Defaqto issues new free multi-manager investment guide

February 25, 2008 | posted by Luci Mylward in Insight, Investment, Press Release | comments (2) |

Defaqto’s independent updated guide designed to help financial advisers improve their understanding of multi-manager fund management has just been produced and  is downloadable free of charge from: http://tinyurl.com/2f623bCalled “Blending Talents1: A guide to multi-manager investing in the UK”, Issue 6,  Defaqto’s latest guide explains how the different types of multi-manager funds can work for financial advisers and their clients. It is also designed to deepen appreciation of the various ways in which multi-manager funds are managed and the report provides a template which if followed by multi-manager fund managers will ensure that advisers will be able to place the appropriate funds in front of their clients.

The guide is issued at a time when the level of fund manager moves in this section of the industry has been unprecedented and it contains the full listing of fund manager moves in 2007.

The guide enumerates the advantages to the adviser of outsourcing  investment decisions to multi-manager investment specialists including how this can help improve client relationships and increased business levels.

Fraser Donaldson, Principal Consultant - Investments at Defaqto and co-author of Blending Talents, says: “With upwards of 300 multi-manager OIECs and unit trusts in the UK, advisers can be overwhelmed by the amount of information they would otherwise need to research without a guide like ours to help them. By following the route map to successful investment selection that the guide provides, advisers will be well placed to meet their customers’ requirements appropriately and with confidence.”

The guide is available as a free download from the Defaqto website at: http://tinyurl.com/2f623b

-Ends-

Notes to Editors:

The guide “Blending Talents” is sponsored by AXA Framlington, Cazenove Capital Management, Credit Suisse Asset Management, Fidelity International, MLC and Schroders.

For further information contact:

Defaqto Limited 

Fraser Donaldson, Chris Johnston or Luci Mylward

01844 295 454

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Shopping around for Payment Protection Insurance

February 24, 2008 | posted by Brian Brown in Banking, Credit Cards, Insight, Insurance, Mortgages, Personal Loans, Protection | comments (0) |

With so much press comment around about cancelling Payment Protection Insurance (PPI) we are often asked where customers who do want cover can go online to purchase standalone PPI or Income Protection Insurance (IPI).

These policies are used to protect the customer in case they are unable to make loan or mortgage repayments following unemployment or sickness.

Anyone buying PPI cover must be sure they read all the information and questions asked by the insurer to make sure they are eligible to buy the policy, and make sure they understand any exclusions which might apply to claims (such as restrictions on backache or mental illness claims, or for pre-existing medical conditions).

The following companies all sell cover on a stand-alone basis:

    

Standalone Mortgage Payment Protection

    

Provider
Web Address
Phone
Cost *
Ant Insurance
www.antinsurance.co.uk
020 8972 557
£2.36
British Insurance
www.britishinsurance.com
08450 175 178
£3.25
Churchill
www.churchill.com
0800 404 770
£4.00
Post Office Ltd
www.postoffice.co.uk
0800 633 967
£4.50
Web Money
www.webmoney.co.uk
0845 155 1931
£3.50

      

Standalone Income Protection/Payment Protection

    

Provider
Web Address
Phone
Cost *
Ant Insurance
www.antinsurance.co.uk
020 8972 9557
£2.50
iprotect
www.iprotectinsurance.co.uk
01962 877 818
£2.64
British Insurance
www.britishinsurance.com
08450 175 178
£4.05
Hitachi Capital
www.hcforyou.co.uk
0870 850 8116
£4.25
Paymentcare Ltd
www.paymentcare.co.uk
0870 428 4088
£4.40
Pinnacle Insurance
www.pinnacle.co.uk
08000 350 292
£2.69
Web Money
www.webmoney.co.uk
0845 155 1930
£4.44

* Cost is cost per £100 of cover for a 35 year old man, with 12 months benefit.  Note that premiums vary markedly and this is in part because differing policies offer different features and benefits.

    

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PPI industry set for massive upheaval, says Defaqto

February 22, 2008 | posted by Luci Mylward in Insight, Insurance, Press Release | comments (0) |

Defaqto’s latest report, “Payment Protection Insurance - 2008  - The party’s over ” predicts that over the next two years there will be a  massive upheaval in the industry as lenders, underwriters and consumers are forced to adjust to consequences that will flow from the judgements of the Competition Commission.With an annual turnover of around £4.5bn and profits in the order of £1.5bn the industry is likely to suffer a severe dilution of profits when the Competition Commission’s statement of remedies is published. If this includes de-coupling the sale of PPI from that of the credit product, this in itself would have a huge impact on the industry. 

As a consequence of the inevitable tightening of the rules under which PPI can be sold, costs and charges across a wide range of other financial products and services will have to rise steeply if banks and credit card companies are to fill the holes in their balance sheets that this will create.

PPI products principally cover protection for loans, credit cards and mortgages but there are significant differences in the way the products are costed and sold. So, while the shortcomings of the PPI industry are well-documented, particularly in connection with the complexity of the products, the sale process itself, the sale to people not covered by the policy and the high cost of some plans, these findings do not apply universally.

PPI policies can and do provide a vital income stream to meet ongoing bills if accident, sickness or unemployment does strike and calls by newspapers and lobby groups to policyholders to cancel their policies could leave them seriously exposed if this advice were followed.

Commenting on the industry, Brian Brown, Head of Insight and lead author of the report said: “We must be very careful not to throw the baby out with the bathwater. PPI has been exploited by lenders as an easy source of profit, but the products themselves can be an extremely valuable.

Policyholders need to carefully examine their personal circumstances and their policy wordings and form a judgement as to whether to retain them, seek cheaper alternatives or drop them altogether.

PPI is the first safety net people fall back on before being forced to claim state benefits and PPI’s detractors should think carefully before advising people to cancel their policies unless they are prepared to accept responsibility for policyholders left unprotected by their advice.”

-Ends-

Notes to Editors:

1The report “Payment Protection Insurance - 2008  - The party’s over ” 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 

Brian Brown, Chris Johnston or Luci Mylward

01844 295 454

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Bank distribution tie-ups back on the menu

February 8, 2008 | posted by Matthew Ward in Banking, Insight, Investment, Pensions | comments (1) |

This week’s L&G and Nationwide announcement which confirmed a distribution tie-up for pensions, investment and protection products is sure to create a stir within the industry. From a pensions point of view this move represents the first banking and life office tie-up for a while and would seem like a very logical and shrewd progression for these companies with the way that the distribution market is moving.It also brings together two strong and trusted consumer brands. Both L&G and Nationwide figured in the top 20 most trusted companies as selected by consumers in research carried out by GfK NOP for Defaqto’s Retirement Savings & Income report 2007. Defaqto asked 1,000 consumers to state which companies, from a pre-defined list of financial services and retail brands, they would trust with their retirement savings. Nationwide and L&G figured prominently, ranking 4th and 16th respectively.In the proposed distribution landscape mapped out by the FSA’s Retail Distribution Review, high street banks in the UK would seem to be set fair for key involvement in providing consumers with affordable access to savings advice and products.

The L&G and Nationwide announcement signals an early example of major UK institutions paying heed to the future of the distribution market and Defaqto would expect to see similar new deals announced or existing relationships embellished in this area. 

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No Claims Discount – Is it just a marketing tool?

February 7, 2008 | posted by Michael Powell in Insurance | comments (0) |

Following the announcement by Direct Line that from January 2008, new and existing customers who suffer damage to their cars caused by vandalism will not have their no claims discount disallowed should they make a claim. My question is, is there still a need for the traditional ‘No Claims Discount’?

The use of ‘NCD’ as a marketing tool has been prevalent within the last few years as insurers try to be innovative and want to be seen as providing the highest discounts in the market. Companies such as Direct Line and the CIS have introduced a new slant of the use of ‘NCD’, stating that all named drivers on its policies can earn their own ‘NCD’, whereas Esure has advertised the fact that its policyholders can get up to a “massive 75%” no claims discount. 

This discount seems to have been around since the dark ages, and in fact it was first introduced by Cornhill Insurance in 1957.  For fifty years motor insurance underwriting has used a ‘no claims discount’ scale when calculating insurance premiums. Therefore, is there now an opportunity to dispense with this out of date method? Gone are the days when the policyholder’s new insurer would require to see proof of any no claims discount earned, and most insurers now only require the previous insurer’s policy number.

(more…)

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Providers may widen margins at customers’ expense - Defaqto’s David Black comments on base rate change

February 7, 2008 | posted by Luci Mylward in Banking, Credit Cards, Insight, Mortgages, Personal Loans, Press Release, Savings | comments (0) |

Following The Monetary Policy Committee’s decision to reduce the Bank of England Base rate by 0.25% to 5.25%, Defaqto’s Principal Consultant - Banking, David Black comments:”This 0.25% cut by the Monetary Policy Committee was widely anticipated and comes as no surprise. I will watch with interest to see whether the full cut is passed on to both savers and borrowers but I suspect that some providers may use the opportunity to widen their margins at customers’ expense.

“Prior to this cut the average Standard Variable Rate is currently 7.55%. Last time the bank base rate was at 5.25% (between 11th January and 9th May 2007) the average Standard Variable Rate was 7.05%.”

Ends

For further information contact:

Defaqto Limited 

David Black, Chris Johnston or Luci Mylward

01844 295 454

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Insurance Industry - Friend or Foe?

February 6, 2008 | posted by Michael Powell in Insight, Insurance | comments (0) |

The public image of the insurance industry has never been a great one, and we have all heard stories of how “insurers always take the premiums but never pay the claims”. However, the recent Channel 4 programme about fraudulent insurance claims has, in my opinion, confused the issue further as to why the industry is so strict when settling claims.

According to the research conducted by Norwich Union, one in ten claims made are fraudulent, and it appears that the insurance industry has been seen as a ‘soft’ touch and an easy way of making money. The programme showed a number of NU policyholders who had put in a claim and which were subsequently investigated into as being possible fraudulent claims. One particular claim that was investigated was where a policyholder had apparently had her engagement ring stolen from the safe in her room when she was on holiday. However, after investigations into the claim were made, it became clear that her fiancée had taken the ring following a split in their relationship. NU’s claims investigator contacted her ex-fiancée and he gave him the ring, which was then presented to her by the investigator after which she freely admitted that she was trying to obtain money from a fraudulent claim.

(more…)

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FTSE fluctuations likely to put off private investors

February 6, 2008 | posted by Chris Johnston in Insight, Investment | comments (0) |

The hefty swings witnessed in the FTSE 100 index in recent times are doing nothing for the confidence of the ordinary investor. All it seems to signal is that investing in top UK registered companies is nothing other than a lottery.

Most of us were brought up to believe that investment in stocks and shares was for the long term. We also thought that the stock market was an accurate leading economic indicator as it focused at least six months ahead and had already discounted the likely future events in its stock pricing. Not so now.  What we are witnessing is reminiscent of a herd of wildebeest on the open plain, sniffing the breeze for the slightest whiff of trouble and then when they sense it, stampeding in the opposite direction. 

How is the small investor supposed to have the slightest confidence in the market in these circumstances? We have always known that the herd instinct was a powerful factor in market movements, but the recent volatility in the markets has exposed the degree to which they are now operating to the shortest of timescales and on the flimsiest of indicators.

While these conditions remain, ordinary punters’ faith in the whole system will remain very jaundiced and only a sustained bout of sanity will be enough to entice them back in. 

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Defaqto announces new star rating procedure

February 1, 2008 | posted by Luci Mylward in Banking, Insight, Insurance, Investment, Pensions, Press Release, Protection | comments (0) |

Defaqto today announced the introduction of a new procedure for star rating personal financial products. Over the past seven years Defaqto has been producing star ratings for a wide range of financial products.  During this time, the process was based on products being scored for their quality against a set of product criteria using Defaqto’s unique Product DNA1 process which is built into the Aequos database. Depending on the scores achieved, products were located in one of five star categories, with Five Stars being the top rating and One Star the lowest rating.To get into the Five Star category, a product had to be scored within the top 10 per cent of all products. For Four Stars, products had to be the next 15 percent of products, for Three Stars in the next 25 percent and so on.

Star ratings for different product groups were produced over the course of a year for inclusion in the publication of the relevant Defaqto Insight market report.

During 2007 Defaqto underwent a review of its rating procedures and decided that in future it will produce all star ratings on the same day - 1st February - and that these ratings will apply for the 12 months to the end of the following January. As well as the revised schedule, the methodology for deciding on product ratings has been improved by Defaqto’s product experts, from being a relative comparison to becoming a set of absolute ‘bars’. As part of the new rating, Defaqto has stipulated that before a product can be rated as Five Stars it must provide some level of cover or benefit in a number of key areas.

These changes will give product providers distinct advantages over the current system:

  • Getting a Five Star product rating will no longer depend on how many other Five Star rated products exist.
  • Providers will know that if their products meet or exceed the top bar for quality, they will be rated Five Stars.
  •  Providers licensed to use Defaqto’s star rating logo will be able to use the logo more effectively, knowing it relates to the current year and the first month of the next year.
  • Providers can develop products over the course of a year knowing in advance the criteria used to score product quality and what the star rating boundaries are.

The research methodology together with the features and benefits used by Defaqto in calculating each product’s scores, as well as the boundaries for each star rating, are produced within the relevant Star Rating Report 20082 publication.

Commenting on the change, Brian Brown, Head of Insight at Defaqto said: “We  believe that these changes will bring greater certainty to providers both in terms of the development and marketing of their products as well as enhanced confidence in the star ratings themselves among consumers.”

                          

-Ends-

Notes to Editors

1 Product DNA - Product Data Numerical Analysis

2 Reports for the different product areas entitled ‘Star Rating Reports 2008′ are on sale priced £850 plus VAT each for a PDF version with discounts available for subsequent purchases . 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 

Brian Brown, Chris Johnston or Luci Mylward

01844 295 454

Star Rating Reports 2008

Number of Features or Benefit Criteria Scored

Features or Benefit  Criteria Essential for Five Star Rating
Home Insurance

 

 
Buildings

23

9
Contents

40

12
Motor

 

 
Comprehensive

44

8
Motorcycle

29

5
Travel

 

 
Annual Travel

29

12
Single Trip

27

12
Gap Year

29

8
Long Stay Travel

29

8
Payment Protection

 

 
Personal Loan PPI

24

7
Credit Card PPI

24

9
Mortgage PPI

24

7
Pet

 

 
Cat

24

5
Dog

26

6
Critical Illness

 

 
Stand Alone CIC

23

0
Level Term CIC

24

0
Decreasing Term CIC

24

0
Income Protection

 

 
Income Protection

16

0
Offshore Bonds

 

 
Guided Architecture

21

0
Portfolio Bonds

21

0
Onshore Bonds

 

 
UK Unit Linked Bonds

18

0
Sipps

Features, Benefits / Costs

Features, Benefits / Costs
SIPPs

19 / 8

0
  

 

 
Current Accounts

34 / 43

3 / 0

 

 
   Credit Cards

 

 
Credit Cards

19 / 27

0 / 1
Offset & Current Account  Mortgages

 

 
Offset & Current Account Mortgages

45  / 24

3 / 1
Equity Release

 

 
Lifetime Mortgages

53 / 27

1 / 1*

 1* - One cost feature the product must not have to achieve Five Star N.B. Where no essential criteria is listed this is because it is included in the standard criteria

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Don’t say you weren’t warned! The FSA lays it on the line

January 30, 2008 | posted by Brian Brown in Banking, Insight, Insurance, Investment, Pensions, Protection | comments (0) |

The FSA has today published its Financial Risks Outlook 2008 report (PDF Download), which sets out the FSA view on the UK financial markets, and where it sees potential risks.

Not only does this report provide an excellent summary of where the world economy and the UK within it appears to be at present, it also discusses the FSA’s priority risks for this year.

It’s not a light read - 70 pages of quite detailed content - but there is an extensive section titled “Industry Focus” which sets out the FSA’s thoughts on what it sees as risks in each financial area.  And some of it makes for quite worrying reading for those involved in financial services.

Leaving aside the massive problems with consumer lending the report also includes some pearls which should guide industry leaders in their future dealings with the FSA, and clearly states where the potholes are.  Non-subtle pointers include: (more…)

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