In a week that’s seen everything from Trump vs China to May vs Davis, the Financial Times has had the courage and grit to tread a different path. In a finely-written memento mori, Hannah Murphy celebrates the demise of binary options trading. What, and you didn’t even know that it had gone?
Oh, but it has. As of last week, the European Security and Markets Authority (ESMA) – better known as the European markets watchdog and regulator – has finally banned the trading instruments that have separated so many punters from their money. Or at least, it’s banned their use by private retail investors.
The beauty of binary trading was always that it didn’t require a lot of fundamentals research – you just set up an account and then placed your faith in your unerring ability to call prices up or down on the day. And then leveraged your outcomes. The clarity and simplicity of the process made it simple for the ordinary man to do what his more sophisticated contemporaries had been doing for decades. (Hurrah!) Except that it also reduced the process of “investment” to the level of a punt in a betting shop, with no call for a reasoned argument, nor any hope of a reasonable reprieve if you called the red when you should have said black.
ESMA says that the profusion of dodgy services, casino-style “free plays” and incentives, coupled with the potential for market-rigging and outright scamming, have created “a structural expected negative return and inbuilt and unmanageable conflicts of interest” between providers and their clients. And that’s not all, says the FT. Next month we can expect to see new and controversial restrictions on contracts for difference (CFDs) and on some kinds of spread bets.
But hold on there. For one thing, the European ban on binary trading will last for only three months, followed by another optional three months – by which time, the regulator hopes, national regulators will have taken their own various steps to outlaw the practice. And for another, as the FT notes, there is still the possibility that closing the public “betting shops” will simply drive the dodgy stuff underground. The combination of mobile phone apps and crypto currencies will probably generate enough opportunities for something else to take the place of the present binary options trade. We can but hope.
Writing in the Financial Mail on Sunday, Sally Hamilton has useful information for readers who have forgotten shares, cash accounts or other investments which for whatever reason, over the years have been left to linger in the back of a filing cabinet.or left in no man’s land after a house move. Estimates apparently indicate that there is around £15billion lying unclaimed in such accounts. If nothing else, it’s a great reminder to think about accounts which might have been overlooked – especially Child Trust Funds as their rightful owners may well know nothing about them – and gives some practical steps people can take to try to reacquaint themselves with their assets.
Meanwhile, The Sunday Telegraph is reporting that HMRC is working to crack down on British ex pats as the tax it collects from people living overseas has trebled in just one year.
It reports that this is part of a wider push on tax avoidance by the government, which has reduced the estimated amount lost from £4bn in 2011-12 to just £1.7bn in 2016-17 and that now the tax office is casting its gaze across the Channel.
In 2017 it made 1,006 requests to foreign authorities, resulting in the recovery of £5.7m in tax. The previous year total receipts were £2m, while in 2013 the taxman recovered just £800,000.
Whether there is such a crackdown going on or not is the question, as moves were denied by a spokesman from HMRC. According to the Telegraph, experts fear that many Britons who live abroad may not realise that they have UK tax liabilities and risk fines of up to 200% of the amount owed. The articles goes into quite some detail about what counts and what doesn’t (confusing is the word), so if you’ve got clients who work partly overseas or have retired to the sunshine in Spain, this is an article you might just want to read for yourself.
The Sunday Times is looking ahead to this month’s government consultation for mandatory minimum three-year tenancies for buy to let landlords. This outcome could be a further blow to a sector already grappling with changes to the rules on offsetting mortgage interest payments against tax and higher stamp duty. The Times suggests that troubles may lurk with mortgage lenders, many of whom issue buy to let mortgages on the proviso that landlords can offer only assured short-hold tenancies of up to 12 months – in an attempt to make sure they can get vacant possession of the property if things go wrong. The consultation runs until 26th August, after which the government has 12 weeks to publish a response. It’ll be of interest to millions of buy to let landlords around the UK and also to their professional advisers.
The Sunday Times is also warning readers that the cost of pension transfer advice is set to soar as more and more advisers pull out of offering advice on such moves to avoid potential mis-selling claims and rising insurance costs. This is particularly noticeable where the transfer value is below £100k. It does stress that getting professional advice is important when it comes to such matters and discusses the type of costs people might face.
Meanwhile in his entertaining Personal Account column, Ian Cowie is owning up to some of the holdings where he’s lost money over the years. As well as individual shares like Vodafone, Kraft Heinz and Daimler there are few collective funds too – like Woodford Patient Capital. With a topical twist, he links the FIFA World Cup to matters of investment (blimey, this year’s tournament has produced some surprises – congratulations to England!) and his holding in BlackRock Latin American IT (which has Brazil as its largest single country exposure) is also on the list
