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

©2008 Defaqto MyMoney. All Rights Reserved.

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.

©2008 Defaqto MyMoney. All Rights Reserved.

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

©2008 Defaqto MyMoney. All Rights Reserved.

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

©2008 Defaqto MyMoney. All Rights Reserved.

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

©2008 Defaqto MyMoney. All Rights Reserved.

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

©2008 Defaqto MyMoney. All Rights Reserved.

 With 30m customers between them, there can’t be many adults in the UK who don’t have a financial relationship with one, or both, of these institutions.

While most people have welcomed the stability (albeit probably temporary) that this decisive move has provided, the question on everyone’s lips is: “Are my savings safe?”

The Government’s role in encouraging the takeover is a positive signal that it will stand behind the new merged institution, come what may.

After all, what Government wants to see millions of customers besieging Halifax branches for the return of £260bn in retail deposits? It doesn’t bear thinking about.

That said, cash deposits are only protected up to £35,000 under the Financial Services Compensation Scheme and then only  “per authorised institution,” not “per account.”

This situation was already unsatisfactory, even before the takeover of HBOS by Lloyds TSB because it already owns a whole slew of brands which all come under  one FSA authorisation. 

These include Halifax, Birmingham Midshires, Saga, Intelligent Finance, Saga and the AA.

This means that if you have savings with any of these institutions, the maximum you could claim in the event of their demise would be £35,000 in total, not £35,000 per brand.

Elsewhere, Lloyds TSB and Cheltenham are jointly authorised, as are First Direct and HSBC, Yorkshire and Clydesdale banks, Abbey and Cahoot, Bank of Ireland and the Post Office, the Co-op and Smile.

The exceptions are Royal Bank of Scotland which is separately authorised from Nat West, and Abbey which is independent of Cater Allen, its private bank.

So not much comfort if you have large deposits with most of these banks.

Defaqto banking consultant, David Black, recommends that savers limit their deposits to around £33,000 per authorised institution 
because the FSCS will pay interest up to the date of closure.

If you want to check out the authorisation status of a financial insitution, visit:

http://www.fsa.gov.uk/register/home.do

Check out the best instant access accounts:
http://www.defaqto.com/consumer/savings-accounts/instant-access-accounts.aspx
Best regular savings rates:
http://www.defaqto.com/consumer/savings-accounts/regular-savings-accounts.aspx

©2008 Defaqto MyMoney. All Rights Reserved.

SAF cover enables customers to claim irrecoverable travel and accommodation costs paid in advance if a scheduled airline goes bust. 

The Post Office policy carries SAF cover as a standard feature, providing up to £1,500 in total for each insured person named on the policy and airline ticket. Swiftcover also offers this feature as an optional extra.

But if you paid for airlines tickets or a holiday accommodation with a credit card or a VISA debit card, the card issuer should refund your losses anyway.

It is only if you paid for your airline tickets or a package holiday via  a non VISA debit card that you will be left high and dry. 

Another risk which not all travel policies will cover is that of terorism. Defaqto has analysed the annual and single travel insurance market and discovered that while most providers would probably pay medical claims resulting from terrorism, travellers could lose out in the case of baggage and personal accident claims.
 
Mike Powell, Defaqto consultant on general insurance, says: “Our research shows that of the 976 annual and single trips analysed, only 63 per cent of policies available offer some form of protection following a terrorist incident, which leaves a significant proportion of people at risk of purchasing inadequate cover.”
 
Powell continues: “Terrorism is not always a consideration that you would even think about when purchasing your travel insurance cover, but you should check with your insurer to confirm the cover, particularly if you are travelling to countries at risk of terrorism.”

Some of the big names that include this protection  are British Airways, American Express, Cosmos, Easyjet and Endsleigh.

Visit Defaqto’s unique travel insurance comparison tool:
http://www.defaqto.com/consumer/insurance/travel/compare-single-trip.aspx

For more information on the policies mentioned above, visit:
www.postoffice.co.uk/travel
http://www.britishairways.com/travel/insurance/public/en_gb
www. americanexpress.com
https://www.easyjet4insurance.com/mawl/inside/ezy/gb?restart=
 

©2008 Defaqto MyMoney. All Rights Reserved.

Some of the 4,000 Lehman Brothers employees, who are set to lose their jobs by the end of this week,  may rue the day they failed to take out income payment protection insurance in happier times.

Not to be confused with payment protection insurance (PPI) which only protects your credit card, loan or mortgage payments for one or two years in the event of accident, sickness or unemployment, most income payment protection insurance policies(IP) will pay out around half to two thirds of your monthly income until you are able to resume work, or until retirement if you can never work agan.

This means that IP is far more expensive than PPI - not only does it pay out for longer, but some occupations are clearly more expensive to insure than others. 

Builders, scaffolders and others in physically dangerous jobs are obvious examples, but in recent months, the employees of investment banks, estate agents and housebuilders have found it hard or impossible to get cover because of the widespread expectation of imminent redundancies in these sectors. Such workers may have no choice now but to go to a specialist broker to obtain cover.

This is why it is always best to buy IP when you least need it. When the economy is heading into recession, underwriters are clearly going to be extremely wary as to whom they are willing to insure.

But you can limit the cost of IP by accepting a long deferment period - the amount of time that must elapse before you can receive a payout. If your employer’s sickness benefits will cover you for the first 3 or 6 months of long term sickness, your IP policy does not need to kick in until then.

You will have to complete a medical questionnaire and for large amounts of cover, you may have to have to undergo a medical as well. It is also essential to be absolutely honest in your responses as insurers will not honour a claim if you have witheld ‘materially relevant information’ - even where the non-disclosure does not relate to your claim.

Regrettably, some insurers  exclude back pain and stress-related illnesses, even though these are the most common causes of long term absence from work.  It is therefore essential that you take independent financial advice so that you select a policy which meets your needs.

LV= recently launched a combined mortgage and lifestyle protection policy, while LifeSearch offers a product called ‘Real Life Cover’ which combines life, critical illness and income protection.

For more on IP, read the Defaqto guide:
http://www.defaqto.com/consumer/insurance/life/income-protection.aspx
www.LV.com

www.lifesearch.co.uk

©2008 Defaqto MyMoney. All Rights Reserved.

Spread betting volumes  more than doubled in the first half of 2008, compared with a year earlier, according to a survey of wealth managers by ComPeer, the industry analyst, while Cass Business School predicts that over one million Brits will have a spread betting account by 2011.

Spread betting offers investors the opportunity to make money in falling markets, particularly via ’shorting,’ whereby you buy shares in a falling market and sell them on in the hope of buying them back later at a lower price.

In brief, spread betting is a form of investment gambling on price fluctuations in a wide range of markets, including indices, individual stocks and shares, commodities and currencies.

Any profits  are tax free (just like any other form of gambling), there’s no stamp duty and no commission or brokerage fees, which may explain its extraordinary attraction to so many people.

But it’s worth setting a few rules before trading if you are new to this form of gambling. Never bet more than you can afford to lose and be prepared to take your losses on the chin.

If you want to spend more than pin money, read up on it and study the share price charts which could turn your hobby into a skill. Most spread betting companies will let you try your hand at spread betting by trading 1p a point for the first few weeks.

Experts recommend specialising in a small area of the market, such as the value of the dollar or oil, rather than trading randomly across the market.

Set yourself a limit as to how much you are prepared to put at risk in any single trade. Experts recommend never placing more than 2 per cent of your account at risk, so if you have a bank of £2,000, be prepared to lose up to £40.

You should set your stop loss accordingly so that if you’re buying the FTSE 100 at 50p, your trade is closed automatically if the index drops 80 points.

Don’t be greedy. Be prepared to cut your losses fast and take your profits early. After all, no one ever  went broke taking a profit. 

Directory of spread betting firms:
http://www.find.co.uk/investments/spread_betting&cfds/spread_betting

http://www.igindex.co.uk/?QPID=116&QPPID=2

©2008 Defaqto MyMoney. All Rights Reserved.