tall from the floor to her haunches, Lizzy the Great Dane is named the tallest living female dog. The Florida-based dog is so tall that her food bowl has to be put on a chair because she cannot reach the floor to eat, the GWR said.

HLP Compliance Blog

Compliance Q & A, 8th September, 2016

This week’s question comes from William Milburn (WM), of Milburn Financial Solutions.

WM: When submitting a mortgage application, why is it necessary to complete a suitability letter within 5 working days, as occasionally the mortgage application does not go to offer?

GE: Good question, William, and one that is not easy to answer as the network requirement is above any regulatory requirement, which makes it tough for advisers to comply with, I guess.

The fact is that a suitability letter itself is not specifically required within FCA rules. So to expect you to produce a letter and do so within 5 days is a big ask. That said, the regulator has recently consulted on suitability letters, so that position might change in due course.

What the regulator does expect is for firms to ensure customers understand the recommendations made and the key reasons for the recommendations to be explained. What better way to do this and keep evidence of it than in a suitability letter?! That’s why suitability letters have remained in favour across the industry and why the regulator is contemplating a rule change. Another, equally important factor is their usefulness in defending a complaint. Rarely have I seen a complaint fail to be defended when there is a robust suitability letter on file. On the other hand, it can be much trickier when there is no letter to support the recommendation. Believe me, the investment in time to produce a letter, on the whole, is worth making. In my view it is a crucial part of the post-sale process, and a good, personalised and well-constructed letter can be a powerful thing.

So, why the five day rule? Well the key to this is that it is a crucial element for us when reviewing the file. It is generally the last piece of the jigsaw and without it the file is not complete. So, by having a five day limit it means we can technically get our hands on it and review the case sooner.

I totally understand the point therefore that the mortgage might not even proceed to offer, which means that the time taken on the letter could be an unnecessary cost. I’m not sure how often this happens for most firms. Our stats indicate that around 15% of applications do not convert to offer, so this would suggest it isn’t a huge problem.

So there are lots of reasons why not to expect a suitability letter on each case within 5 days, but equally there are sound business reasons why this helps us manage the network.

Read more:

What & Why? Financial Distress.

HLP Compliance Blog

What & Why? Financial Distress

HLP Compliance Blog, Gavin Earnshaw

Predicting ‘Financial Distress’ is like anything in life; predictions are sometimes right, often wrong and can come from flawed assumptions or data. But such a prediction is something that the Financial Conduct Authority (FCA) has been mulling over recently, and the results give an insight into their thinking.

Debt plays a crucial role; be it to allow people to manage temporary cash-flow shortfalls (think short-term insurance contracts, such as house insurance) to spreading the cost of large purchases, such as property. Many people manage their debt adequately, making repayment a priority and meeting their obligation as agreed.

But for some the story is different. Their debt becomes associated with financial distress.

So, what is financial distress? What proportion of people with debt experience this financial distress and what are their socio-economic characteristics? If we can answer these questions we can go some way to prevent such distress in the first place.

This is the question the regulator has pondered recently and the findings are interesting.

They say that, while firms cannot predict which exact individual will suffer financial distress in the future, the research shows it appears possible to consider, on average, whether cohorts of individuals with a set of characteristics are especially vulnerable to future financial distress, and therefore whether lending to them may be predictably unaffordable and harmful.

They found that the ratio of consumer credit debt relative to income, known as the debt to income (DTI) ratio, has a strong relationship with financial distress. People with higher debt relative to income experience greater financial distress. A person’s current DTI ratio is a strong predictor of whether individuals are likely to experience financial distress approximately two years in the future. 10% of people with the highest DTI ratios are much more likely to suffer financial distress in the future than those with lower DTI ratios.

All this suggests that the regulator thinks that affordability assessments, taking into account existing debts, is the way for lenders to manage customer loans. The MMR brought such assessment into the mortgage market and will continue to hold back lending to some individuals. It remains to see how this will manifest itself in terms of financial distress. The true effect will be seen when interest rates rise. Apparently we are still some time away from this, so only time will tell.

This focus by the regulator shows a forward thinking approach. Not always popular and often maligned for their intervention, but if these rules can prevent your customers from suffering financial distress then that will create a happier customer base. Multiply that effect across the industry and we may well prevent the level of financial shock that we saw 8 years ago.

So next time you consider an affordability assessment that appears frustratingly limiting you could consider this point. Acting in the customers best interest can sometimes mean delivering bad news. Better a reality check now than serious financial problems in the future.

You can read the FCA’s findings in full in Occasional Paper Number 20: Can we predict which consumer credit users will suffer financial distress? here.

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Compliance Q & A, 8th September, 2016.