Monthly Archives: November 2016

Shop till you drop

Nationwide’s Christmas Spending Report, which looks into how the nation finances the big day, reveals many Brits are left in the red months after the decorations come down.

The Nationwide report shows the average person in the UK will spend almost half (44%) of their monthly salary on Christmas, while one in fifteen (6%) spend in excess of a month’s salary. In terms of the amount spent, the average is £646, equating to a staggering £33 billion nationally every year. However, one in five people (20%) admit to splashing out more than £1,000 ahead of the big day. This leaves a fifth of Brits (19%) suffering financially for three months or more, and one in three (37%) regretting the amount they have spent over Christmas.

Because it’s the time of year when cash flow is most often stretched, for almost a third (30%), the cost of good cheer is in some part carried by debt, as 21 per cent put the expense on their credit cards and one in ten (9%) rely on their overdraft. While a third (30%) pay off the debt within a month, one in seven (15%) take up to three months and one in fifty takes a year or longer to clear the cost. All that financial pressure leads to 14 per cent of Brits arguing about the cost of Christmas with their partners.

Many avoid the high street, instead favouring online shopping. Just over half (55%) now buy the majority of their gifts online. In fact, less than a third (30%) still get most of their presents in high street chains, 6 per cent mostly use independent retailers and 4 per cent make their gift selections at the supermarket.

The Autumn statement

The Chancellor has announced £3.15 billion is being set aside for 90,000 new houses in London. The Mayor will use the cash for housing tenures, including those with below-market rents for low-income Londoners and homes with rents set at no more than a third of average local income for middle-income earners. In addition, there will be more shared-ownership homes to help Londoners who want to buy but can’t afford to on the open market.

£1.4 billion is being set aside to deliver 40,000 affordable homes but there is little detail as to how this will work. The plight of first-time buyers trying to save for huge deposits is widely recognised and, while any help is welcome, property experts are arguing that this scheme doesn’t go far enough because many more homes are needed.

Letting agents’ fees to be banned in England and Wales “as soon as possible”. This is welcome move for renters who feel high administrative fees, including charges for printing tenancy agreements are excessive. Letting agents are already protesting against the plan and say that the loss of income will simply be passed on in higher costs for landlords, who will in turn pass it on to tenants in the form of higher rents.

A £2.3 billion housing infrastructure fund is being launched to help provide 100,000 new homes in high-demand areas but there was no reversal of stamp duty charges for second homes or on cuts to mortgage tax relief, as hoped by landlords. Some see this as good news for first-time buyers, because it reduces competition in the starter home market, while others argue that this means fewer rental properties will come to market to serve the growing population of renters.

Figures from the British Bankers Association (BBA) suggests consumer credit is now growing at its fastest rate since November 2006, reflecting strong retail sales growth. Consumer confidence remains robust as borrowers take advantage of record low interest rates. Consumer credit is now showing annual growth of over 7% reflecting strong retail sales growth in October supported in the case of personal loans by favourable interest rates.

Mortgage approvals ticked up a little October with a relatively modest increase in activity since the Bank of England cut rates in August. House purchase approval numbers are 10% lower than in October 2015 and in the first ten months of 2016 were 4% lower than in the same period of 2015. Remortgaging approvals were similar to those in October 2015 but in the first ten months of 2016 were 13% higher than in the equivalent period of 2015.

There was also slight increase in business borrowing in October but this was driven by a one-off factor and will probably unwind next month. However, businesses are increasingly going back to capital markets as a means to raise funding. They also continue to hold cash deposits, suggesting that they are building up cash reserves for ready access to resources should the need arise.

Tap and go

Barclays is set to unveil 100 contactless machines at 25 branches across “the north”, which will allow customers to withdraw up to £100 without putting their card into the machine, or by using their smartphone instead. The exact locations of the machines have not yet been released, but the bank said they would be rolled out to 180 branches across the UK if the project was a success.
ATM users will simply tap their contactless card against the machine’s reader before inputting their pin as normal. Customers with iPhones won’t be able to use the scheme because Apple limits the use of its contactless technology to its own Apple Pay system. Barclays suggested the facility was more secure than inserting a bank card, as it avoided the risk of having the card’s details hijacked by a skimming machine. The user also cannot walk off and leave their card in the slot. Those taking out sums greater than £100 will still have to put their card in the machine.

999 – make an appointment

A rat in a kitchen and the wrong takeaway delivery are among 999 calls released by a police force as it introduces an “appointments system” for callers.

On the calls to the 999 service, a disgruntled customer can be heard complaining about the wrong delivery of food from a takeaway, a woman tells the call handler, “I’ve got a rat in my kitchen and I’ve been ringing the housing…but I’m terrified, literally,” and a man who wants officers to retrieve his coat from a bar because he is not allowed back in.

Merseyside Police wants to highlight the amount of non-urgent calls it receives requesting immediate police assistance.
The force says of 2,500 calls a day, up to 2,000 of those do not require immediate help and this week it launches an appointment system for non-urgent callers who require a visit from an officer.

Instead of waiting for the first available patrol, the call handler will arrange a convenient time either at their home, or their local police station, to see an officer.

Neil Hoare

Neil Hoare


Looking forward…and looking back

gavin earnshaw with hlp graphicOne of the great things about this time of the year, something I love doing, is planning for the year ahead. January 3rd 2017 creates an opportunity to start a new strategy. No doubt you are turning your thoughts to such issues.

But it also a good time to reflect; to put right some of last year’s mistakes and make sure some of the important things that didn’t get done in 2016 get prioritised. Reflection is a good thing in compliance. Compliance is about systems, controls and risk management and the best way to develop a safe business is to learn from past mistakes. It is a good thing to do and I urge all business owners to do likewise before the year is out. What were the worst issues for you in business in 2016? How can you prevent them happening again in 2017?

As I have been reflecting one of the topics that has stuck in my mind is that of later life products and interest only mortgages, particularly the impact that this can have on vulnerable customers.

As it happens, there have not been too many times this year that the issue has cropped up. Complaints are few and far between and the market does not seem to have stumbled upon any major problems. Indeed, when the subject has come up, it is generally where lenders have been confident enough to create a bit more flexibility – particularly for later life lending. Halifax were one of those lenders that stretched its upper age limit by five years, to 80, in May this year.

6 months on and Halifax have reviewed this decision to see what impact it has had. The findings are generally reassuring in terms of customers that stated they fully understand the potential impact of taking a loan into later life and the implications this will mean to supporting the loan beyond an age where they might expect to retire. But not in all instances.

47% of customers stated the genuinely expected to still have the mortgage post-retirement age – most of these were positive about being able to maintain the mortgage repayments, but this does demonstrate a short-term view in general. We know from a study of behavioural economics that there is a tendency for customers to have short-term bias and over-confidence when projecting into the future.

More worrying is that around one in ten customers, when asked if the specifically recall discussing the implications of lending into retirement with their broker, said they had no recollection of this.

Couple these statistics together and it would suggest 1 in 20 customers taking out a later life loan will ‘unexpectedly’ have to continue payments beyond normal retirement age. A reassuringly small percentage, but enough to trouble a compliance manager looking at future risk and thinking about what is happening now that might manifest into complaints in the future.

I can see the complaint form now:

Q: “Reason for complaint?
A: “I wasn’t really sure what I was doing, which is why I went to see a broker, to get guidance. They are the expert and I did what they recommended. I was told take the term into retirement but no-one explained the implications to me. I can’t afford the mortgage and want you to help me with the costs. You should never have let me do this!”

So, what all this means is that it is a reminder to us that, when recommending a later life loan, that you make sure that you take the time to ensure your customer truly understands the risks. Ask questions like, ‘will your retirement income support the loan?’, ‘do you expect to be working into later life?’, ‘is it feasible that you could be doing the same type of work when you are in your 70’s?’, ‘do you understand the implications of having the loan beyond normal retirement age?’, ‘do you have an alternative plan should things go wrong?’.

And, equally importantly, record the answers on your file and replay this back to the customer in the suitability letter. Take the time to personalise the letter to make it clear that you had a detailed discussion on the subject and the customer was made aware of the risks and understands the situation they will be in.

This is good practice in any higher risk situation. Debt consolidation, interest only, sub-prime rates, etc.

Learn from the mistakes of others in the past. Look to the future and avoid having to deal with tricky complaints by making your file robust now.

Good luck with your planning for 2017. We are looking forward to supporting you every step of the way!

I got Bills

According to the latest research from the Council of Mortgage Lenders (CML), the amount borrowers are paying as a percentage of their household income to service capital and interest rates reached a historic low this month for both first-time buyers and home movers, 17.8% and 17.7% respectively.

The CML also published affordability metrics for first-time buyers which saw the typical loan size decrease to £133,000 in September from £136,400 in August. The average household income also decreased slightly from £41,000 in August to £40,200 in September. This meant the income multiple was slightly down from 3.56 to 3.53. The average amount borrowed by home movers in the UK also decreased to £171,000 in September from £175,000 in August, while the average home mover household income also decreased to £55,100 from £55,400. The income multiple for the average home mover went from 3.27 to 3.26 month-on-month.

While there was a decline in house purchase lending in September compared to a month before, this is the highest volume of loans and most amount borrowed in the month of September since September 2007. This was mirrored in first-time buyer trends as this was the highest volume of loans in the month of September since September 2006.

Remortgage loans saw a decline month-on-month but an increase year-on-year in September. On a quarterly basis, there were more loans advanced for remortgage than any quarter since the third quarter of 2011.

Return of confidence

The latest results from the quarterly survey by Buy to Let lender The Mortgage Works shows that landlords’ confidence in their own lettings business has recovered strongly from a dip in quarter 2 of 2016.

The tracking also highlight landlords’ future intentions with 23% of those surveyed planning to buy property, up 6% on quarter 2. The impact of Brexit was also highlighted, 33% of landlords believe that the decision to leave the EU will have a detrimental effect on them with just 10% believing it to be a positive step for the private rented sector.

64% of landlords are concerned that the Government changes on their tax allowances will affect their profitability but that hasn’t affected tenant demand, almost a third are suggesting a slight or significant increase and 44% confirming no change. Despite the questions around portfolio profitability, almost 1 in 4 landlords will look to buy more property to increase their portfolio in the next 12 months, up 6% on the number just 3 months ago.

Teach them young

Just one in four children aged between seven and 17 have received lessons in basic money management despite it being part of the national curriculum, new Money Advice Service research reveals. The study, part of Financial Capability Week, shows nine in ten young people who have actually had financial education lessons found them useful.

There are issues at home too, with two in five parents not confident talking to their children about money, and even fewer (1 in 3) actively engaging their kids with the household finances. This is despite three quarters of children talking to their parents about money. The Money Advice Service surveyed 16 and 17 year olds as part of the study, and found many are lacking the experiences needed once they leave home. A third have never put money into a bank account and two in five don’t even have a current account.

There’s a lack of confidence too. Only 43% of 12-17 year olds felt confident managing their money. The rest are less likely to shop around and save money – good financial habits to have in adult life. With only seven percent of children talking to teachers about money, but three quarters talking to their parents on the topic, there’s certainly a gap in knowledge that could be filled by mum and dad.

Yet part of the problem is parents themselves aren’t confident with money. Half (50%) do not save regularly, 44% say they don’t feel confident managing their money and 68% say they find keeping up with their credit commitments and bills a burden.

Need to Work

An estimated 20,000 of those who are diagnosed with cancer each year in the UK will face discrimination in their workplace, according to research released by Macmillan Cancer Support and YouGov at the World Cancer Congress in Paris.

The research, which explores the impact of cancer on working life, found that nearly a fifth of people (18%) who return to work after being diagnosed with cancer say they faced discrimination from their employer or colleagues. In addition, more than a third (35%) report other negative experiences, such as feeling guilty for having to take time off for medical appointments and a loss of confidence in their ability to do their job. 1 in 7 (15%) say they returned to work before they felt ready and 14% of people give up work altogether or are made redundant as a result of their diagnosis. With improvements in survival rates for cancer and more people working for longer and retiring later, the number of people with cancer of working age is predicted to reach 1.7 million by 2030.

The charity found that the vast majority (85%) of people in work when they were diagnosed with cancer say that continuing work is important to them. The most common reason for this is ‘to maintain a sense of normality’ (60%) and others include ‘I enjoy my job’ (45%) and ‘I needed the money’ (54%).

Down and Snout

Pigs have personalities that can be trough half-full or trough half-empty, a study has shown.
Scientists tested 36 domestic pigs, some of which were treated to enriched living conditions with extra space and layers of deep straw. Just like humans, some pigs are go-getting, optimistic and positive while others are moody pessimists, new research reveals.

Their personalities were investigated by offering them food bowls in two fixed locations and containing sugar-coated chocolates or disappointing coffee beans. Pro-active, optimistic pigs were more likely to investigate a bowl placed between the two locations that might or might not be filled with delicious sweets. They always looked on the bright side, whatever environment they had to live in.

Moody reactive animals with less space and no straw tended to be negative and pessimistic – but were cheered up by an improvement in living conditions. The findings are published in the Royal Society journal Biology Letters.

Financial Fraud

In the last fortnight the FCA has turned its attention to the fight against financial crime. For those that attended the conferences and regional forums recently you will recall me mentioning that financial crime is one of the seven key areas of focus for the FCA this year and it serves for us all to remain wary of the possibility of financial crime in our business.

The FCA have held a Financial Crime Conference and have looked at the topic from a variety of angles. In her closing speech, the conference chair stated “Fighting financial crime and making the UK’s financial system a hostile place for criminals to do business is a priority for all of us.

The potential for criminal activity in our business is ever present. From customers committing application fraud by over stating their income and supplying fake documents, to systemic fraud co-ordinated by introducers, I have seen it all over the last few years. I have also seen the consequences of this, through lender panel removals resulting in the removal of permissions to trade. The outcome can be career threatening and devastating, even for ‘innocent’ advisers.

I made it clear at the recent conferences on what you can do to stay safe and keep your business clear of danger. The key message being to collect documents and to verify income before submitting the case to the lender. Handle ‘original’ documents where possible. Check them thoroughly for signs of inconsistency. Make sure the situation is plausible and that your customer is being truthful. Get a second opinion. Look out for scheme abuse. Only then, when you are satisfied, should you submit to the lender. Do check your application to completion rates and, where applicants withdraw, you should let the lender know straight away and give a reason why.

What more is there that we as a network can do to aid the fight against financial crime? I have been pondering this in recent weeks and, given the topic of AML cropped up at the FCA conference, it made me think that we could help more with identity verification tools. Collecting and copying identity documents is not always easy – especially for non-face to face transactions. What the network needs is a reliable and cost-effective solution to this age-old problem.

In recent years technology solutions have improved and there are a number of excellent Electronic Identity Verification (EIDV) systems on the market. We are reviewing these at present and our aim is to find a system that combines a reliable solution, with ease of use at a reasonable price. Once we have done this we will update our procedures to permit the use of EIDV as a means of identity verification. This will eliminate the faff of collecting passports, copying and returning them, with the risk of them going missing in transit.

As a network I genuinely believe we have a healthy attitude towards the fight against financial crime – one the FCA would be impressed by. Based on the feedback I have had from our product partners they are certainly seeing an improvement in the quality of business from the HLP partners. Keep up the great work and thank you for taking this topic seriously.

Once we have concluded our review of EIDV systems we will update you further. In the meantime if you have any concerns regarding any of your customer applications then do not hesitate to get in touch using the Suspicious Activity Reporting (SAR) form and we will be happy to offer a second opinion.

The Key to staying safe

One in 10 Millennials admit that they are unsure who else has a set of keys to their home, according to research conducted by Ocean Finance.

They asked those surveyed who else had keys to their home – apart from the people who live there. Over three quarters (77%) of respondents say that they have given other people keys, and one in five say that they’ve given out two or more sets of keys. The people we’re most likely to hand a set of keys to are family members we don’t share a home with. But neighbours, cleaners and dog walkers are also often given a key to people’s properties.

Perhaps surprisingly, one in five Millennials give keys to a cleaner compared to only 2% of those aged over 55. And almost one in 10 (8%) Londoners give keys to a dog walker.

Overall, 2% of people admit that they don’t know who has keys to their home. But among Millennials, this increases to one in 10 not knowing who can get in.

Loans at 90 increasing

First-time buyers depend on having a healthy supply of suitable mortgages available to help them take that all-important first step on the ladder. Latest figures from Moneyfacts reveal that they still have plenty of deals to choose from, with the number of mortgages available to those with just a 10% deposit being the highest seen in eight years.

The data, which comes from the latest Moneyfacts UK Mortgage Trends Treasury Report, shows that the majority of loan-to-value (LTV) tiers saw an increase in product numbers this month, but the 95% and 90% LTV tiers have enjoyed a particularly significant boost.

The number of 95% LTV products available may be down slightly on a year ago, but the monthly boost is clear to see, while the number of 90% LTV Deals on offer has soared to its highest level since 2008 – and this sector has enjoyed a particularly welcome turnaround since the referendum in June.

Normal Service Resumed

Tesco Bank returned to normal service following the temporary suspension of online transactions from their current accounts. The Bank also confirmed that personal data was not compromised as a result of fraud that took place over the weekend of 5-6 November and that online transactions had been suspended to prevent criminal activity.

Tesco Bank has identified around 9,000 customers who were affected by these fraudulent transactions and all customers affected were fully reimbursed by the evening of Tuesday 8 November. According to the Bank, the total cost of refunding these customers is estimated to be £2.5 million.

Tesco Bank confirmed it is continuing to work closely with the authorities and regulators in their criminal investigation of this incident.

White paper

The Protection Review has launched a White Paper describing five steps the industry should take to grow the critical illness market. Written after the recent Protection Review Summit in London, the White Paper summarises the debate and sets out the recommendations which aims to simplify critical illness products by grouping conditions together into categories.

Other areas of focus include developing more niche products like cancer stroke and heart attack plans to make the product more attractive to different customers, to reconsider hybrid critical illness/income protection products and ensure they wouldn’t be penalised by the portals for being different.

The team has identified the need to generate more positive stories to overcome the public perception that Insurers don’t pay claims and develop a strategy that takes the focus away from the headline of cheap prices on portals. Finally there is a desire to try and be more inclusive for people insurers now consider to be impaired lives, who 20 years ago would have been standard risks.

On Yer Bike

It would be quicker to ride a bike than drive a car on some sections of the M25, it has been revealed.

Figures show that the average speed of northbound traffic on the London orbital near Heathrow Airport was 13.7mph during peak evening times last month. This was significantly slower than the 19mph recorded during the same month in 2008, according to a report by satnav firm TomTom.

Reasonably fit cyclists can easily average in excess of 15mph on flat roads.

TomTom analysed 20 of the country’s busiest sections of motorway, with the M25 northbound approach to the Dartford Tunnel coming out as the worst. Its peak time average was just 7.8mph.

However, the figures are reported to have been exacerbated by lane closures and roadworks over the past month.


According to the Nationwide Building Society, after fifteen successive monthly increases, UK house prices were unchanged in October (after taking account of seasonal factors). As a result, the annual rate of house price growth slowed to 4.6%, from 5.3% in September, though the Building Society highlights that this is still in line with the growth rates prevailing since early 2015.

The report suggests that measures of housing market activity remain fairly subdued, with the number of residential property transactions circa 10% below the levels recorded in the same period of 2015 in recent months. However The Nationwide reflects that this weakness may still in part reflect the after-effects of the introduction stamp duty on second homes introduced in April, where buyers brought forward transactions to Q1 to avoid additional stamp duty liabilities. Policy changes impacting the Buy to Let market may also be playing a role in dampening activity.

Nationwide’s research clearly indicates that UK house price growth has been remarkably stable over the past eighteen months, averaging circa 5%. While this is relatively modest by UK standards, it is still well in excess of average wage growth. Indeed, over the past three years, house prices increased by circa 20% while wages have risen by circa 6%. As a result, the typical house now costs six times average earnings, up from 5.3 times earnings in 2013.

Building on confidence

The second annual Lloyds Bank Commercial Banking report is the first in-depth study of the sector following the decision to leave the European Union in June 2016. Although over a third of firms (36 per cent) said that the uncertainty following the EU referendum result is the biggest challenge to their business, the industry is relatively optimistic; planning to grow, invest and create jobs.

It seems that this outlook has given the industry the confidence to invest, with average five-year investment plans up 17 per cent year on year. House builders are also confident about growth, with 42 per cent of respondents saying that their growth forecasts had improved since the EU vote, compared with 27 per cent who said they had declined. They are now predicting an average growth of 28 per cent over the next five years, up from 25 per cent last year.

While the UK continues to face the housing shortage head-on, more than one-fifth (22 per cent) of house builders do not believe the sector has the resources it needs to help the Government achieve its targets for new housing, and 14 per cent are unsure. Firms also said that the availability of government support (32 per cent) and suitable land (29 per cent) are factors that impact the industry’s ability to meet targets for new housing.

Ask the bill payer

Household bills are still rising according to new figures from Bacs Payment Schemes Limited (Bacs). The Bacs Bill Tracker, which analyses 100 million anonymised Direct Debits per month, shows that households using automated payments now have to find £678 a month to pay for a basket of essential bills like energy, water, mortgages, rent, council tax, and household insurances. With around three quarters of household bills paid by Direct Debit, the Bill Tracker is a reliable barometer of the financial pressures bill payers are facing each month as they juggle the demands on their household budgets.

The cost of meeting these core outgoings – which exclude discretionary bills like mobile phone contracts and gym membership – is up from £670 in September 2015. And looking back over the last five years from 2011, the upward trend means that bill payers are now having to find an extra £85 a month for their household bills.

And he drove the fastest milk float

Sixty years is a long time in anyone’s book: in that time there have been 12 British Prime Ministers, five UK Eurovision winners, and there have been over 8,000 episodes of Coronation Street broadcasted to homes up and down the country. And sixty years is how long Premium Bonds have been on sale, with the popular product celebrating its diamond anniversary on 1 November 2016.

Alderman Sir Cuthbert Ackroyd, the then Lord Mayor of London, bought the very first Premium Bond on 1 November 1956. The investment immediately caught the imagination of the British public, so much so that by the end of their first day on sale, £5 million worth of Premium Bonds had been sold. And by the time of the first prize draw on 1 June 1957, there were 23,000 prizes drawn with a top prize of £1,000.

In all, Premium Bonds have come a long way since that momentous November day: the top prize has changed from £1,000 to the current £1 million jackpot, and while the first version of ERNIE (Electronic Random Number Indicating Equipment), ERNIE 1, if it were still in use today, would now take over 100 days to complete a draw, today’s model, ERNIE 4, takes around five hours.

And finally – we are what we eat

The fourth annual Waitrose report on our relationship with food has demonstrated how Social media has fundamentally changed our relationship with food. One in five Britons has posted a picture of their food on social media or sent it to a friend, in the last month and over 2% of us have shared a picture in the last day. 44% of us make more effort with our cooking if we think a photo of it may be posted. Spiralisers were the top selling gadget in Waitrose this summer, and Instagram-friendly dishes such as charred food, picanha, bao buns and churros all make it into this year’s barometer.

There was a time when healthy eating involved calorie counting, effort and sacrifice. But now nearly three quarters (71%) say it’s just a part of who we are, a part of everyday life. 60% of us say the food we choose to eat is naturally lighter and fresher than five years ago, e.g. swapping potatoes for aubergines in cooking (up 18% this year), or choosing mini treats instead of full-size options, such as mini hot cross buns at Easter (up 165%). Products including seeds and grains, coconut flour, cactus water and seaweed – and a ‘veggan’ diet (vegan but with eggs) are all top food trends of the year.

And finally four in 10 of us see eating out as less of a treat than we used to. When we do stay in we’re making it an event. In the last year, 40% of us have either been to or hosted a Come Dine With Me-style revolving dinner party, or a dinner party where everyone brings a dish, or a themed evening based around a holiday destination or cooking style. It’s a 7 out of 10 for me!