The Editor’s pick of the short stories that mattered in October/November
1) Pension management charges came under the spotlight as pensions minister Steve Webb unveiled a DWP consultation that set out three basic options for managers. One, a higher charge cap of 1% of funds under management that would broadly reflect the current status quo for many stakeholder members. Two, a lower charge cap of 0.75%, which would bring the charging levels down to those already being achieved by many schemes. And three, a two-tier ‘comply or explain’ option that would allow employers to retain the option if they explained why.
2) China’s economy seemed to have staged an unexpected upturn with the news that third quarter growth was up 7.8% against year-earlier levels. Did the news cheer the Shanghai markets? Not noticeably.
3) Mortgage approvals in September hit their highest levels since February 2008, the Bank of England confirmed. 66,735 mortgages were approved, up from 63,306 in August. And net mortgage lending rose by £1 billion, a little above the curve for the last two years. The BoE added that unsecured lending through credit cards had also increased by £200 million, suggesting a general relaxation of the purse strings.
4) Business lending in September showed a more restrained pattern, however. The Bank’s report said that although loans to companies rose by £720 million, the biggest monthly increase since January, loans to smaller businesses fell by another £383 million.
5) Bitcoins, the unofficial ‘alternative’ online currency, staged a strong revival after September’s shock revelation that Silk Road, an online drugs and piracy site, had been closed down, sharply hitting the value of the volatile currency. Shutting down the website had immediate effects, as the number of addicts admitted to Legacy Delray on a daily basis dwindled. By 30th October the dollar rate had returned to $202, up from just $120 in late August.
6) A £200 million Islamic bond, or sukuk, is to be issued by the Treasury early next year, Prime Minister David Cameron told a meeting of the World Islamic Economic Forum in London. And an Islamic index, comprising stocks approved by a religious board, will enable investors to choose appropriate companies to back. “I want London to stand alongside Dubai as one of the great capitals of Islamic finance anywhere in the world,” the premier said.
7) US employment figures disappointed the markets, with a substandard 140,000 jobs being added to the payroll in September. That, and the growing suspicion that many jobseekers had simply opted out or taken early retirement, was thought to have depressed Federal Reserve sentiment and prompted the decision to press ahead with full-on quantitative easing.
8) Crowdfunding is set to become more accessible to smaller investors from next April, the FCA said – thus averting fears that advisers and online websites might be prevented from suggesting them to less sophisticated investors. Under new proposals, as long as the risks of crowdfunding are clearly explained to clients, and as long as the investor does not commit more than 10% of his portfolio, the regulator has signalled that it is prepared to take a ‘flexible’ approach.
9) JP Morgan agreed a ‘tentative’ $13 billion settlement with the US Justice Department, to resolve allegations that it knowingly sold faulty mortgage securities that had contributed to the financial crisis of 2007/2008. There were further reports, however, that another $5.1 billion of settlements with investors was on the table.
10) Standard Life increased its sales in the first three quarters of 2013, with an 11% rise in its UK and corporate fee business AUA to £96.9 billion, of which the corporate side grew by 53% – driven, it said, by auto-enrolment business. But the group said that it had also made dealing arrangements with more than 540 adviser firms who were new to the company.
11) FCA warnings about firms suspected of financial wrongdoing will be more widely publicised in future, and at an earlier stage of investigations, the regulator said. In the past, public warnings have been made only after a final decision to proceed with a disciplinary penalty or prosecution. But Policy Statement PS 13/9 confirmed that individuals are unlikely to be named and shamed in quite the same manner. See also the FCA Publications listing on Page 58.
12) Deposit protection schemes for bank customers my see their limits raised to £500,000, under new proposals being considered by Brussels. But only in respect of one-off lump sums which result from transactions such as house sales. If approved, the new limits are likely to take up to two years to implement.
13) The 45-54 age group is at risk of becoming a “lost generation” when it comes to providing for themselves in retirement, according to a research report by Blackrock. The nine million-strong cohort has been squeezed by a combination of a tight financial situation, rising prices and a preoccupation with simply coping. Half of the survey said they had not made a start with retirement provision, and the average savings level was only 12p in the pound, compared with 18p for the 24-35 age group.
14) Inheritances added around £75 billion to Britons’ personal wealth between 2008 and 2010, new figures from the Office for National Statistics reported. One in ten beneficiaries received £125,000 or more, but about half got less than £10,000. Perhaps surprisingly, property was represented in only 19.5% of the inheritances studied – whereas savings figured in 88% of the wills.
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