Monthly Archives: August 2018

Weekly Round-Up: 24th August 2018

Organised fraud

Close up of credit cardsThe Association of British Insurers’ (ABI) most comprehensive analysis yet into insurance fraud published this week highlights that every minute an insurance fraud is now detected in the UK. For the first time, the ABI’s annual detected fraud figures include data on application fraud – where details such as age, address, or claims history are deliberately miss-stated.

A total of 562,000 insurance frauds were detected by insurers in 2017 and of these there were 113,000 fraudulent claims, and 449,000 dishonest insurance applications. The number of dishonest insurance claims, at 113,000, were valued at £1.3 billion. The number was down 8% on 2016, while their value rose slightly by 1%. The fall in number reflects the industry’s collaborative work in detecting and deterring fraud.

The number of organised frauds, such as staged motor accidents, fell 22% on 2016, with frauds worth £158 million detected. This reflected the work of the Insurance Fraud Bureau (IFB), who are currently investigating a rising number of suspected frauds, and the Insurance Fraud Enforcement Department (IFED). IFED is the specialist police fraud unit investigating insurance fraud, such as staged motor accidents and illegal insurance advisers (so-called ghost brokers). Since its formation in 2006, IFED has secured over 400 court convictions for insurance fraud. The value of fraudulent detected motor insurance claims, at £775 million, rose by 4% on 2016. The number of these frauds, at 67,000, showed a small rise.

Fraudulent property insurance claims fell. The number detected dropped by 11% on 2016 to 22,000, with a value of £100 million. Insurers detected 449,000 cases of confirmed or suspected application fraud, where people lied or withheld information to try and get cheaper cover. Motor insurance made up the bulk of dishonest applications, with typical lies including the nature of the applicant’s occupation, and driving record, where previous claims and motoring convictions were not disclosed.

A cyclist claimed £135,000 compensation from a council for injuries he said he sustained when he fell off his cycle after hitting a pothole. However, evidence showed that the accident happened when he fell off on a slippery road at another location. He was jailed for three-and-a-half years. In another example, a bodybuilder, who claimed £150,000 for a back injury, was exposed when he was filmed doing a press-up challenge. He was ordered to pay £35,000 in legal costs. The ring leader of a gang who staged a bus crash to try to get £500,000 in insurance pay-outs for fake injuries was jailed and banned from driving for two years. Using a rental car, he staged the crash, following which eight of his fellow fraudsters on the bus claimed for fake injuries to necks and hips. Finally a student was convicted after attempting to claim £14,000 through six invented claims following a trip to Venice, including the alleged loss of an iPod, laptop and designer watch.

Loopholes

Fraud_300x200pxIt was only relatively recently, in 2015, that the Financial Ombudsman (FOS) shared their insight into banking complaints involving telephone fraud. In those days it appeared that as older people were more likely to use landlines meant they were particularly at risk of “no hang up” scams.

But, according to their latest review in today’s connected world, it’s often loopholes in new technologies, rather than in old ones, that fraudsters are using to their advantage. FOS highlight that the first step toward being scammed for an individual may be putting their details into an identical, but fake banking website – or responding to a text message that, on the face of it, looks like it’s from their bank.

Unlike most other complaints FOS see, complaints about fraud and scams involve – whether it’s accepted or suspected – the actions of a criminal third party. So it’s understandable that, in many cases, both the bank and their customer tell FOS in strong terms that they’re not responsible for what’s happened.

This makes it harder for FOS to reach an answer that both sides are happy with. But it doesn’t mean usual standards don’t apply. As case studies from FOS illustrate, they will expect to see clear evidence that banks have investigated thoroughly – and reflected hard on what more might have been done to protect their customers and their money.

FOS also often hear from banks that their customers have acted with “gross negligence” – and this means they’re not liable for the money their customer has lost. However, according to FOS, gross negligence is more than just being careless or negligent. And as their case studies show, the evolution of criminals’ methods – in particular, their sophisticated use of technology and manipulative “social engineering” – means it’s an increasingly difficult case to make.

If there’s anything to be salvaged in the wake of fraud and scams, it’s what everyone can learn about how they happened and what needs to change.

Party Hard

Health Monitor_300x200pxEating a large meal could help detect early signs of metabolic conditions such as type 2 diabetes, according to new research the British Heart Foundation part-funded, published in the journal Cell Reports. A team of researchers, led by Dr Samuel Virtue and Professor Toni Vidal-Puig of the Cambridge University Metabolic Research Laboratories and the Medical Research Council’s (MRC) Metabolic Diseases Unit, have made the observation whilst studying a gene called PPARy2. This gene controls the formation and function of fat tissue, which stores energy in the form of fat.

Researchers found that in mice that lack PPARy2, lipids – a form of free fat – were not sufficiently stored in fat tissue and were redirected to other organs, which is an early sign of metabolic disease and diabetes. Although the young mice without PPARy2 looked ‘healthy’, they went on to develop insulin resistance (the process that underlies early diabetes) as they got older. The glucose tolerance test (GTT) is a diagnostic test used routinely to detect diabetes. A glucose drink is taken after a period of fasting and the test measures how well the body’s cells are able to absorb glucose.

When the team performed the GTT on the mice without PPARy2, the results were similar to normal mice. But  when they replaced the glucose in the GTT with a large, fatty meal – equivalent to eating a Christmas dinner – signs of metabolic disease emerged, including 10 times the levels of insulin found in normal mice given the same fatty meal, increased blood glucose and increased blood fatty acids. The researchers believe this is because PPARy2 is especially important in clearing free fats from the blood quickly after a high fat meal by storing them inside fat tissue. In mice without PPARy2, the fat tissue was overwhelmed by the high fat meal and the lipids built up in the blood or were redirected to other organs, eventually leading to insulin resistance as the mice aged.

Together with Professor José Manuel Fernández-Real, of the University of Girona, the team also demonstrated that PPARγ2 levels in humans are lower in obese individuals, demonstrating that their findings could also be relevant to humans. The study was jointly funded by the British Heart Foundation (BHF), MRC and Wellcome.

Lenders ordered

Pound coinsUK Finance has published their data showing mortgages lending by their members in 2017. The figures show their members’ gross mortgage lending in the latest calendar year and balances outstanding at the end of 2017, rounded to the nearest £100 million and ranked on the same basis. This means that the very smallest lenders, those with under £50 million of lending, do not feature in the figures. The data accounted for some 97 per cent of the total mortgage market – as published by the Bank of England.

For 2017, gross lending totalled £257 billion, up four per cent on 2016. This was lower than the 11 per cent growth seen in 2016. However, within this UK Finance have seen increased competition for business. This year there are 65 lenders in their results for gross lending, up from 60 lenders the year before. The largest lenders saw more modest growth. Although Lloyds has continued to increase lending activity with a seven per cent rise compared to 2016, the next three lenders on the table (Nationwide Building Society, Royal Bank of Scotland and Santander) all saw lower volumes than in 2016, compared to the previous year and corresponding contractions in market share.

Despite this, there was no change in the top ten gross lending table, with all lenders retaining the same rankings as in 2016. Lloyds Banking Group remains at the top of the balances outstanding table, despite a decrease in book size of one per cent. RBS had an increase of seven per cent for their balances outstanding, allowing them to overtake Barclays on the table and become the lender with the fourth largest mortgage assets in the UK. Below the top five, HSBC, Coventry, Virgin Money and TSB all increased their market share of outstanding mortgage assets.

2017 was a good year for the mortgage market with more lenders competing for business, and gross lending continuing on an upward trend. In their our most recent market forecasts, UK Finance predicted gross lending of £260 billion in 2018 – an increase of about two per cent. Lending in the early months of 2018 has, so far, outpaced their forecasts, driven largely by stronger-than-expected remortgage activity. The uncertainties UK Finance set out last year – not least those relating to the UK economy – remain; these have the potential to affect the path of lending for the rest of this year and beyond. However, the market has shown this year that, yet again, it is competitive and robust enough to continue to help UK mortgage customers as their needs change.

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Weekly Round-Up, 17th August 2018

Seven in pocket

Pound CoinsGirls are getting more pocket money than boys for the first time in a decade, averaging £7.09 a week according to the Halifax Pocket Money report. The average weekly amount boys receive has dropped by 14p since last year to just £6.91, 18p less than the girls receive.

The overall average amount of pocket money children receive has also dropped for the first time in four years. The average weekly amount kids receive is now £7.01p, a 3p drop from last year’s average. Halifax estimates this equates to a national weekly pocket money deficit of £235,405 or enough money to buy 21,420 LOL dolls. When it comes to how parents dish out the dough, cash is still king, with 84% of parents giving cash to their kids, compared with only one in five (19%) paying it directly to their bank account, and just 3% paying it via a pocket money app.

The majority of parents still encourage their kids to save up the old fashioned way, with the piggy bank keeping a place in many homes, as 60% of parents say they still use one themselves, and three-quarters (76%) of kids say they use one too. Around a third (36%) of parents said they give their children enough pocket money to enable them to understand the value of money and the benefits of saving. It seems to be working too, as more than half (54%) say they believe their children are good at managing money, and four in five (80%) say they feel their kids understand the value of money. Only a quarter of parents (28%) make their children earn their pocket money by doing housework and chores, and nearly half (48%) would withhold pocket money if these jobs are not done properly.

Half (51%) of parents said they would stop giving pocket money as a way to punish bad behaviour, on a par with grounding as one of the most commonly used ways parents try to keep behaviour in check. It seems boys’ expectations to be higher earners start from an early age too, as just over half (51%) said they believe they should be given more pocket money, compared to just 41% of girls. Over half (53%) of girls said they felt they were given the right amount of money.

While almost a quarter of parents (22%) say they give their children as much pocket money as they can afford, nearly half (43%) say they don’t think their children actually need any pocket money at all. But it’s not just parents who are prepared to part with their pennies, as four in ten (39%) kids say they also receive pocket money from grandparents and other relatives.

Keeping watch

Credit CardThe Dedicated Card and Payment Crime Unit (DCPCU) has prevented £25m of fraud and carried out 84 arrests and interviews under caution in the first half of 2018, figures published today reveal.

The DCPCU, a specialist police unit sponsored by the finance industry, achieved estimated savings of £25m from preventing and disrupting fraud in the first half of the year. This brings the total savings from reduced fraud activity to over £540m since the unit was set up in 2002. 26 fraudsters were convicted between January and June 2018 in cases investigated by the DCPCU. This resulted in 33 years imprisonment for those given custodial sentences.

In the same period, the unit has disrupted seven organised crime groups and recovered 8,651 stolen card numbers. In addition, over £122,000 of compensation was returned to victims following the confiscation of criminal assets by the DCPCU.

The DCPCU are warning that criminal gangs are becoming ever increasingly sophisticated taking advantage of new technologies to commit fraud online. But through close cooperation between enforcement and the industry, the aim for the task force is to stay one step ahead and ensure there is no place for fraudsters to hide.

Travelling Lite

Suitcases at an airportAccording to the latest statistics from the Association of British Insurers, every week 3,000 holidaymakers every week need emergency medical treatment abroad and are helped by travel insurers with £3.9 million paid out- a six year high. Typical payouts include a £233,000 medical bill for a 15-day hospital stay in the US following a stroke, £185,000 for a 10-day stay in a US hospital to treat a blood clot, and £95,000 for treating a road accident injury in Central America.

The costs of needing emergency medical treatment abroad are exposed this week by the Association of British Insurers (ABI). Analysis by the ABI of the 510,000 travel insurance claims reveals that last year Travel insurers helped 159,000 British travellers who needed emergency medical treatment abroad – the equivalent of just over 3,000 a week with the total medical bill estimated to be £201 million.

The cost of an air ambulance back to the UK alone can be very expensive. Typical claims to cover a return trip to the UK include £35,000 from the US, £12,000 from Majorca, and £25,000 from the Canary Islands. Yet despite such jaw-dropping costs, an estimated one-in-five people admit to having travelled abroad without travel insurance, leaving them unprotected against potentially financially crippling medical bills. Of the total 510,000 travel insurance claims dealt with last year, 159,000 medical expenses accounted for 52% of claims costs, cancellations accounted for 38% and lost baggage or money for 4%.

Fear of financial shock

Stacking coinsAccording to new research released by Zurich UK, it appears that British adults have some thinking to do when it comes to their finances. From the report it is worrying that one in three (34%) do not feel they would be able to recover from a financial shock or loss of income, and do not have the savings in place they need to feel financially resilient. In the findings from its Cost of Resilience study Zurich suggest that the most valuable asset we have is ourselves and our ability to generate an income. Therefore, it’s a concern that nine in 10 are likely to prioritise insuring their mobile phone over themselves.

The report, which was developed with neuroscientist Dr Jack Lewis, also found that 24% of UK adults have no savings, 15% have no idea whether they would be able to cope with a financial shock or not, 11% have income protection, 71% insure their homes; 70%, holidays; and 18% mobile phones and just 37% believe they need to have savings to feel resilient.

The report calls on Insurer’s to encourage people to review their circumstances, assess the solutions available, consider what support exists to protect them and reduce feelings of financial vulnerability. Awareness of products such as an income protection plan, which is designed to provide a regular income if you are unable to work due to illness or disability, needs increasing which in turn could help individuals to feel less vulnerable and more financially resilient.

The report concludes that there is a need to educate people and help them to understand that there are products to ease the stress and worry of a financial shock and loss of income.

Weekly Round-Up, 10th August 2018

Stamp it out

Moving House121,500 first-time buyers have saved a total of £284,000,000 taking advantage of the government’s cut to stamp duty, according to statistics released this week which cover the period until 30th June this year. Over the next five years, it is estimated that the government’s flagship housing policy will help over 1 million people getting onto the housing ladder.

First time buyers purchasing homes of £300,000 and under now pay no stamp duty at all, and those who have bought properties of up to £500,000 will also have benefited from a stamp duty cut.

This is part of the government’s long-term commitment to make housing more affordable. As part of the Autumn Budget housing package, the Chancellor announced at least £44 billion for housing – which includes at least £15.3 billion of financial support for house building over the next five years – and an aim to build 300,000 new homes a year in the areas that need it, as well as encouraging better use of land in cities and towns.

In addition to government-backed schemes such as the Help to Buy equity loan and Help to Buy ISA, those hoping to make their money go further can open a Lifetime ISA – to either save for a first home, or for later in life.

House price growth

Cardboard Houses on CoinsAccording to the latest research by the Halifax, house prices picked up in July, with the annual rate of growth rising from 1.8% in June to 3.3% in July, the largest increase since last November. The average house price is now £230,280, the highest on record.

According to the Lender house prices in the three months to July were 1.3% higher than in the previous quarter, the fastest quarterly increase, again, since November. While the quarterly and annual rates of house price growth have improved, housing activity remains soft. Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.

In its commentary the Halifax highlight that in contrast, the labour market remains robust, with the numbers of people in employment rising by 137,000 in the three months to May with much of the job creation driven by a rise in full-time employment. Pressures on household finances are also easing as growth in average earnings continues to rise at a faster rate than consumer prices. With regards to the recent rise in the Bank of England Base Rate, we do not anticipate that this will have a significant effect on either mortgage affordability or transaction volumes.

Time to put the rent up?

To letThe most striking feature of the July 2018 Royal Institute of Chartered Surveyors (RICS) survey is the continued reduction of new property being put on the market in the lettings sector with 9% more members and responders seeing a fall rather than rise in New Landlord Instructions. This is the eighth consecutive quarter in which this RICS indicator has recorded a negative number.

This pattern reflects the shift in the Buy to Let market in the wake of tax changes which are still in the process of being implemented, as smaller scale landlords exit the sector. Significantly, the drop in instructions is evident in virtually all parts of the country to a greater or lesser extent.

While the supply of fresh rental stock to the market is increasingly constrained, the Tenant Demand indicator remains resilient. The upward momentum appears to have slowed, but the number of tenants looking for a new home remains in positive territory at a headline level.

One consequence of this imbalance is that expectations for rental growth, and rising rents for consumers, appear to be strengthening again. Over the next twelve months, rents are projected to increase by a little short of +2% nationally, but the shortfall in supply over the medium term is expected to force a cumulative rise of around +15% (based on three month average of responses) by the middle of 2023. East Anglia and the South West are viewed as likely to see the sharpest growth over the period.

Living longer?

Health Monitor_300x200pxAccording to the latest research from the Office of National Statistics, there were 533,253 deaths registered in England and Wales in 2017, a 1.6% increase from 2016 and the highest number registered annually since 2003. Age-standardised mortality rates (ASMRs) decreased for both sexes in 2017; by 0.4% for males and 0.2% for females. Both the number of deaths and age-specific mortality rates for people aged 90 years and over increased in 2017, by 4.4% and 2.9% respectively; most notably for females.

Demonstrating that more people are dying with cancer rather than as a result of cancer ASMRs for cancers, respiratory diseases and circulatory diseases continued to decrease in 2017, whilst rates for mental and behavioural disorders, and diseases of the nervous system increased by 3.6% and 7.0% respectively. The City of Kingston upon Hull replaced Blackpool as the local authority with the highest ASMR rate in England in 2017, increasing by 7.1% from 2016.

The infant mortality rate increased for the first time in five years to 4.0 deaths per 1,000 live births; the neonatal rate also increased by 3.6% compared with 2016, whilst the post neonatal rate remained the same.

The research shows that the population is both growing and ageing and when you take those things into account, mortality rates decreased slightly from 2016 to 2017, for both males and females. Mortality rates for cancers, respiratory diseases and circulatory diseases have also decreased, however, rates increased for mental and behavioural disorders, such as dementia, and diseases of the nervous system, such as Parkinson’s and Alzheimer’s. This could be partly linked to a better understanding of these conditions, which may have led to better identification and diagnoses. The number of infant deaths decreased in 2017, but because the number of live births decreased more significantly, the infant mortality rate rose for the first time in five years.

Weekly Round-Up, 3rd August 2018

Rate Rise

Pound CoinsAt its meeting ending on 1 August 2018, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to increase Bank Rate by 0.25 percentage points, to 0.75% in an attempt to meet its 2% inflation target whilst sustaining economic growth and high levels of employment.

Since the last Inflation Report in May, the MPC felt that the near-term economic outlook had evolved broadly in line with the MPC’s expectations with GDP expected to grow by around 1¾% per year on average over the forecast period. Global demand appears to be growing above its estimated potential rate and financial conditions remain, as the MPC describe it, accommodative.

Unemployment is low and is projected to fall a little further with CPI inflation at 2.4% in June, pushed above the 2% target by external cost pressures resulting from the effects of sterling’s past depreciation and higher energy prices. The MPC don’t expect to hit their target of 2% for another three years. The MPC also continues to recognise that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal or Brexit as it is more commonly known.

It’s clear that this is not the last base rate rise as the MPC suggests, were the economy to continue to develop broadly in line with its Inflation Report projections, that an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon. They have re-iterated that any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.

Matching inflation?

weekly round up 2According to the latest analysis by the Nationwide Building Society, there was a slight uptick in annual house price growth in July to 2.5%, from 2.0% in June. Nonetheless, annual house price growth remains within the fairly narrow range of between 2-3% which has prevailed over the past 12 months, suggesting little change in the balance between demand and supply in the market. Looking further ahead, house price growth will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.

The Society observed that the subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low. Overall, they continue to expect house prices to rise by around 1% over the course of 2018.

Providing the economy does not weaken further, the impact of the small rise in interest rates on UK households is likely to be modest partly because only a relatively small proportion of borrowers will be directly impacted by the change. Most lending on personal loans and credit cards is fixed or tends to be unaffected by movements in the Bank Rate. Similarly, in recent years, the vast majority of new mortgages have been extended on fixed interest rates.

Indeed, the share of outstanding mortgages on variable interest rates (and which are therefore likely to see an increase in payments if Bank Rate is increased) according to the Nationwide has fallen to its lowest level on record, at c35%, down from a peak of 70% in 2001. For example, on the average mortgage, an interest rate increase of 0.25% would increase monthly payments by £16 to £700 (equivalent to c£190 extra per year).

Text or talk?

BLOG_prank_999_CallsOfcom has given us an insight into the communications market in 2018 in their latest research into our changing habits. Interestingly in the UK 5.2% of households’ spend was on communications services (£124.62 per month), with 70% of this on telecoms services. People claimed to spend a total of one day a week online (24 hours), more than twice as much as in 2011 with the the most popular smartphone activities for commuters are sending and receiving messages (43%) and using social media (32%).>

Most adults acknowledged the value of being connected, with three-quarters agreeing that being online helps them maintain personal relationships. But they also acknowledge its drawbacks, such as interrupting face-to-face communications with others. 78% of UK adults use a smartphone with 58% of households owning a tablet and 44% having a games console although these numbers have plateaued in the last three years. Smart TVs were in 42% of households in 2017, up from 5% in 2012 and now one in five households (20%) wear tech such as smart watches and fitness trackers.

Nine in ten people watched TV every week in 2017, for an average of 3 hours 23 minutes a day. This is nine minutes less than in 2016, down across all age groups under the age of 65 and those aged 55plus accounted for more than half of all viewing in the UK. More than half (50.9%) of all radio listening is now digital, mainly due to growth in listening through DAB. 13% of UK households used a smart speaker in 2018; three-quarters of these were Amazon devices.

Nine in ten people now have access to the internet in the home in 2018 however the majority (62%) of time spent on the internet was on mobile devices and interestingly BBC website visitor numbers overtook those of Amazon in the UK in 2018. The BBC had the third-highest number of users after Google and Facebook.

No more than a month

BLOG_FinancialHardshipThe latest bulletin from the Office of National Statistics highlights the changes in the wealth of the UK population. 12% of respondents to their survey in the period July 2016 to December 2017 reported that they always or most of the time ran out of money at the end of the week or month, or needed a credit card or overdraft to get by in the past year; this was unchanged from the period July 2014 to June 2016.

44% of respondents reported that they would not be able to make ends meet for longer than three months if they lost the main source of income coming into their household; this fell slightly from 46% in July 2014 to June 2016. Worryingly the percentage of 16 to 24 years age group reporting that they would not be able to make ends meet for longer than one month if they lost the main source of income coming into their household was 48%; this was compared with 26% of all respondents.

Almost 1 in 10 (8%) of respondents in the period July 2016 to December 2017 reported that they would be unable to meet an unexpected major expense equivalent to or greater than a month’s income and 44% of employees in the period July 2016 to December 2017 thought employer pensions were the safest way to save for retirement. This is compared to 42% of the self-employed in the period July 2016 to December 2017 who thought investing in property was the safest way to save for retirement.

In the period July 2016 to December 2017, 17% of those aged 16 to 24 years felt that they knew enough about pensions to make decisions about saving for retirement; this was compared with 42% of all non-retired respondents. 63% of eligible employees were aware that they had been automatically enrolled into a workplace pension. Of all eligible employees who reported that they had not been automatically enrolled into a workplace pension, 91% were already enrolled into a pension scheme.