Financial Review 17th June 2016

Watchdog bears teeth over Land Registry sale proposal
The competition watchdog has objected to government plans to privatise the Land Registry, warning that allowing a private firm to take possession of property ownership information could cause problems for other businesses. The Government attracted criticism for announcing its plans for the £1 billion plus sell-off just before the Easter break, followed by a short consultation.

The Land Registry employs more than 4,500 civil servants and plays an important role in the property market, holding 24 million titles for the ownership of properties across England and Wales. The information is available to the public at a small charge, and to businesses and other organisations.

The Competition and Markets Authority (CMA) said its preferred option was for public ownership. Failing that, it said the organisation should be split into two with the register of properties remaining in public hands while a commercial arm was spun off. The CMA, however, has no powers to block the proposed privatisation.

Nuisance call plague drives the demise of the landline
All households in Britain will know the feeling: the phone rings, you dash to pick it up, only to discover it’s a recorded message on the other end. Whether they’re peddling PPI claims services, accident compensation, or spurious claims that you can wriggle out of debts, cold calls are a nuisance.

If it seems you get a lot of these calls, you’re right – 40% of phone calls are ‘nuisance calls’, claim consumer groups. Older customers receive more, with some people getting over 60 a month. These are one of the factors leading to the demise of the landline for mobiles, as it’s more difficult for nuisance callers to get mobile numbers and calls can be more easily blocked.

Rolls-Royce sales slump as far-East economies stall
Economic woes in the Far East saw sales and profits slip at car maker Rolls-Royce last year as wealthy overseas buyers held back. Sales fell 21% from £446 million to £353m, while profits dipped from £18.2m to £16.6m.

Rolls-Royce has been owned by BMW since 1998 and paid an £8m dividend in 2015, down from £53.8m the previous year. The company said significant economic headwinds had impacted negatively on the entire luxury sector and that it was not immune.

Rate Cuts outpace rises as savings drought continues
The savings drought looks set to continue, as rate cuts have now outpaced rate rises for seven consecutive months. Unprecedented interest rate lows, lack of competition between providers and economic uncertainty have all combined to produce a perfect storm for rate cuts. In the past seven months, there have been 883 cuts against just 188 rate increases. February was the worst month of the seven, with 253 cuts to 12 rises recorded.

The best rate available on an easy-access account is now 1.45% from RCI Bank, and the best easy-access rate covered by the Financial Services Compensation Scheme (deposits with RCI Bank are covered by the French equivalent) is only 1.26%. Major high street banks are offering rates well below these.

Phoning the revenue proves to be a highly taxing time
Taxpayers forced to hang on the phone while calling HM Revenue and Customs (HMRC) lost the equivalent of £97m last year, a spending watchdog said. The National Audit Office (NAO) said the quality of service at HMRC collapsed over an 18-month period between 2014 and 2015. Call waiting times tripled during that time, as some customers were kept on hold for up to an hour. In response, HMRC said most calls were now being answered in just six minutes.

As part of its study, the NAO worked out how much money callers would have notionally lost, while waiting for a reply. It valued people’s time at an average of £17 an hour. This meant they lost £66m while waiting, £21m while speaking to HMRC staff and spent £10m on lengthy phone calls.

Pensioner savers fail to shop around
Seven in 10 savers who have taken advantage of new pension freedoms failed to shop around for the best deal. The research by Citizens Advice has sparked fears that millions of over-55s who opted to keep their pensions invested and use them like a bank account are being hit by high charges. It found one in seven stuck with the same firm because they would be hit with hefty exit fees if they moved. Three in 10 stayed with the same company, as they thought it was the easiest way of getting hold of their cash, while a third said they trusted their pension firm so did not look elsewhere.

In the past, savers who turned pension pots into annuities were left with poor payouts if they didn’t shop around. Now, fears are growing that savers using new drawdown freedoms face the same risk.

UK gets busy with a record employment rate of 74.2%
The UK unemployment rate has fallen to 5%, the lowest since October 2005, according to official figures. The unemployment total fell to 1.67 million in the February to April quarter, down 20,000 from the previous quarter, according to the Office for National Statistics (ONS). The number of people in work rose by 55,000, with the employment rate remaining at a record high of 74.2%. Earnings, excluding bonuses, rose by 2.3% compared with last year.

The rise was bigger than analysts had expected, and pay growth in April alone was 2.5%, which the ONS said was partly due to the introduction of the National Living Wage. The introduction of the new, compulsory minimum of £7.20 an hour for workers aged 25 and above affected 1.8m people.

Other data from the ONS showed the number of people now employed in local government has fallen to a record low of 2.2m. By contrast private businesses have been taking on more staff, with the number employed in the private sector up by nearly half a million over the past year to 26m.

Best-buy Savings rates have outperformed shares since 1995
Money in best-buy savings accounts has fared better than the stock market over most investment periods since 1995, a study has concluded. It found that investments in tracker funds would have lost money up to a third of the time. But cash in a savings account always ends up higher than it started, said the author of the study.

The research compared returns from a tracker fund – which follows the FTSE 100 share index – with cash that is moved each year into a best-buy one-year deposit account. Savings accounts beat the tracker in the majority of five-year periods beginning each month from January 1995 to the present. Over the full 21 years, however, the tracker ended up producing a compound annual return of 6%, beating the 5% produced by best-buy savings accounts. This challenges the traditionally held-view in the investment industry that shares always perform better than savings account over long periods.

Second home duty rise stamps out buy-to-let housing market
The number of mortgages taken out by landlords buying new properties plummeted by 85% in April, following the introduction of a new stamp duty rate on second homes. Figures from the Council of Mortgage Lenders (CML) showed 4,200 buy-to-let loans were taken out for purchases during the month, worth £600m.

Borrowing by landlords purchasing properties spiked in March as investors tried to complete deals before new rules on stamp duty came into effect in April. Since then, buyers of any kind of residential property, other than their main home, have had to pay a 3% surcharge.
The CML’s data shows there were 28,700 loans for buy-to-let purchases in March.

Check that valuable items are covered by your home insurance
One in five home insurance claims are rejected because homeowners have bought the wrong cover. Most people assume their insurance will protect their belongings in any situation, but successful claims on home contents cover have fallen 6% in a year.

People’s most treasured possessions, such as jewellery and artwork, are often worth too much to claim if they are stolen because most insurers have a cap on what they will pay out for individual items unless you list them separately and pay extra for cover.

Only 14% of policies offer full accidental damage cover. Without that, everyday disasters could land you with a hefty bill. Claims for this type of accident are more common in the summer months. The Association of British Insurers has launched an online guide to help homeowners get the right cover.

Pension savers seeking security could start a new gold rush
Pension investors can now stash gold bullion bought from the Royal Mint in their retirement pots. Physical gold in the form of bars and fractions of bars can be purchased on the Mint’s bullion trading platform, although they will remain stored in its vault, for self-invested personal pensions (SIPPs).

Prices are determined by live gold prices. In mid-June a 100-gramme Royal Mint Refinery bar cost from £2,850, while a one kilo gold bar cast started at just over £28,000. On top of that, Royal Mint levies an annual 1% plus VAT charge for storing the bars.

The Royal Mint, which has an unbroken history of minting British coinage for the past thousand years, launched its bullion trading website in 2014 to make it easier to buy and sell gold coins. It has expanded its operations since then to include bars carrying its own historic marque.

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