Weekend economic news roundup


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Weekend economic news roundup

Government loan scheme hits Isa interest rates
Savings experts warn that the annual scramble by banks to attract customers with competitive Individual Savings Accounts rates
could be a damp squib this year.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 3
Also appeared in : The Times, p.57, The Independent, p.55, Independent i, p.48-49

Cheap money scheme has ripped heart out of savings
On 1 August last year the Bank of England’s Funding for Lending scheme was launched with the aim of providing cheaper loans and
mortgages to individuals and businesses, writes Andrew Hagger. Six months on, there’s no doubt that mortgage rates have fallen as
planned, but the side effects of this initiative have been nothing short of disastrous for UK savers.
The Independent, p. 61

Where to look for best online savings rates?
This week, BM Savings (formerly Birmingham Midshires) has launched a new online savings account, Online Reward, which pays up to
1.9pc. However, interest rates are tiered so savers have to deposit more than £49,999 to get the top rate. For balances of less
than £10,000 savers will get just 1.5pc.
The Daily Telegraph Your Money, p. 7

‘Pension liberation’ schemes targeted
Schemes offering to “unlock” pensions savings early but swallow up as much as half the fund in fees face a crackdown from law
enforcement agencies.
The Daily Telegraph, p. 37
Also appeared in : Financial Times Money, p.4

Pensioners are preparing for battle to prevent the Government’s assault on pensions.
The Daily Telegraph Your Money, p. 1

Unit & Investment Trusts and OEICS
Aberdeen ‘soft-closes’ EM fund
Aberdeen Asset Management is reportedly to impose a 2 per cent initial charge on its £3.7bn Emerging Markets fund.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2
Also appeared in : The Daily Telegraph, p.36, Financial Times Money, p.7

Mortgage rates fall again – but lenders are raising their fees
The level of interest payable on fixed-rate mortgages has been driven down to a record low as lenders compete to offer the cheapest
The Times, p. 65

1.89% loan to buy a home
Borrowers wanting to take advantage of Chelsea Building Society’s two-year fixed rate will need to find a 40 per cent deposit and
pay a £1,695 booking fee. The deal is the lowest two-year rate in recent times and is unlikely to have been beaten in earlier
generations because the Bank of England base rate is at an all-time low of 0.5 per cent.
Daily Mail, p. 37

Libor-rigging scandal ‘may implicate senior bank staff’
Tom Hayes the former UBS senior trader at the centre of the Libor scandal has warned that the conspiracy to manipulate key global
borrowing rates could implicate senior bank executives.
The Daily Telegraph, p. 37

Co-op ‘facing difficulty’ over Lloyds deal
Concerns are being raised about whether or not the the Co-operative’s plan to take control of 632 Lloyds Banking Group branches
will come to pass, following months of negotiation. A spokeswoman for the latter claimed that the firms were “making good
The Guardian, p. 27

Look to the US to boost economy, says Carney
Britain should consider importing key elements of North American monetary policy as officials grasp for ways to re-energise the
economy, Mark Carney suggested to MPs this week.
The Times, p. 58

Litigation fears take shine off Moody’s 66% rise in income
The chief executive of Moody’s yesterday tried to assuage shareholder fears that his rating agency could be the next target of the
US government.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 15

Lenders start fixed-rate price war
Focus on how a price war has broken out between banks and building societies as they continue to launch cheaper fixed-rate
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

Bank prepares to adjust its inflation sights — again
The recent slide in the pound is likely to force the Bank of England to lift its inflation forecasts next week, heralding a further
clampdown on household incomes. HSBC expects the Bank to predict consumer prices inflation inflation of 2.6 per cent in the first
quarter of 2013, 2.2 per cent in the same period of 2014 and 2 per cent in the first three months of 2015.
The Times, p. 46

Libor cheats to face the law
In the United States the Justice Department rolled up its sleeves and announced fraud charges against the credit ratings agency
Standard & Poor’s for its role in allegedly cheating investors between 2004-07 by giving favourable ratings to toxic debt.
Daily Mail, p. 101

Santander fears
Santander has sparked fears of a wave of redundancies after summoning 800 investment advisers to a meeting on Wednesday.
Daily Mail, p. 99

Barclays set to reignite bonuses row
The row over bankers’ bonuses is set to reignite this week amid reports that Barclays will pay between £1.5bn and £2bn to staff for
their work last year. The bank is also expected to trim bonuses for its investment bankers from the £1.5bn awarded the previous
Daily Mail, p. 99

Cable lays his Royal Bank of Scotland joker on the table
The FT’s Neil Collins discusses Vince Cable’s suggestion that the public should be given shares in Royal Bank of Scotland.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 20

Stealth tax on inheritance
In a blow to families with valuable property and other assets, the Treasury will freeze the amount that people can inherit free of
tax, rather than raise it in line with inflation. The decision comes just eight weeks after George Osborne, the chancellor,
promised to increase the amount in two years’ time. Now he has decided it will not go up until at least 2019, leaving thousands of
families £95,000 worse off than if the tax free allowance had risen.
The Sunday Times, p. 1-2

Steady income if you play it safe
Record amounts are flowing into Venture Capital Trusts (VCTs), as higher earners look for ways to reduce their tax bills.
The Sunday Telegraph Money and Jobs, p. 4

Bonds tie up and strangle your savings
Funds that hold bonds are promoted as lower risk by the fund management industry because bonds provide a fixed income and their
price is less volatile than shares.
The Sunday Times Money, p. 6

‘Pension predators’ targeted in new crackdown
Steve Webb, the minister for pensions, is to launch a campaign backed by the FSA, HMRC, pensions regulator and the Serious Fraud
Office that will attempt to reduce the outpouring of hundreds of millions of pounds to pension liberation companies.
The Observer, p. 19
Also appeared in : The Mail on Sunday, p.87, The Mail on Sunday, p.83, The Independent on Sunday, p.97, The Mail on Sunday, p.8

Equitable pensioners ‘still waiting for justice’
Thousands of Equitable Life policy holders are still waiting for their share of £1.5bn compensation promised by the Government two
years ago.
The Sunday Telegraph Money and Jobs, p. 2
Also appeared in : The Mail on Sunday, p.84

Directors cut costs with DIY pensions
Company directors are taking advantage of a specialist do-it-yourself work pension that allows them to borrow from their retirement
The Sunday Times Money, p. 5

Trust aims to reduce risk for novice investors
AXA Investment Managers has made a name for itself over the years for running distribution funds, which offer investors a first
stepping stone away from cash savings into bonds and equities, with a mix of income and long-term capital growth.
The Mail on Sunday, p. 91

Calculator will reveal the real cost of your investment funds
Jeff Prestridge comment on the True and Fair Campaign which is stepping up its efforts to get asset management companies to
disclose the real costs of investing money in their funds.
The Mail on Sunday, p. 84

Low rates spark property revival
House prices are set for the strongest spring bounce since the credit crunch as buyers take advantage of a rates war between
mortgage lenders.
The Sunday Times Money, p. 1

Price war brings record low rates on fixed mortgages
Fixed-rate mortgage rates have fallen to record levels after a price war broke out.
The Sunday Telegraph Money and Jobs, p. 2

Pain goes on as new ‘bad bank’ wades in
The Spanish Mortgage Association has reported a decline in the national property market, with The Observer quoting The Economist as
saying that prices will not recover until a further 20% is wiped off the value of Spanish homes.
The Observer, p. 45

Mortgage reforms bring rapid revival
An assessment of the Icelandic property market, which has been rising steadily for a number of years.
The Observer, p. 45

How to stop ‘ticking time-bomb’ detonating
Financial comment claiming that not everyone with an interest-only mortgage is sitting on what has been dubbed a ‘ticking
time-bomb’ by Martin Wheatley, head of new City regulator the Financial Conduct Authority. According to a report by BDRC
Continental, 560,000 households – 31 per cent of those with interest-only mortgages – have an investment plan that is on course to
clear their loan by the end of its term.
The Mail on Sunday, p. 77

Equities ripe for the taking as the ISA season starts
Around now is the time when the “ISA season” kicks off in earnest, writes Julian Knight. This is when, traditionally, most of the
big providers reveal the rates they will tempt customers with in advance of the 2012-13 tax year deadline for investment in an
individual savings account.
The Independent on Sunday, p. 94

If you’re fed up with a bank, our guide makes it easy to switch
Fears over switching a current account to a new bank or building society are stopping customers making the most of a fresh wave of
account deals. New challengers, including Metro Bank, Marks & Spencer Bank and Virgin Money, are shaking up the market. But each
year fewer than three in 100 customers move their current account.
The Mail on Sunday, p. 85

Talking cash points are gagged
Unlike other banks, HSBC and Santander have not activated the special “talking” features on their cash machines to help the blind.
Sunday Express Financial, p. 8

Barclays to slash 2,000 ‘casino’ jobs
It is reported that Barclays is poised to cull about 2,000 “casino” bankers at the investment banking arm – previously known as
Barclays Capital – as part of a radical overhaul ordered by Antony Jenkins, its new chief executive.
The Sunday Times Business, p. 1
Also appeared in : The Sunday Times Business, p.4, The Sunday Telegraph Business, p.7, The Sun, p.11, The Sunday Telegraph
Business, p.7, The Sunday Telegraph Business, p.1, The Sunday Telegraph Business, p.2, The Observer, p.43, The Sun, p.25, The
Mail on Sunday, p.75, Sunday Express Financial, p.1, The Independent on Sunday, p.85, The Observer, p.47, The Observer, p.3

Scandal-hit bank chief gets bonus
Stephen Hester, the boss of Royal Bank of Scotland, will be handed a £780,000 bonus just weeks after the bailed-out lender was
fined £390m for its role in the global interest rate rigging scandal. RBS, which is 81% owned by the government, is adamant that
Hester should receive the payment, which was granted in 2010, as he has received only one annual bonus since joining RBS in 2008.
The Sunday Times, p. 1
Also appeared in : The Sunday Times Business, p.4, The Mail on Sunday, p.15, Sunday Express, p.32

Macquarie in tax row
Investment funds led by Macquarie, the Australian financial giant, have reportedly paid just £1.8m in tax despite banking £2.2bn in
dividends and interest payments since 2005. Macquarie claims it is simply taking advantage of breaks the Treasury introduced to
spur investment. Its biggest assets are Thames Water, the monopoly supplier to London; Airwave, the telecoms provider to the
emergency services; the M6 toll road; and Arqiva, the mobile phone and television transmitter.
The Sunday Times Business, p. 3
Also appeared in : The Sunday Times Business, p.9

Inquiry into secret files kept by banks
A report on the Information Commissioner’s Office investigating allegations that banks are sharing a secret list which contains
“unsubstantiated” allegations about their customers. The allegations centre on lenders’ asset-based lending arms, which are
unregulated. They provide a combined £16bn of credit to the UK’s small and medium-sized businesses – typically by advancing cash
against their invoices.
The Sunday Telegraph Business, p. 3

Struggling Man Group hires KPMG to review its governance
Man Group, the troubled hedge fund, has asked KPMG to sort out its governance after a shareholder revolt last year.
The Independent on Sunday, p. 86

City watchdog kills bid to save broker
The Financial Services Authority sank Seymour Pierce, one of the Square Mile’s best-known stockbrokers, by refusing to sanction a
bailout by a Ukrainian tycoon after an eight-month investigation into his affairs.
The Sunday Times Business, p. 1-2

Victims caught in latest mis-selling scandal urged to beware of cold-call ‘cowboys’
Small business owners have been targeted by unscrupulous claims management companies, a leading industry figure has warned.
The Independent on Sunday, p. 92-93

Investment company boss slams charges as scandalous
Peter Hargreaves, the founder of Hargreaves Lansdown, one of the UK’s biggest sellers of investment products, says that the high
charges and opaque fees investment groups are charging savers for funds is a “scandal” waiting to happen.
Sunday Express Financial, p. 3

Zombie curse must be ended without an all-out massacre
A report on so-called ‘zombie’ firms. The word is increasingly being used to mean households or companies that have debts they can
never realistically expect to meet, but that have managed to avoid going bust thanks to low interest rates and bank tolerance.
The Mail on Sunday, p. 82

Lloyd’s in seismic shift to seek out China premiums
Not so long ago the Lloyd’s insurance market was a byword for everything rotten in the City of London. Colourful-sounding insiders
were accused of ripping off the rich and famous who put their entire wealth at risk to play in the insurance market. Now, though,
the market’s chief executive is feeling rather smug. Vilification is centred on banks a few hundred yards up the road. Lloyd’s is –
for the present – in the clear.
The Mail on Sunday, p. 81

Banks need to get their boardrooms in order
A radical overhaul of senior management is needed to ensure that we are not overtaken by similar scandals in the future, writes
Margareta Pagano.
The Independent on Sunday, p. 89

The above articles appeared on 09/02/13 & 10/02/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

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