Are you covered for lost baggage?

March 19, 2008 | posted by Chloe Cottam in Insight |

With the chaos that has surrounded the opening of Heathrow’s Terminal 5, and the late Easter school holidays upon us, families are looking to take a break and the issue of baggage being lost or delayed is prominent.When travelling abroad, if your luggage is lost or delayed and you need to purchase items such as a change of clothes, hygiene products or any other necessary items, you would expect your insurance policy to reimburse you. Similarly, if your flight was delayed you would expect your insurance policy to provide some form of compensation for you being stuck in the airport lounge.

Defaqto has looked into the single trip travel insurance market to see what cover is provided for lost and delayed baggage as well as being delayed at an airport. The research noted:

  •  14% of single trip policies do not provide any cover for delayed baggage.
  •  40% of single trip policies only provide a maximum cover of £100 or less for delayed baggage.
  •  40% of single trip policies only provide a maximum cover of £100 or less for compensation for flights being delayed.
  •  74% of single trip policies provide £20 or less for the first 12 hours of being delayed at the airport.
  •  82% of single trip policies provide £20 or less for the each subsequent 12 hours of being delayed at the airport.

Mike Powell, Consultant for General Insurance at Defaqto, said:  “With the problems that have occurred with the opening of Terminal 5 and the fact that there has been widespread reports in the media of people not being able to collect their luggage and flights being cancelled or delayed, consumers do not always consider what cover is provided by their travel insurance policy for these types of eventualities. It is therefore important to check what is provided by a travel insurance policy before purchasing cover.”

-Ends-

 

For further information contact:

Defaqto Limited          

Insight person, Chris Johnston or Luci Mylward

01844 295 454

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CGT: botched roll-out; laudable aims

March 18, 2008 | posted by Christopher Jones-Warner in Insight |

While a flat rate 18% tax on capital gains may be bad news for basic rate tax payers, it is likely to be good news for City private client investment operations and, in the longer run, for most investors as well. 

The Chancellor is regularly besieged by calls for the abolition of Capital Gains Tax on shares. It will never happen, though, for the intention of the tax is less to raise revenue than to stop investors protecting their total returns through capital appreciation. 

The tax has become highly complicated, however, tying up valuable resource in expertise, computer power and time while generating no real wealth for the nation. Many private client investment firms have invested heavily into systems that overcome these complexities to produce reliable reports and estimates of tax payable. 

Loading client details on to a tax system can be highly labour intensive particularly where a client has had a penchant for scrip dividends. The reports themselves are only as good as the information loaded into the system. The cost of administering these systems is borne, ultimately, by clients. 

So while abolition may not have been an option, simplifying the tax via a flat rate removes many of its disadvantages. Before we get to that happy state, however, firms will have to take their clients’ portfolios and un-index them: stripping back holdings to their base cost, ex-indexation and taper relief.  

With indexation, taper relief and pooling gone, calculation will be far simpler heralding a longer term reduction in costs, fees and angst.

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Advisers hold the key to platform success, says Defaqto

March 13, 2008 | posted by Luci Mylward in Investment, Pensions, Press Release |

Providers planning a long-term future in the adviser platform market will need to respond positively to IFAs’ requirements to achieve success, according to Defaqto’s latest report, ‘Adviser Platforms in the UK 20081- Stand and Deliver‘.  The report identifies key areas of focus for those wishing to deliver successful propositions within this ever-changing marketplace.The report suggests that despite experiencing some growth, the platform market is essentially still in its infancy. IFA networks and support groups, which have yet to take a stance on platforms or commit to preferred partners, will need to be the target of platform providers. These providers will need to cite the positive experiences of those who have bought into the concept of platform technology and are conducting business online.

In the report, Defaqto uses feedback from IFAs conducting business in the UK investment market to deliver a qualitative dimension to the findings. This includes an insight into IFA business habits, IFA opinion on pertinent industry issues and IFA perception of service standards within the platform arena. This gives important insights to providers by allowing  a better understanding of the IFA community’s behaviour and needs in this developing market.

Matt Ward, Defaqto’s Principal Consultant for Pensions & Wealth Management, comments: “It would appear from our research that many IFAs are still trialing platform solutions ahead of further commitment to one or two partners. One of the reasons for this would seem to be a confusion surrounding the USPs of each proposition and it is vitally important for providers to ensure that IFA supporters are clear about the capability of the services and systems on offer.

“Everyone who is involved in the market, whether as an active or potential participant, will benefit from understanding more fully how the market is moving and how propositions are developing, as well as finding out what the likely impact of regulatory directives on the platform market will be.”

-Ends-

Notes to Editors:

1The report ‘Adviser Platforms in the UK 20081- Stand and Deliver‘  is on sale priced £1,200 excluding VAT for a PDF version and £595 (No VAT payable) for a single printed copy. For further information please contact Chris Johnston on 01844 295457, or the Sales Department on Freephone 0808 1000 804 or visit http://www.defaqto.com/

 For further information contact:

Defaqto Limited 

Matt Ward, Chris Johnston or Luci Mylward

01844 295 454

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Evaluating web comparison sites

March 12, 2008 | posted by Luci Mylward in Insurance, Press Release |

With moneysupermarket.com and confused.com both claiming to offer the cheapest quotes for motor insurance based on research surveys, the poor consumer could be forgiven for wondering how one piece of research could end up favouring one site and another favouring the other.Price comparison websites have rapidly become hugely important in the process of selecting insurance policies, but the assumption that they all work to a uniform set of criteria so that the consumer can genuinely compare like with like, is way off the mark.

A typical instance of this is where the aggregator sets the voluntary excess to automatically default to a large amount in order to offer reduced premiums. The consumer may not spot this and only find out at claim time. Similarly, if the consumer requires courtesy car cover or wishes to protect their no claims discount, the cost of this is not always shown or included in the initial quote.  The consumer, therefore, will have to obtain this information directly from the insurer. Another complication is where the consumer cannot compare the actual cover levels between one policy and another to assess each one’s respective value for money.

Defaqto, the independent financial research company, evaluates motor price comparison sites for the overall quality of their operations, but not for premiums. To carry out this research it uses at thirty-three criteria relating to three aspects of the operation: The Quotation Process; The Quotation Results Process and Insurer Results. The findings provide a comprehensive and independent analysis of the quality of the sites1.

Commenting on the situation, Mike Powell, Consultant - General Insurance said:   “Our research so far has been into car insurance on price comparison sites. To do this we rate each site for the way it handles the thirty-three criteria we consider most relevant to the quotation process from a consumer point of view. What has emerged is that not one site covers all insurers and many have a fairly restricted pool of insurers to draw on. 

“The same insurance requirement can even produce different premiums from the same insurer across different sites. The message is clear - make sure you know what you want in terms of cover levels and treat price as a secondary consideration.”

-Ends

Notes to Editors:

1 The report entitled ‘Motor insurance in the UK, 2007 - the rise of the aggregator’ is on sale priced £1,200 plus VAT for a PDF version and £595 (No VAT payable) for a single printed copy. For further information please contact Chris Johnston on 01844 295457, or the Sales Department on Freephone 0808 1000 804 or visit http://www.defaqto.com/

                                                                  

For further information contact:

Defaqto Limited
Mike Powell, Chris Johnston or Luci Mylward
01844 295 454

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Hiding lights under bushels

March 11, 2008 | posted by Chris Johnston in Insight, Investment |

The investment industry is awash with statistics on fund performance. If you want to know how a fund has performed over three months, six months, one year, five years or ten years, the information is readily available. While past performance is not a guide to future performance, it is another part of the fund’s jigsaw of information that helps complete the picture along with asset allocation, fund manager details, investment policy and the like.

The situation radically changes though if you are interested in investing for income and you set about finding out how much a fund has paid out in the recent past. Now the position changes from the historical performance of the accumulation fund to the future expectation of distribution of the income fund.

If past performance is not necessarily a guide to future performance, how can expected performance be a guide to actual performance?  And what is the point of showing fund performance figures that include the very distributions that people seeking to compare income funds want to identify? 

Performance figures would make some small sense to people who want information about income distributions if they were stripped of the income reinvestment element of the performance. At least the claims of funds who say they aim to pay a reasonable income while at the same time delivering asset growth could be tested.

Investing for income appears to carry the same health warning that investing anywhere else does. Do your own research about the fund composition, management style and future likely economic conditions and come to your own conclusions.

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High profile group SIPPs - who’ll be choosing the funds?

March 7, 2008 | posted by Matthew Ward in Insight, Investment, Pensions |

News of the recent adoption of a Group SIPP proposition by one of the larger employers in the UK, GlaxoSmithKline, will have been music to the ears for providers of these money purchase pension solutions. We predict that this will spark more activity with regards to the inclusion of these schemes within employee benefit packages, especially as the decline in final salary schemes continues. Similarly providers buoyed by the appeal and success of individual SIPP products will be keen to ‘spread the love’ into the group market. 

Although Group SIPP is being touted by some to be the new heir to the throne in the group pension market we think that due to the array of investment solutions available it is more likely to suit the needs of a small percentage of the workforce such as key personnel and directors.  As such it may very well emerge as a successful top-up scheme solution which can be run in tandem with a Group Stakeholder or Group Personal pension scheme. 

The major decision point for the employer when appraising money purchase scheme options will be around getting access to manageable and sound investment propositions and hence this is where development focus in the market is likely to be. It is a well known fact that employees will often not want or be able to make a decision on which funds to utilise, especially where no advice or guidance is available, meaning that default funds are regularly used. Therefore the discussion around the number of funds or asset types available can often be a futile one.

As far as Group SIPPs are concerned if the employee struggled to select investment funds from a choice of 30 to 40 funds previously, how will they choose from a platform of over 1,000 funds? 

In light of these issues an interesting development which may occur, mirroring its success in the individual SIPP market, will be for providers to offer access to specialist Discretionary Fund Management links through the Group SIPP. This could provide a ‘win-win’ situation where the employer will be comforted by the fact that they are de-risking themselves from investment decision making, the employee will not be inclined to pick from a list of funds and the DFM will be able to professionally design and run large portfolios which can be linked to employee goal targeting and attitude to risk.

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Defaqto exhibits at Adviser 2008 exhibition in Glasgow

March 5, 2008 | posted by Luci Mylward in Press Release |

Defaqto, the independent financial research company, is exhibiting its Aequos Engage product selection system to financial advisers at Adviser 2008 being held at the Scottish Exhibition + Conference Centre, Glasgow on 6 March.The company will also be providing information on Defaqto Compare, Defaqto Star Ratings, the latest free Multi-Manager guide as well as Defaqto’s Investment and Business News, a free daily newsletter commenting on the economic, business and financial issues of the day.

Aequos Engage provides financial advisers with online information on financial products covering pensions, protection, investments, including wraps, as well as equity release and offshore products. Operating as a solutions-based system, Aequos Engage provides all the tools necessary for advisers to quickly identify the correct products for their clients, as well as providing suitability letters to cover compliance requirements.

Commenting on the exhibition, Roger Perry, Adviser National Accounts Manager at Defaqto said:” While we are very pleased with the success we have already achieved with Aequos Engage, we are not resting on our laurels and are using this opportunity to raise awareness  for it and our other products among advisers in Scotland. It is always very satisfying to have the opportunity to meeting individual advisers and discussing their needs and being able to demonstrate our capabilities.”

-Ends-

For further information contact:

Defaqto Limited 

Chris Johnston or Luci Mylward

01844 295 454

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PPI - The hard sell continues

March 4, 2008 | posted by Brian Brown in Banking, Insight, Insurance, Personal Loans |

Lenders have been at great pains to point out to the FSA and the Competition Commission that the granting of an unsecured loan is no longer dependent on whether the customer takes Payment Protection Insurance or not.

Yet my own experience shows that lenders haven’t given up on the hard sell yet!  I am in the unenviable position of wanting to convert part of my garage into a study/playroom, but not having the readies to pay for it.  So like all sensible people I had to take out a personal loan to fund this.  I’m good for the cash, so I knew that getting a cheap loan wouldn’t be a problem.

On Sunday morning I searched online for the best deal, from a major bank, then applied on the Web.  Fantastic, job done, sorted.  Roll on the builders.

However a couple of hours later I got a text message asking me to call the bank in question regarding my application, so I gave them a ring (on an 0845 number too, so not a free call!). (more…)

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All change

March 4, 2008 | posted by David Black in Banking, Credit Cards, Insight, Mortgages, Personal Loans |

The general concensus is that the Monetary Policy Committee won’t change the Bank of England Repo rate (base rate) in their meeting taking place this week. Expectations are that the rate is currently on a downward path although inflationary pressures may temper the MPC’s willingness to reduce further and faster.

There are clear economic worries too and suggestions that the US economy is in recession may lead to similar revelations over here in due course.

From a financial point of view the fallout from the US sub-prime credit crisis has meant that banks are generally unwilling to lend to each other and are finding it both more difficult and more expensive to raise wholesale funds.

This gives us an unusual situation.

If you’re a saver the best deposit rates are significantly out of kilter with the base rate. Ordinarily you’d expect to be doing well if you could find a savings rate that was equal to - or just below - the bank base rate. Now, however, you can beat the base rate by over 1% with certain cash ISAs or savings accounts. This is happening for two distinct reasons: firstly general eagerness to raise retail funds and secondly new entrants (typically foreign bank subsidiaries) who have to offer best buy status accounts to obtain sufficient customers through the resultant publicity. 

(more…)

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Defaqto’s Star Ratings an Industry Success

February 29, 2008 | posted by Luci Mylward in Banking, Credit Cards, Current Accounts, Insight, Insurance, Investment, Pensions, Press Release, Protection |

Defaqto’s Star Ratings for 2008 have been more widely adopted by providers than ever before. The ratings, which have become the most authoritative and impartial guide to product quality available, cover products in the banking, protection, investment, pension and general insurance areasIn January Defaqto undertook the huge task of analysing the quality of just under 2,200 products in 24 separate product areas from 550 different suppliers. Defaqto used a set of quality criteria to assess each product in each particular area. From this analysis Defaqto was able to score each product and then assign it a Star Rating.  The ratings ranged from five stars down to one star.

In total Defaqto assigned 252 Five Star ratings, 360 Four Stars, 571 Three Stars, 498 Two Stars and 511 One Star.

Defaqto licenses companies to use the rating in their promotional material and so far this year, Defaqto has licensed the use of 140 Five Star Ratings.

Brian Brown, Head of Insight at Defaqto said: “A Five Star rating enables companies to demonstrate to consumers that their products have reached the highest tier of quality. The rating, with its associated logo, is becoming a well-known statement of product quality in the market as more and more companies adopt it into their marketing plans.

“With the ever-growing emphasis on product cost, product quality has been in danger of being excluded from the purchase decision. A Five Star Rating helps to address this imbalance by identifying for consumers products which have been independently assessed for quality.”

Main Star Rated Product Groups
Credit Cards Current Accounts Home Insurance Motor Insurance
Pet Insurance Travel Insurance Payment Protection SIPPs
Offshore Bonds Onshore Bonds Critical Illness Income Protection

-Ends

For further information contact:

Defaqto Limited
Brian Brown, Chris Johnston or Luci Mylward
01844 295 454

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