Weekend economic news round up

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Weekend economic news round up

Standard Life cuts bonuses
Standard Life, has cut bonuses on its unitised pension plans to 0.5 per cent and to 0.75 per cent on its life plans.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

Wealthy pensioners won’t lose free perks before 2016
Britain’s retirees will not face any cutbacks to their free “pensioner perks” until at least a year after the next general election – despite demands for the wealthy elderly to start sharing the burden of austerity.
Independent i, p. 4

Bonds are in, shares are out
The annual survey of company pensions by the National Association of Pension Funds has revealed that pension funds now hold more of their assets in bonds than shares for the first time in almost 40 years.
The Daily Telegraph Your Money, p. 3

Most pay nothing into pensions
Nest, the state-provided default pension system, says seven in 10 private-sector workers do not currently pay into a retirement scheme, while figures from the Office for National Statistics show that the number of “active” pension savers in the UK fell from 12.2million at the peak in 1967 to 8.2million in 2011.
The Daily Telegraph Your Money, p. 3

Annuity inquiry must lead to fairer pensions
The Financial Services Authority’s news this week that it has launched an investigation into the £15bn annuity market prompted criticism that the City watchdog has taken so long to act. A a report from the National Association of Pension Funds (NAPF) and the Pensions Institute last year showed that retirees are being short-changed by up to £1bn from their total future pension income because serious obstacles stop them getting the best annuity deal.
The Independent, p. 53

Cowie’s blog week
Ian Cowie’s analysis of mortgage affordability. According to Halifax, house price affordability reached its best level since 1999 in the final quarter of 2012, while Nationwide says first-time buyers’ homes are now more affordable than they have been since 2003.
The Daily Telegraph Your Money, p. 12

‘Property will outperform shares’
Investment analysis of the property funds market as analysts recommend buying now as long as property prices remain low.
The Daily Telegraph Your Money, p. 7

Barclays may face criminal charges over Qatari bailout
Barclays is facing yet another blow to its already tarnished reputation after it emerged that the bank could face criminal charges over a 2008 bailout. The bank – already facing opprobrium over the Libor rate-rigging scandal, the tax advice its gives clients, the PPI mis-selling scandal, executive pay and staff bonuses – is now being investigated about a £6bn lifeline it received from foreign investors.
The Independent, p. 13
Also appeared in : Financial Times, p.1, Independent i, p.6, The Daily Telegraph, p.33, The Guardian, p.27, The Times, p.42, The Times, p.44

RBS faces £500m Libor settlement
Report on how Royal Bank of Scotland is set to pay more than £500m to US and UK authorities as early as next week, resolving allegations it manipulated benchmark interest rates.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 13

Deutsche Bank move to raise capital ratio lifts investors
Deutsche Bank reported a €2.2bn quarterly loss this week.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 14

Netherlands seizes bank
The Dutch government announced Friday that it had taken control of one of the country’s biggest financial institutions, SNS Reaal, after the stumbling lender was unable to find a buyer in the private sector.
International Herald Tribune, p. 1
Also appeared in : The Daily Telegraph, p.35, The Times, p.49

Ping An stake sale
The Chinese authorities have approved HSBC’s sale of a 15.6 per cent stake in local insurer Ping An to Thai conglomerate CP Group.
The Daily Telegraph, p. 34
Also appeared in : International Herald Tribune, p.11

CRÉDIT AGRICOLE TO WRITE DOWN €3.8 BILLION MORE FROM BAD DEALS
Crédit Agricole, one of the largest French banks, said Friday that it would write down a further €3.8 billion as it struggled to unwind investments made before the 2008 financial crisis.
International Herald Tribune, p. 11

METLIFE TO BUY PENSION PROVIDER IN CHILE FROM BBVA FOR $2 BILLION
MetLife agreed Friday to buy the Chilean pension fund provider AFP Provida from the Spanish bank BBVA for around $2 billion.
International Herald Tribune, p. 11

Mis-selling scandal: banks let off the hook
Banks have been handed a free pass allowing them to get out of paying compensation on the biggest interest rate swap mis-selling claims, The Independent has learnt. But it has emerged that swaps of £10m and above will be excluded, exempting the banks from compensating companies that took them out. City analysts suggest that banks’ compensation claims related to swaps mis-selling could reach £1.5bn – a large sum but only a fraction of the more than £10bn set aside to cover the mis-selling of payment protection insurance policies.
The Independent, p. 1-4
Also appeared in : Independent i, p.6

FSA facing compensation scheme backlash
The Financial Services Authority is facing a backlash after it emerged that a compensation scheme for businesses mis-sold interest rate swaps will leave hundreds of would be claimants out in the cold.
The Daily Telegraph, p. 33

new rules let you know what you’re paying for
As part of the long-awaited retail distribution review (RDR), financial advisers can no longer receive commission from fund-management groups for recommending their products. This has heralded a major change to the way fees are levied on investments bought through advisers, and although it’s still too early to say whether it will result in charges coming down, it should help make the entire process a lot more transparent.
The Independent, p. 54-55

THIS WEEK SAVINGS FUND LIVING COSTS
53 per cent of British savers are being forced to dip into their cash pile to fund day-to-day living expenses, according to Lloyds.
The Independent on Sunday, p. 93

Beat the savings slump with a fix
Savers have had little to celebrate with banks and mutuals slashing rates, but some fixed accounts are bucking this trend. The average rate cut last month was 0.4 percentage points. Sixteen providers lowered returns, compared with just two last January. However, a handful have boosted fixed-rate accounts in recent days, including BM Savings, Sainsbury’s, Shawbrook and Vanquis. Another option for those seeking to beat the interest rate slump is a regular savings account. On Friday, First Direct withdrew its competitive Regular Saver account which paid 8% to those depositing £25 to £300 a month. However, M&S is still offering its Monthly Saver, which pays a respectable 6%.
The Sunday Times Money, p. 5

Make a difference to young lives and earn a 12% return
Retail investors can put their savings into a scheme to help disadvantaged young people, with the promise of a 12% return. The eight-year Future for Children bond, which is available through financial advisers, will invest in a project from Essex county council to improve the life of disadvantaged 11 to 16-year-olds.
The Sunday Times Money, p. 6

£800 more if you shop around for an annuity
Research by Moneyfacts.co.uk has shown that customers could lose out £794 on a £100,000 pension pot by failing to shop around for providers. Elsewhere, the Office of Fair Trading last month launched an investigation into whether employees were being unfairly hit with high charges on workplace pension schemes.
The Sunday Telegraph Money and Jobs, p. 2

Crackdown to boost pensions
Savers could pocket thousands of pounds more a year in retirement as a result of a clampdown on pension firms that do not offer competitive incomes. Last week the Financial Services Authority, the City watchdog, launched a review into the £11bn market for annuities, which pay an income for life when a worker retires. However, the code of conduct, to be introduced next month by the Association of British Insurers (ABI), the trade body, has been criticised for allowing insurers to shop around on behalf of customers. This means that some insurers can present results from only two rival firms, ignoring many others that may offer better deals.
The Sunday Times Money, p. 1

All in a good cause: The investment bond that lets you make a social impact, too
A new phrase is set to enter the complex lexicon of financial services – the social impact bond. Allia, which describes itself as a charitable social investment organisation, will this week start offering an investment bond with a difference.
The Independent on Sunday, p. 92-93

Beware the ‘cheaper’ leasehold option that could cost more in the long run
First-timer buyers desperate to scramble on to the property ladder should be wary of leasehold flats, as this form of “ownership” is no more than an extended rental that might seem cheaper, but can cost you dear in the end, experts warn.
The Observer, p. 43

Things are on the up
The economy may be in the doldrums, haunted by the spectre of an unprecedented triple dip recession, but morsels of good news are finally emerging from the housing market. Property values in England and Wales rose by 1.7% in 2012, to an average £162,080, the fastest rate of increase for more than two years, according to Land Registry data released last week.
The Sunday Times Home, p. 4

Home loan rates fall to record lows
Report on how homeowners are benefiting from the lowest mortgage rates on record after banks made further cuts to the cost of home loans last week.
The Sunday Times Money, p. 3

Property is rising again
House prices increased 0.5% in January, in a further sign that the property market has turned a corner after two years of static sales.
The Sunday Times Money, p. 2

Investor lost out after Santander advice error
Santander customers are being warned not to allow call centre staff to fob them off when they want to transfer investments. The bank has a history of poor customer service. The Financial Ombudsman Service said it received 5,072 complaints about Santander in the first half of 2012. Of these, 116 related to investments.
The Sunday Times Money, p. 8

New Bank of England head to face MPs for first time me
Mark Carney, pictured right, the new Bank of England governor, will be cross-examined about his plans for jump-starting the economy at the Treasury select committee on Thursday, the Canadian’s first outing in the Commons.
The Observer, p. 12-13
Also appeared in : The Independent on Sunday, p.85, The Sunday Telegraph Business, p.2

Osborne in new threat to banks
George Osborne is still locked in last-minute negotiations with Vince Cable, the Business Secretary, over plans for new powers to split up Britain’s leading banks if proposals to “ring-fence” retail and investment divisions are deemed not to have worked. The Chancellor has also demanded that the Royal Bank of Scotland pays the expected £500m fine for Libor manipulation from funds reserved for bonuses.
The Sunday Telegraph Business, p. 1

RBS pledges Hester will stay to 2014
RBS chairman Sir Philip Hampton has moved to calm investor fears over chief executive Stephen Hester’s future, privately pledging that the 52-year-old will stay in charge well into 2014.
The Independent on Sunday, p. 85

Prudential CEO demands Carney quit QE or risk further turmoil
Tidjane Thiam, the chief executive of Prudential has warned incoming Bank of England Governor, Mark Carney, that the quantitative easing programme should be halted to prevent further economic turmoil.
The Sunday Telegraph Business, p. 1-2

RBS plans branch IPO after Santander failure
The Royal Bank of Scotland is planning an £1bn initial public offering (IPO) of the business it failed to sell to Santander after a lack of strong interest from trade bidders.
The Sunday Telegraph Business, p. 1

Lloyds in pusg to half false PPI claims
Antony Horta-Osorio, the chief executive of Lloyds Banking Group, has called on Chris Grayling to look at changing the law so that the costs of false payment protection insurance claims would be shared by the claims management companies that are often behind them.
The Sunday Telegraph Business, p. 3

Osborne to force banks to break up
The Chancellor is ready to grant the Bank of England power to break up banks that fail to keep a clear dividing line between high-street branches and riskier “casino banking” operations. The move, expected to be announced in a speech tomorrow, would allow the authorities to step in if evidence emerged that a bank was endangering ordinary savers’ money with risky trading.
The Sunday Times, p. 2

Increase rates while you can, Bank urged
Economists are calling on the Bank of England to raise interest rates, the first time they have sought an increase in over a year. The Bank should take advantage of the lull in the eurozone crisis to start bringing rates back to normal levels, they say. Bank rate has been at 0.5% since March 2009.
The Sunday Times Business, p. 2

The above articles appeared on 02/02/13 & 03/02/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

Charterbridge Private Financial Planning, Independent Financial Advice, Thornbury, Bristol.