Tesco launches motorbike insurance comparison

October 10, 2008 | posted by Pam Atherton in Insurance | Print This Post

While the European banking system lurches from crisis to crisis, life must go on, and more mundane matters, such as making sure your belongings are adequately insured, still need to be dealt with.

And at this time of belt-tightening, it is more important than ever to shop around for the best quotes.

So it is good to see that Tescocompare.com, the comparison website has launched a motorbike insurance comparison service, providing bikers with the opportunity to compare the motorbike deals from 22 brokers.

Uniquely, Tescocompare.com is offering a price guarantee to UK motorcyclists, (aged 19 or over,  spending £75 or more on their premium) and that the quote provided by Tescocompare.com is the cheapest available.

If you think you can get a cheaper quote elsewhere, you can call Tescocompare.com for free on 0800 089 8018 and it promises to beat the price.

The new comparison channel is also offering free legal cover worth £25 to any motorcyclist who requests a quote, even if you don’t end up buying your policy through Tescocompare.com.

The comparison site automatically searches all three levels of cover - namely fully comprehensive, third party fire & theft, and third party only. These are all accessible via on-screen tabs, so that you only need to search once.

Top tips are also available to help you keep your  premium to a minimum. Matthew Dransfield of Tescocompare.com says: “Everyone is trying to make their money go that extra mile in the credit crunch.

“Our motorbike insurance comparison service also offers tips on how to lower insurance premiums and enables motorcyclists to search for quotes on all levels of cover.”

Tescocompare.com also offers price comparison services on home insurance, mortgages, gas and electricity suppliers, credit cards and loans.

Defaqto insurance principal Mike Powell: “A lot of aggregator sites, such as comparethemarket.com, gocompare.com, lloydtsbcompare.com and confused.com have entered the motorbike insurance market.

Aggregators started with motor insurance, but some now do motorbike and van insurance as well.”

For more visit:

www.tescocompare.com

Take a look at  Defaqto’s unique  motorbike comparison service:
http://www.defaqto.com/consumer/insurance/motor/compare-motorcycle.aspx

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New crackdown on loan insurance sales

October 9, 2008 | posted by Pam Atherton in Insurance, Loans | Print This Post

Financial institutions face a fresh crackdown on the sale of payment protection insurance, as the FSA announced that it was fining  Alliance & Leicester a record £7m for misselling PPI alongside personal loans.

It is the largest FSA fine for PPI misselling to date. The FSA said A&L’s failings were the “most serious” it has seen and that in telephone sales of PPI on unsecured loans, the bank had failed to give customers full details of the costs and had sought reasons to sell the product without properly considering the customer’s needs.

The FSA said A&L did not make it sufficiently clear that PPI was optional and that it had trained its telephone sales  staff to put pressure on customers if they queried the inclusion of PPI in their quotation or challenged advisers’ recommendations.

The fine comes as the FSA renewed its call for banks to reform their sales practices ahead of the increased ‘intervention’ it is planning. Earlier this year, the banks were accused of profiteering from PPI by amost £1.5bn a year on £5.5bn of sales and that profits had been used to subsidise cheap personal loans.

PPI pays out if you are unable to work due to accident, sickness or unemployment, but the cover only lasts for 1-2 years. Undisclosed previous medical conditions, unemployment andcertain types of employment can render these policies worthless, leading to a high rejection rate on claims.

PPI can be bought alonside personal loans, credit cards and mortgages.

Of particular concern to the FSA is the fact that customers were not always been told they would have to pay for the policy entirely upfront with a lump sum, on which interest is charged.

The FSA said that some institutions should consider stopping selling lump sum insurance policies on unsecured personal loans.

Defaqto insurance principal, Brian Brown, advised policyholders not to cancel existing policies as a kneejerk reaction: “At a time of economic downturn and rising unemployment, this is the very time to keep such policies going. You should only cancel a PPI policy if it is not appropriate to your needs or you would not be eligible to claim, so you should check the small print and with the insurer first, before doing anything.”

For more on Payment Protection Insurance:
http://www.defaqto.com/consumer/insurance/life/income-protection.aspx

For more on long term income protection:
http://www.defaqto.com/consumer/insurance/life/income-protection.aspx

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Another day, another bank failure

October 8, 2008 | posted by Pam Atherton in Banking, Savings | Print This Post

STOP PRESS: the Government has said it will compensate all Ice Save depositors in full. 

In a separate move, ING Direct will acquire £2.5bn of deposits held by 160,000 customers from Kaupthing Edge, the internet-only UK retail arm of Iceland’s biggest bank.

ING Direct is also taking control of £538m of savings held by 22,200 people with Heritable Bank, which was run by Iceland’s Landsbanki - Icesave’s owner.

With the collapse of Iceland’s second largest bank, Landsbanki, yesterday the grim reality of the credit crunch is starting to hurt British savers for the first time in a real way.

Some 300,000 UK savers have an average deposit of £15,000 in Landsbanki’s popular IceSave account which featured regularly in the best buy tables.

Under the deposit protection arrangements in Iceland, the Icelandic authorities would normally pay depositors the first €20,887 of compensation (£16,300), while the UK’s Financial Services Compensation Scheme (FSCS) would make up the rest of any claim up to the increased limit of £50,000 (which luckily came into effect yesterday).

But this morning, the Chancellor, Alistair Darling said that the Icelandic compensation scheme had no money in it and that the UK government would pick up the tab and compensate UK savers in full.

 This latest collapse brings home to UK savers the fact that foreign-owned banks can make claiming compensation a more complicated and risky process.

In the Defaqto term accounts best buy table on Tuesday (prior to the announcement of Landsbanki’s collapse), no fewer than seven of the accounts listed were from non-UK banks http://www.defaqto.com/consumer/savings-accounts/term-accounts.aspx.

Of these two were from Anglo Irish Bank, which now enjoy a 100 per cent guarantee from the Irish government. But three of the accounts were Landsbanki IceSave accounts, one was from Dutch-owned AK Bank NV and one was provided by the Indian bank ICICI.

While there is nothing inherently wrong with saving in a foreign-owned bank, depositors should check what the arrangements would be if anything went wrong. Levels of compensation vary from country to country and their authorisation.

To date, however, the UK Government has compensated depositors in full.

For more on the FSCS:
www.fscs.org.uk
Why not invest regularly with a mutual building society:
http://www.defaqto.com/consumer/savings-accounts/regular-savings-accounts.aspx

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It’s that time of year…

October 7, 2008 | posted by Pam Atherton in Investments, Pensions, Savings | Print This Post

STOP PRESS…. Landsbanki, the Icelandic bank offering  the popular IceSave account into which 350,000 UK  savers have poured an average of £15,000, has been declared insolvent.  UK savers will have to make a claim to the Financial Services Compensation Scheme. More on this in tomorrow’s blog. 

Away from the drama of yet another bank collapse, life must go on and, yes, the taxman will still want your tax return, even if you have lost all your savings in a failed bank.

So it’s time to dust off your financial records and fill in that tax return that you have shoved to the bottom of your pile of  ’things to do.’

If you wish to file a paper return, the deadline is now 31 October; if  you prefer to file online the deadline is 31 January 2009.  HMRC is trying to encourage  greater take-up of online filing, but paper returns are still valid.

The new style returns will need extra care this year so here’s a 12 point aide-memoire to help you get it right:

1. Check that you have all the right pages.  If you have capital gains from share sales or a property sale (which is not your principal private residence), you will need the capital gains pages.

2. If you are employed, you will need your P60 (showing the tax and national insurance contributions  paid via payroll) and P11D (showing your employee benefits, some of which are taxable).

3. If you are self employed, you will need the self employment pages, although it is advisable to use an accountant. Not only will you get valuable advice about allowances and what you can claim as expenses, but accountants’ fees are tax deductible.

4. Everyone has to fill in the first six pages of the standard tax return and the questions should be read carefully, particularly those on page three.

5. Gather together any bank and building society annual statements of tax deducted to fill in the relevant boxes on interest received.

6. Don’t include income or gains from Individual Savings Accounts (ISAs) or Personal Equity Plans (PEPs), but do include contributions to company and private pension schemes.

If you are a higher rate taxpayer, you may be due an 18 per cent rebate of tax (for pension contributions made in the 2007-08 tax year).

This does not apply, however, if you contribute via a salary sacrifice pension arrangement as your contributions will have been made out non-taxed income.
 
7. There is a new box to be completed if you work through a service company. Be aware that HMRC is  scrutinising service company arrangements more closely because of previous instances of tax evasion in this area.

8. The new ‘additional information’ pages are for other items such as share schemes, stock dividends and the married couple’s allowance. You don’t need to send these pages back if you have nothing to declare.
 
9. If you are non-resident or non-domiciled people, you may need specialist advice as the rules for’ non doms’ have changed significantly this year.

10. If you have trouble completing the paper return, remember that the online version will calculate your tax liability automatically.

11. If you don’t have precise information, you can use estimated figures but you should still explain these on your tax return and follow it up with HMRC.

12. There is no need to include pence – always round numbers down. Take a photocopy and remember to sign the forms and send them off in good time.

Your tax office will inform you of the amount of tax payable  by 31 January 2009. If you only owe a small amount, HMRC will adjust your tax code accordingly and deduct it through your monthly pay.

For more on tax visit:

http://www.hmrc.gov.uk/index.htm

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Where now for investors?

October 6, 2008 | posted by Pam Atherton in Investments | Print This Post

While stockmarkets remain in rollercoaster mode, ordinary investors may be wondering whether now is the right time to invest.

Despite share prices showing unprecendented volatility, eminent investors such as Anthony Bolton, the former Fidelity fund manager, announced last week he was dipping his toes back into the stockmarket.

While Bolton was at pains to say that he was not calling the bottom of the market, he said  there were areas of the market showing value.

Retail stockbroker, The Share Centre (www.share.com) agrees and has identifed 10 defensive shares worth looking at.

Nick Raynor, investment adviser at The Share Centre says: “There are opportunties for investors to pick up bargains where shares are currently undervalued.

“We are encouraging investors to fully research any investments they are considering and that they make the most of alert and monitoring tools such as stop loss limits and price targets.”

Raynor likes utility stocks such as National Grid, Pennon and Northumbrian, on the grounds that EDF’s recent purchase of British Energy may rekindle some corporate activity within the sector.
Utility stocks are also recession-proof, given that everyone needs water, gas and electricity, even if the economy goes into recession.

Another recommendation is Reckit Benckiser, the world’s largest cleaning products group, owning brands such as Vanish, Harpic and Airwick. The company’s strategy is simple and well-executed and people will still clean their homes, irrespective of economic conditions.

Rayner also likes Tesco’s defensive qualities as a food retailer which is expanding successfully in countries such as Russia, and whose shares are currently yielding 11.6 per cent.

Similarly, BAT, the cigarette manufacturer, has strong defensive qualities, a commitment to increase dividends and long term organic growth.

BT is favoured for its relative stability and the strong demand for broadband in the UK, where BT is the leading retail supplier, although Raynor recommends only drip feeding into this share.

Despite difficult trading conditions in the property market, Raynor is backing Land Securities. The company has decided to split its £15bn property portfolio into three separately quoted businesses as it looks to return value to investors.

Another favourite is Cobham, the aerospace company, which has strong trading links with the US, where defence budgets are growing at a higher rate than in the UK. A 12 per cent fall in the share price adds to its attraction.

STOP PRESS: The German and Spanish governments are considering following the Irish government and guaranteeing up to 100 per cent of retail savings deposits in their respective countries’ banks. The guarantee limit in the UK rises to £50,000 per authorised institution (not brand) from tomorrow 7 October.

New to sharedealing?  Visit:
http://www.defaqto.com/consumer/investments/share-dealing.aspx
Want to spread your risk via unit trust investment?:
http://www.defaqto.com/consumer/investments/unit-trust-sectors.aspx
Invest directly in shares via a Self Select ISA:
http://www.defaqto.com/consumer/investments/isas/guide-to-self-select-isas.aspx

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September financial services market overview

October 3, 2008 | posted by Pam Atherton in Banking, Insurance, Investments, Mortgages, Pensions, Savings | Print This Post

The near collapse of the global banking system in September left financial advisers stunned as they tried to come to terms with the implications of recent events for their businesses and clients.

UK and global insurers revealed over £1.5bn of exposure to Lehman Brothers and insurer AIG, with Axa, Aegon and Aviva declaring exposure to both, while Friends Provident, Zurich Financial and Royal Liver confirmed exposure to Lehman Brothers only.
 
IFAs scrambled to assess the potential losses for clients’ capital invested in structured products underwritten by Lehman Brothers, such as those offered by Meteor, Arc, NDF and DRI.

The takeover of HBOS by Lloyds TSB raised the prospect of a new super bank controlling 28 per cent of the UK mortgage market, leading to adviser concerns over competition and cuts in
procuration fees. 

Advisers also wondered about the future of Swip and Insight’s multi-manager propositions and the new bank’s plans for the protection market, when the two banks merge with an 18 per cent share of the life insurance market once the Scottish Widows, Clerical Medical and Halifax Life brands are all under one roof.

The Investment Management Association issued a warning about the lack of transparency and performance information on retail structured products and the FSA was severely criticised for allowing structured products to go unregulated.

On the Retail Distribution Review front, Financial Services Consumer Panel chairman, Lord Lipsey, said he thought the FSA would seek a middle way on the strict division of sales and advice set out in the interim RDR report.

Simply Biz chairman, Ken Davy, called for the RDR to allow advisers to have the choice of gaining a diploma or equivalent qualification within six years or working under the supervision of a qualified adviser.

A mandatory deadline for higher qualification in the final RDR report would force 10- 30 per cent of IFAs out of the industry, Davy said.
 
But the Personal Finance Society said the number of advisers who hold the chartered financial planner qualification had leapt by 50 per cent in the last 12 months.  The Society also established a group of pensions experts to lobby HMRC for greater clarity on QROPs regulations.

Advisers welcomed the FSA’s decision to investigate absolute return funds with regard to their development, risk management and Treating Customers Fairly, while IFA firm, Hargreaves Lansdown, said it did not think the FSA’s ban on the short selling of 32 financial stocks until 16 January 2009 would adversely affect these funds. 

Elsewhere, APCIMs attacked the FSA for failing to do an adequate cost-benefits analysis of its TCF requirements.

Meanwhile, the Lib Dems at their party conference vowed to tackle the disincentives to save via personal accounts, axe higher rate relief on pensions, urge the FSA to fund a system of generic advice via an industry levy and endorsed equity release as a way of boosting pensioner incomes.

Pensions Minister Mike O’Brien said the Government would report on the effect of means-testing in December and dismissed the ‘wild claims’ that had been made about the number of people likely to be affected.

Meanwhile, research by Fidelity revealed startling differences on the returns of mainstream funds over a five year period, depending on the fund wrapper used. Highest returns were from collective funds, followed by offshore and onshore bonds due to the CGT changes effective since April 2008 which make collective funds more tax efficient for most investors.

The Irish Government’s decision to guarantee the retail deposits held by six of  Ireland’s largest financial institutions ratcheted up the pressure on the UK Government to do likewise.

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Is there anywhere safe to deposit one’s cash?

October 2, 2008 | posted by Pam Atherton in Banking, Savings | Print This Post

With hardly a day passing without a bank collapsing or needing to be rescued, you could be forgiven for wondering whether there are any financial institutions left where you can safely deposit your hard earned cash.

If you want a copper-bottomed guarantee of security, there isn’t much to beat National Savings & Investments (NS&I)  www.nsandi.com/which offers a range of taxable, tax-free and index-linked certificates and premium bonds.

It does not offer a traditional bank-type account with cheque book but its Easy Access savings account provides a cash card which can be used to withdraw money at ATMs.

Northern Rock savings accounts (http://www.northernrock.co.uk)  are also guaranteed by the Government, at least  until further notice, so you could put your money with it for the time being until it is sold off or wound up.

A third option is certain Irish banks and building societies following the Irish government’s announcement that it will guarantee the safety of all deposits in six of its principal savings institutions.

The latter are the Bank of Ireland, Allied Irish Bank (AIB), Anglo Irish Bank (AIB) and two building societies -  the Educational and the Irish Nationwide. The sixth is Irish Life and Permanent, Ireland’s largest life insurance company.
 
The guarantee lasts for the next two years and AIB, Anglo Irish Bank and the Bank of Ireland all have branches in the UK.

The announcement by the Irish Department of Finance appears to cover all depositors of these institutuions, even for those located outside Ireland.

Anglo Irish Bank has been actively seeking deposits from savers in England and Scotland for the last two years, with competitive rates of interest on its Easy Access, 7 Day account and nine month bond. It was adamant yesterday that the safety guarantee applied to all depositors, irrespective of their location.

Bank of Ireland has 46 branches in Northern Ireland and 11 offices in England and Scotland. It also runs the financial services division of the UK Post Office and has about 1.5m customers with deposit accounts through this brand.

Anglo Irish Bank has seven branches in England and Scotland, while Allied Irish Bank has 27 branches in England, Scotland and Wales and 47 in Northern Ireland.

Defaqto banking principal David Black, says:  “It’s a great move on the part of the Irish government to instill confidence. Anglo Irish Bank has had consistently competitive rates in recent years.” 

For top paying savings accounts visit:
http://www.defaqto.com/consumer/savings-accounts/instant-access-accounts.aspx
http://www.defaqto.com/consumer/savings-accounts/notice-savings-accounts.aspx
http://www.defaqto.com/consumer/savings-accounts/regular-savings-accounts.aspx
http://www.defaqto.com/consumer/savings-accounts/childrens-

www.angloirishbank.co.uk
http://www.bank-of-ireland.co.uk/
http://www.aib.ie/servlet/ContentServer?pagename=AIB_Ireland/IHPHomepage

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Car insurance premiums set to rise

October 1, 2008 | posted by Pam Atherton in Insurance | Print This Post

Away from the financial markets, and assuming that we will won’t all be selling out cars next week because of a 1929-type stockmarket collapse, car insurance premiums look set to rise.

This is the view of Defaqto insurance consultant, Mike Powell, whose recently published report  on the car  insurance market, “Difficult Times Ahead,” comes to the conclusion that the current, the highly competitive level of car insurance premiums is simply unsustainable.

In 2007, insurers made a loss on motor insurance for the thirteenth consecutive year. Insurers took in £10.5bn in premiums, but with £8.2bn paid out in claims, and with the cost of administration and commissions added on, insurers made a loss of £263m last year.

According to consultants, Deloitte, insurers had to release £1bn from prior year reserves in order to stem these underwriting losses.

So why have insurers allowed this state of affirs to continue for so long? The answer, according to Mike Powell is that car owners are great for selling other insurance products to.  If you own a car, you will probably have other things you want to insure such as your house and its contents, travel, pets and so on.

Another reason is that car owners are very cost sensitive and are willing to shop around online to get the cheapest premium.  Aggregator web sites have enabled car owners to compare multiple quotes, making it difficult for insurers to raise their premiums.

However, the situation may have reached a tipping point because of the rise in personal injury claims which is costing insurers a small fortune.

Powell says: “If it continues like this, how long will insurers be able to stay in the market?

“Providers will either have to raise their premiums or withdraw from the market. In any case, cheapest is not always the best. It’s only whenyou come to make a claim that you know whether you policy is any good.”

Visit Defaqto’s unique car insurance comparison tool:
http://www.defaqto.com/consumer/insurance/motor/compare-car.aspx

Read the Defaqto guide to car insurance:
http://www.defaqto.com/consumer/insurance/motor.aspx

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What next for B&B savers and borrowers?

September 30, 2008 | posted by Pam Atherton in Banking, Mortgages, Pensions, Savings | Print This Post

It is business as usual for depositors and other customers of Bradford & Bingley (B&B), who need have no concerns about the safety of their money.

That was the message from the Financial Services Compensation Scheme (FSCS) yesterday as it stepped in to help the 2.5m B&B customers  after the bank failed to meet its regulatory requirements and the FSA declared the bank in default. 

The FSCS is contributing some £14bn to enable retail deposits held in B&B, and which are covered by the compensation scheme, to be transferred to their new owner, Abbey, which in turn is owned by the Spanish bank, Banco Santander.

FSCS chief executive, Loretta Minghella, said: “This initiative means that some 2.5m people can rest assured that their money is safe and they will not lose it because of the problems at Bradford & Bingley. They can access their accounts in the normal way and it is business as usual for them.”

This effectively means that B&B depositors will have 100 per cent of their savings protected, because the FSA and FSCS have arranged for a smooth transfer of their accounts to Abbey.

Normally, when a UK authorised bank fails,  only the first £35,000 is covered by the FSCS.

So you should make sure you spread your money across different savings institutions (that are not all part of the same group) so that your money is protected.

For instance, if Banco Santander were now to fail and you had accounts with B&B, as well as with Abbey and Cahoot (all owned and authorised under the Banco Santander name), you would  only be covered for the first £35,000 of total savings held with these three brand names, not £35,000 for each.

For borrowers, although existing B&B mortgages will continue to run as they are for the time being, once a mortgage deal comes to an end, it is likely that you will be required to move elsewhere or pay the bank’s prevailing standard variable rate which will almost certainly be higher.

Those with buy-to-let mortgages may have difficulty re-mortgaging elsewhere as a large number of lenders have withdrawn from the market. For example, three lenders previously funded by the now defunct Lehmann Brothers have ceased lending.

For shareholders, the outlook is even worse. There is little prospect of them receiving anything and B&B staff with holdings  in the bank’s SAYE scheme and pension plan will be particularly hard hit.

All of which serves to prove the old maxim that you shouldn’t put all your eggs in one basket.

For more on the FSCS visit:
www.fscs.org.uk

For the top instant access savings accounts visit:
http://www.defaqto.com/consumer/savings-accounts/instant-access-accounts.aspx
Top cash ISAs:
http://www.defaqto.com/consumer/savings-accounts/cash-isas.aspx
Top term accounts
http://www.defaqto.com/consumer/savings-accounts/term-accounts.aspx
TOp notice accounts
http://www.defaqto.com/consumer/savings-accounts/notice-savings-accounts.aspx
TOp children’s savings accounts:
http://www.defaqto.com/consumer/savings-accounts/childrens-accounts.aspx

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My cash machine nightmare

September 29, 2008 | posted by Pam Atherton in Banking, Savings | Print This Post

You think it will never happen to you, and then it does.

While withdrawing money from a cash machine a few weeks ago, a man approached me saying that it had just swallowed his card.

I told him to go away, thinking that he was going to grab the cash when it came out, but lo and behold, no cash was forthcoming and the machine refused to return my card.

Having waited a few minutes to see if machine might change its mind, I walked away thinking nothing of it.
 
On reporting the incident to my bank the next day, I was told that the card wasn’t in the machine and must have been stolen - probably by the man who had approached me and who had got my PIN by shoulder surfing when he spoke to me.

To my horror, he had swiped a cool £1,000 from my account in the space of a few hours - £600 in cash and £400 in shop purchases.

APACS, the UK payment association says that £35m was lost through cash machine fraud in 200.

Sandra Quinn of  APACS, says: “The three principal methods criminals use to steal cards and card details at cash machines are card-trapping devices, whereby the fraudster inserts a card catcher device into the card slot; skimming from the magnetic stripe at cash machines and shoulder-surfing, whereby the fraudster observes the cardholder inputting their PIN and then uses distraction techniques to steal the card.”
 
By UK fraud standards, my experience was small beer. I know people who have had their entire identity stolen and had mortgages, personal loans and credit cards taken out in their name for months before they have even become aware of it.

Trying to unravel that sort of  fraud is a nightmare and can take months, if not years, to sort out.

In my own case, I had to make numerous calls to the bank’s call centre, just to report the loss of the card. I then had to visit my branch, complete two forms (one of which I had to wait to come in the post). Having done all that, I am still awaiting a refund.

The upshot is that I won’t be withdrawing any money from street-side ATMs anymore. I’ll stick to the cash machines inside branches during banking hours.

For more on card protection and identity fraud:

http://www.defaqto.com/consumer/credit-cards/card-protection.aspx
http://www.defaqto.com/consumer/credit-cards/guide-identity-theft-insurance.aspx

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