18 February 2009
Financial crises teach a lot of hard lessons - lessons in greed, lessons in fear, lessons about calling markets, about overborrowing, about not relying on other parties beyond what it says in the contract, about not relying solely on ratings agencies.
Leading fund firms lost around £48bn of assets in 2008, with Fidelity International seeing £8bn wiped out, research from Money Marketing has revealed.
The Council of Mortgage Lenders has revealed that there were 5,000 less repossessions in 2008 than it originally predicted.
Brokers have called on lenders to do more to make "theoretical" 90 per cent mortgages accessible to first-time buyers.
The move to wrap sneaks up on you. Piece by piece, the evidence amasses that this is the correct solution for clients and business, until it is so conclusive you wonder why you did not see it sooner.
The Association of British Insurers is launching a review of fund sectors, which will begin by examining the money market sector.
The Association of British Insurers says the European Union should consider a single prudential regulator for Europe.
The Association of British Insurers has reported a 64 per cent drop in total single premium investment and savings new business in Q4 2008 to £3.77bn from £10.54bn in Q4 2007.
Ofqual has approved accreditation of the ifs School of Finance's level four diploma for financial advisers. ifs dean of further education Anne Kiem says: "We shall work closely with the FSSC to ensure that our qualifications meet with their prescription and standards."
Commodities are set for a tough 2009, according to the Economist Intelligence Unit. In its quarterly report, published earlier this month, the EIU forecasts a 41 per cent fall in its Industrial Raw Materials index this year.
Advisers are divided as to whether investors should move out of Standard Life's pension sterling fund now that the firm has agreed to compensate for last month's revaluation.
The Financial Services Compensation Scheme has declared Square Mile Securities Limited in default and has estimated that compensation costs could reach up to £15m.
Rating agency Moody's has downgraded Aegon to negative after the firm reported an expected fourth-quarter loss of £1.08bn and an underlying loss before tax of £179m in its preliminary results on Tuesday.
AIG is negotiating a third bail out with the US government ahead of an expected fourth quarter loss of more than £16.9bn, according to the Financial Times.
Ignis Asset Management joint venture Argonaut has launched its European absolute return fund under the management of Barry Norris
Axa Framlington has launched a UK blue chip equity income fund which will begin trading on February 23.
Axa UK has reported a 44 per cent drop in underlying earnings for its life and savings business to £97m in 2008.
Last week, the banking industry faced the music before Parliamentary select committees, producing some startling admissions and political fireworks.
Baring Asset Management is to revamp its directional global bond trust, with the fund set to move into the IMA absolute return sector.
We turned bullish on Japanese equities in the second half of 2008 and we remain so today.
Blue Sky Asset Management is warning advisers that AAA-backed structured products may be being marketed on headline credit ratings that might not offer a reliable categorisation of risk.
Staff bonus levels at the FSA have been increased from 12 per cent to 15 per cent. The regulator has also added £10m to increase staff salaries so they are level with industry norms. A spokesman says: "We have put aside up to £10m to support moves to create more effective supervision. There are some staff working here who are being paid less than the accepted level paid in the wider industry so this money is for salary increases, not bonuses.
Bankers have defended bonus payments as essential to attract top-quality staff.
Neither providers nor advisers who wish to thrive in the pension and investments world in the 21st century can afford to ignore wraps.
Is it fair that medium-sized IFA firms should face a hike in FSA fees of up to 90 per cent?Yes 0%No 100%
Advisers have welcomed Prime Minister Gordon Brown's call for a review of MPs' final-salary pensions.
Buy-to-let lending fell by 56 per cent year-on-year in the fourth quarter of 2008, the lowest figures since 2003.
Hundreds of Aifa and AMI members have already pledged support to a campaign to have FSA regulatory fees reviewed and the regulator's budgeting process overseen by the National Audit Office.
Well, we got there. Some months ago, I talked in this column of how a generic industry marketing or advertising campaign might be got off the ground.
Cartesian fund manager Jeremy Hall believes the FTSE 100 could drop below 3,600 although he is expecting to see increasingly attractive valuations in the next 12 to 24 months.
The Chartered Insurance Institute has launched a practical paper as part of its diploma in financial planning qualification.
Clerical Medical has launched an Isa transfer kit for advisers to manage their clients investment.
Advisers are warning that concerns over future misselling complaints could stop them advising borrowers to take up the Government's mortgage holiday scheme.
The Consulting Consortium chief executive Joanne Smith has been admitted to the Compliance Institute’s fellowship in recognition of her contribution to regulatory practice.
The holding company of Countrywide has completed a scheme of arrangement review to restructure the estate agents' balance sheet.
Clive Cowdery's Resolution has reportedly approached Prudential about a potential bid to buy its UK insurance business.
Britain’s defined contribution pension assets have lost 25 per cent of their value - £140bn - since the start of the credit crunch, according to Aon Consulting.
Lincoln Financial Group is confident about the prospects for variable annuities this year, claiming the financial crisis has proved the value of guarantees.
Last October, the clamour for the Bank of England to reduce bank rate and get some liquidity back into the economy was deafening. With the economy sliding rapidly into recession and the mortgage market at its lowest level for many years many organisation were calling for the Bank of England to take some action. The 1.5 per cent reduction in November was warmly received as a dramatic but justified response to the situation.
In a world where interest rates are close to zero, sources of high and sustainable income will be increasingly rare this year and should attract a premium value. Dividends can meet this need but investors have to be vigilant as there will be widespread dividend cuts.
After being clobbered by performance and asset bleeding in 2008, the last thing fund managers wanted was advisers rubbing salt into their wounds. Cue the latest instalments of Chelsea Financial Services' Relegation Zone and Bestinvest's Spot The Dog.
Although I am only 30, I would like to plan for early retirement. I do not want to be working when I am 65. Have you got any tips to help me make this happen?
AIG Life has announced that it may not be able to make early distributions to investors who chose to move their assets from its enhanced fund into its protected recovery fund.
European Central Bank president Jean-Claude Trichet has called for an extension of EU regulation to cover all financial markets that pose risks to stability.
We are all aware that these are unprecedented times, with the current state of flux in the markets leaving no shortage of news stories and column inches on the matter.
Edward Jones says its recruitment plans will aim to swell its adviser numbers "into the thousands".
UK-based training provider Elmfield Training has been accredited by the Chartered Insurance Institute to offer apprenticeship programmes in retail financial services.
Email Mortgages is urging UK lenders to launch more innovative products to aid potential homeowners similar to those offered in the Republic of Ireland.
Scottish Widows has cut bonuses by up to half after its with-profits fund fell by 17.5 per cent in 2008 due to a 54 per cent exposure to equities and property.
F&C has made a number of changes to its trademark proprietary screening tool for fund of funds.
In 35 years in the City, I have been blessed by opportunity, wonderful mentors and friends - and being in the right place at the right time.
It would be grossly unfair if the advice sector shouldered more of the financial burden of the current crisis than other sectors of financial services. Indeed, there is a strong argument for why they should shoulder proportionately less.
BNY Mellon Asset Management head of distribution Paul Feeney believes companies rather than individual markets will lead the world out of global recession.
I will be happy to put my money into personal accounts if they can guarantee me an annualised return of 5.1 per cent above inflation. Sadly, even such ambitiously high performance figures will not be enough to make personal accounts an appealing prospect for many low or average-earners with 20 years or less to retirement.
Following Sir James Crosby's decision finally to do the decent thing and fall on his sword, no doubt the FSA will be seeking some other failed banker to take his place and drive through the pro-bank agenda that underlies the RDR.
Fortis Insurance is to replace Axa as the chosen provider for UK Underwriting in a new five-year deal.
FOS chief ombudsman Walter Merricks has warned that firms facing financial hardship are too quick to reject consumer complaints and, as a result, a higher proportion are being upheld by the ombudsman.
In the current climate regulation is high on the agenda for those seeking answers on how the UK ended up in economic meltdown.
Foreign banks may close their UK branches if new FSA liquidity proposals to make each individual branch self-sufficient are implemented, according to BDO Stoy Hayward.
Many years ago, a personal finance website I was working on came up with the idea of launching a magazine. I was asked who I would ideally like to write for the magazine and the first name that came to mind was Tony Hetherington.
The FSA has appointed Mark Norris as its new chief operating officer, taking over from David Kenmir, who is leaving in April. Norris has 25 years experience in the industry, most recently as COO of Credit Suisse's UK private banking business.
The FSA is suggesting to some firms that advisers consider obtaining criminal records bureau checks when hiring new staff, according to Sifa.
All firms selling singe premium payment protection insurance have until May to withdraw the product from the market, says the Financial Services Authority.
The FSA has pledged to investigate the "purported regulatory blockages" stopping investors and advisers identifying the underlying counterparty of certain structured products.
The FSA has amended its proposals on prohibiting compensation payments from with-profit funds’ inherited estates to only apply to future misselling.
The FTSE 100 has fallen to 3,772.45 sinking below last year’s November bear market low as fears deepen about the global banking sector.
The FTSE 100 dropped to its lowest level this year, falling to 3,938.12 in afternoon trades today.
The FTSE 100 struck yearly lows of 3,907 this morning after a sell-off in mining stocks with news that mining giant Anglo American was suspending its dividend.
Gartmore has appointed John Anderson to its fixed income team as head of credit.
Shadow Chancellor George Osborne has hinted that a Conservative Government could formally separate retail deposit-taking and investment banking
Partnership has recruited Just Retirement's head of sales Paul Glynn and national account director Jackie Wilkins.
Banking minister Lord Myers has labelled 100 per cent mortgages as “foolish” as Gordon Brown hints at regulatory limits to high loan to value loans.
After the derision heaped on a Treasury minister who dared to utter the phrase "green shoots", I am only too well aware of the dangers that those words carry in the current climate.
Advisers have hit out at group protection providers for taking too long to produce costings for policy renewals.
Pension recruitment specialists GRS Group has hired five senior recruitment consultants from Mansion House.
Advisers have raised questions over the efficiency of leading fund firms after research from Money Marketing found that almost half still run over 10 funds with less than £50m in assets.
Hannover Life Re has appointed Andy Johnston as business development manager for its UK team.
Hargreaves Lansdown has warned it could be 2011 before the UK comes out of recession despite the firm seeing a 28 per cent increase in profits for the second half of 2008.
The Hartford is looking at a number of options to de-risk its guaranteed retirement income plan, including reducing its maximum equity exposure, Money Marketing understands.
Former HBOS chief executive Andy Hornby pledged to double mortgage market share in 2007 but told MPs last week he had tried to limit growth during his tenure.
Investment advisers face up to a 930 per cent increase in Financial Services Compensation Scheme levies for the next year.
Aifa has slammed the FSA for raising regulatory fees for all but the smallest IFA firms, warning that medium-size firms face overall increases of 90 per cent.
The Institute of Financial Planning is creating a fast-track route to the Certified Financial Planner qualification.
The Institute of Financial Planning has welcomed the FSA’s approval of the SIIM in Wealth Management.
The UK consumer price index fell to 3 per cent in January, down from December's 3.1 per cent. This is the fourth consecutive monthly fall from a high of 5.2 per cent last September. The retail price index fell to 0.1 per cent, its lowest amount since 1960.
Investec has launched its seventh series of structured products which will now be available to residents of the Isle of Man.
The Council of Mortgage Lenders sees no sign of a mortgage revival as January lending figures slip to the lowest amount since April 2001.
Launching a new business is tricky and launching in the teeth of a recession makes the process more fraught but Bluefin Advisory Services CEO John Simmonds is upbeat about the economic headwind.
The Isle of Man High Court will meet this morning to discuss the Manx government’s proposed scheme of arrangement which is is providing the underpin for compensation should recovery be less than 60p in the poundfor KSFIoM depositors.
The liquidation of Kaupthing Singer & Friedlander Isle of Man has be adjourned again until April 9 to allow the Treasury more time to work up a scheme of arrangement to help affected depositors.
Legal & General has slashed with-profits bonuses in line with other insurers, it has announced today.
Legal & General has more than doubled its credit default reserves to £1.2bn but refuses to rule out a dividend cut in response to market concerns.
The current rules of law relating to insurable interest in life assurance contracts are restrictive and, if not complied with, will render the contract illegal and void from inception. That is a severe sanction.
Lloyds TSB chief executive Eric Daniels has admitted he would have liked to have spent "three to five times" as much time doing due diligence on HBOS before the acquisition took place.
Moody's has highlighted the weak profitability of Clerical Medical's business through IFAs.
Times are going to get tough. Protection sales have escaped the ravages of the credit crunch and recession so far, while mortgage and investments have taken an almighty battering, but this period of calm can't last forever. Not only will sales be hit at some point but also lapse rates will start to increase as more people lose their jobs and try to save money by cancelling their protection policies.
LV= Asset Management has opened up three new multi-manager funds in a bid to take advantage of the Isa season.
BlackRock absolute alpha fund manager Mark Lyttleton has warned advisers not to fall prey to "flimsy" absolute return funds which he says are increasingly being launched.
M&G has appointed Dermot Kiernan as manager of its £251m Guernsey-domiciled property fund.
Whether pension reform succeeds or fails will be measured mainly by how many people opt out of automatic enrolment. However good the legislation and the compliance getting employers to carry out their duties, it all boils down to whether people remain an active member of a pension scheme and save for their retirement. It is fundamental that we get the culture surrounding saving spot on.
I don't know how much more of this nonsense I can take. Joanne Segars is very knowledgeable when it comes to defined-benefit (final-salary based) pensions but the stance she is taking when representing the National Association of Pension Funds can only be because of vested interests. Let us hope that the Mad Hatter rejects her request for the Government to guarantee the Pension Protection Fund.
Alexander Forbes Financial Services marketing director David Marlow is leaving the firm as part of a review that could see support staff axed.
I have got a bee in my bonnet about this means-testing malarkey. The DWP has published its report on the interaction of private pensions and means-testing - it is now time to move on.
Midas chief executive Simon Edwards says a snapback in prices and NAVs could see its funds return double-digit figures in 2009.
Aim-listed asset manager Midas Capital has reached an agreement with its bank to waive loan covenants until April 30 with the aim of restructuring its borrowing arrangements.
Moody's Investors Service has downgraded the insurance financial strength and senior debt ratings of Swiss Re.
Morgan Stanley has launched what it claims is the first retail structured product to be cash-collateralised and backed by UK Government gilts.
Mortgage 2000 is exiting the mortgage sourcing market and transferring users to Mortgage Brain.
Exit from the eurozone would be a disastrous decision for a member country and is unlikely to happen, says Neptune head of European equities Rob Burnett.
New Star UK alpha fund manager Tim Steer is still undecided on his future and refuses to rule out going it alone if "the perfect opportunity" comes along.
Last week, I looked at the importance of owner/managed businesses having sufficient life and critical-illness cover to provide liquidity either to maintain loan repayments or to clear outstanding debts in the event of the death or critical illness of a key contributor to income and profit.
Northern Rock has played down its potential mortgage lending at 90 per cent for new and existing clients.
NPI has continued to provide an adviser with incorrect information about a client's with-profits pension policy despite apologising for previous mistakes.
Octopus Investments has launched an online training resource for IFAs, financial planners and undergraduates to boost expertise in tax-efficient investments.
And the spotlight is on Standard Life... Again. This time the firm is being lambasted for guaranteeing annuity quotes on its own pension policies for just one day, compared with an industry average of two weeks.
The Office of National Statistics has classified both RBS and Lloyds TSB as public sector entities.
OPM Fund Management is using exchange traded funds to short the FTSE 100 and S&P 500 in its equity-focused multi-manager funds and anticipates renewed lows on the markets this year.
It is both easy and difficult to predict the direction that the economy will take in 2009 and into 2010. The easy bit is to say the full effects of the financial crisis in 2008 will translate into a severe economic downturn, the worst in a generation.
Advisers have hit out at Standard Life for guaranteeing annuity quotes on its own policies for only one day compared with an industry average of two weeks.
Former Ascentric director and co-founder Michael Fordham has joined IHT specialist and fund manager The Way Group as managing director of business development.
Credit Suisse's global head of fixed income Paul Griffiths will join Aberdeen in the same role after the group's proposed acquisition in June. Griffiths will replace Gary Bartlett, who has departed the company.
Nationwide group distribution director Matthew Wyles has been appointed chairman of the Council of Mortgage Lenders for 2009. HSBC head of mortgages Martin van der Heijden and Paragon Mortgages managing director John Heron have been appointed as deputy chairmen.
Watson Wyatt has appointed Martin Muir as the leader of its insurance and financial services practice UK life team. Graham Fulcher has been appointed leader of the UK non-life team. Muir is a long-time consultant at Watson Wyatt while Fulcher joined in September 2008 from ACE.
Ignis Asset Management director Jonathan Polin believes the current economic crisis proves that the fund industry is not ready for single-country funds from emerging and frontier markets.
"National IFA firm Positive Solutions is to launch an IFA practitioner programme and is targeting up to 500 recruits to its apprenticeship scheme in the next two years.
Prudential has cut its with-profits annual bonus rates by up to 0.75 per cent this year.
Total APE sales for Prudential’s UK insurance operations were up 4 per cent last year to £947m.
More than a fifth of assets held in Prudential's £222m cash funds are invested in mortgage backed securities and corporate debt.
Understanding people is all about trying to view matters from their perspective. This allows us to find out what really motivates them.
Helm Godfrey says the FSA is providing no regulatory dividends or benefits to intermediaries despite big cost increases for most firms.
The future for the directly authorised IFA is looking pretty bleak. A whole variety of factors are coming together to make life quite tough for the sole practitioner or small business owner who wants a direct relationship with the regulator. If I was a cynic, I could label this as a conspiracy theory against small firms. But I'm not so I won't.
Northern Rock has revealed it will be taking its toxic assets and moving them to a separate ‘bad bank’.
Rockingham Retirement has been awarded the Chartered Insurance Institute’s chartered insurance broker title.
Rockingham Retirement has called on pension and annuity providers to step up their efforts in promoting the open market option.
Certain statistics have been released recently that may lead some to believe the economic situation is getting better. The Halifax house price index recorded a 1.9 per cent increase last month while retail sales showed a big tick up. Unfortunately, I am convinced that both are just blips.
Rowanmoor Pensions has appointed two new consultants to strengthen its sales and consultancy teams based in regional offices across the country.
Scottish Widows has appointed former XL Re chief underwriter John Downes as its new chief underwriter.
Gilts may have had a popular year in 2008 but it turns out that they have done better for longer than just that. According to the latest Barclays Capital Gilt & Equity study, they have provided the best average annual rate of return for the past 20 years, returning 5.5 per cent a year compared with a 4.6 per cent gain from the FTSE All-Share and 3.5 per cent for cash.
Premier Network Group has confirmed that the potential deal to transfer its remaining 37 appointed representative firms to Sesame has now fallen through.
Companies with struggling pension schemes will not be allowed to cut contributions while they are still paying dividends to shareholders, according to the Pensions Regulator.
Tele-interviewing specialist Morgan Ash is launching an e-signature service.
Can anyone please explain to me why the Government has persisted in dropping bank rate to an all-time low?
SimplyBiz and Compliance First will refund the Chartered Insurance Institute exam fee for every passing grade that its members achieve towards a diploma qualification in 2009. SimplyBiz says it is expecting over 5,000 exams to be taken this year by members.
The dramatic drop in interest rates and the likelihood that they will remain low for some time is exposing the practice of many Sipp providers in taking a cut of the bank interest on the monies held by the Sipp as trustee on behalf of their clients.
Skandia is to give free access to the healthcare service roadtohealth for new Skandia Protect and The Skandia Plan policyholders.
Skandia International has warned that client suitability issues around Qrops could create misselling problems.
The ABI's long-term new business data for Q4 2008 reveals new business for regular premium individual protection policies dropped by only 0.9 per cent in 2008.
Over 10,000 small firms will pay lower regulatory fees than last year.
February and March are key months in which to consider tax planning to maximise the use of an individual's allowances, reliefs, exemptions, etc, for the current tax year. Some of these will be lost if not used before the tax year end.
St. James’s Place Wealth Management Group has revealed a fall of 19.7 per cent in operating profits in 2008.
By the time you read this, I will have returned to our shores. My experience of life down under has been clouded to a considerable extent by the tragedy that unfolded in the state of Victoria as we concluded our journey in New Zealand.
Equity-release provider Stonehaven has introduced Interest Select, a product that allows people to choose to pay an amount of monthly interest on their lifetime mortgage.
The FSA will strengthen its supervision of banks and "high-risk" firms with "a more intense regulatory approach".
On October 1, 1962, I took up my place at a desk in Cheapside, London in the pension department of what was then called Yorkshire Insurance Company, now buried deep within Aviva. In my 46-plus years, I have felt that I have been on a perp-etual learning curve, never more so than in recent years.
The Income Protection Task Force is expected to lobby the Government for compulsory employee benefit statements in a bid to improve understanding over sick pay entitlement.
Fidelity Fundsnetwork says advisers must not overlook the importance of this year's Isa allowance in the recession- ary climate.
In estimating the cost of statutory regulation, most people would point to the cost of the FSA. Their beautiful offices and almost 3,000 well-paid staff cost the financial services industry over £300m per annum. The compensation scheme has during its existence paid out £1bn and has a payroll of £25m a year. That does not include bailing out Northern Rock, Icelandic banks, etc. Billions have been borrowed which the banking industry, if not nationalised, will have to repay.
Robert Lloyd George founded his eponymous firm in 1991 based on his fundamental belief in the power of the Asia and emerging market investment story.
Variable annuity providers are looking to create a UK trade body to represent their interests.
Trigold will be offering a free two month trial to current Mortgage 2000 Encore subscribers.
Trigold Business Academy has teamed up with the Chartered Insurance Institute to offer its users cheaper rates on course materials.
MPs have questioned the tripartite authorities' relationship after the Prime Minister claimed he had no idea the FSA had found failings in HBOS when considering James Crosby as the regulator's deputy chairman.
Truestone is concerned that sovereign bonds could burn yield-seekers this year and is looking to gradually reduce its clients' exposure to the sector.
Whenever you see an article on trusts, it almost always repeats the same arguments about the benefits, they help avoid inheritance tax, avoid probate, make sure the right people benefit and so on - and it is true that all of these are benefits for the client.
A Frenchman, a German woman and a Scotsman walked into a bar...
Vision Network will now offer investments and pensions via the Crystal’s Momentum financial planning software.
It is true, 2008 was a tough year for many financial services professionals but from a recruitment point of view, I only noticed a change in the final quarter. We registered many individuals and the market became top-heavy with candidates.
No financial adviser needs be reminded that an Isa is tax- efficient but because the recession has brought public anxiety about big things such as job security and a general suspicion of financial markets, the importance of using the Isa allowance might be undervalued by the public right now.