Monthly Archives: August 2009

Lucy Warwick-Ching

Listen to the latest Money Show, the FT’s personal finance podcast, for up-to-date news and insights from the industry. Today’s show is now LIVE.

This week our special guest came from inside the Pearson Group; Matthew Vincent, personal finance editor of the Financial Times, invited Claer Barrett from the Financial Times’ sister publication Investor Chronicle onto the show.

Lucy Warwick-Ching

When the government introduced ‘Pensions Simplification’ in April 2006 it was supposed to do what the title suggests and make long-term retirement planning easier for consumers to understand - the reality is something quite different.

Research has found that many people are put off planning for retirement at an early stage, when they are trying to choose a pension product, by the terms they come across.

I spoke to Mike Morrison, head of pension development at Axa Winterthur Wealth Management and have pulled together a simple a glossary of retirement terms.

To hear what terms such as Sipp, Sass, USP and income drawdown mean in plain English listen to our conversation through our audio player:

Sharlene Goff

Are things looking up for first-time buyers?

Halifax has today launched a new mortgage deal for buyers with deposits of just 10 per cent. Sounds good so far. Any new opportunity for first-timers – recently the pariahs of the housing market – to get a foot on the ladder should be welcomed.

But there is one rather large drawback. The interest rate is a whopping 7.29 per cent fixed for three years. On a £250,000 property, this would mean monthly mortgage payments of almost £1,500, based on a loan-to-value of 90 per cent. Halifax claims to be one of the few lenders trying to accommodate first-time buyers. A spokeswoman acknowledged it was “crucial” to have products for new entrants so other homeowners can move up the chain. This is why “Halifax has always been out there in the market, almost alone in doing that”.

But given that potential buyers could rent a similarly priced property for about £500 less a month, and the fact that the recovery in property prices is still fragile, there seems little incentive for anyone to take up this kind of rate.

Lucy Warwick-Ching

It seems it’s not just ordinary folk that get ripped off by unscrupulous salesmen - wealthy people also suffer. So, following a bad experience when chosing a company to do work on his house, a footballer has decided to set up a website to help fellow players avoid being charged over the odds.

September 1 will see the the launch of Middlesborough defender Andrew Taylor’s Platinum Players, a directory of trusted retailers, financial advisers, lawyers and builders.

Lucy Warwick-Ching

There seems to be a storm brewing in financial services about the use of services such as Zopa, the online lending exchange where depositors can lend money directly to borrowers at a mutually agreed interest rate. 

Dubbed the “e-Bay of banking”, the idea behind Zopa is that by cutting out the big banks, borrowers should get cheaper rates, and lenders get higher returns.

So, with banks still turning down potential borrowers, and reluctant to relax their strict lending criteria, many consumers have been turning to Zopa as an alternative sources of affordable credit.

But this initial blog posted up on Zopa’s own website has sparked a debate about Zopa’s ability to apply competitive pressure on the banks – and the argument has now spread to Twitter, at #bankbloggerfight:

Why the banks need Zopa

Could Zopa become the first real competitive pressure banks feel to put their customers more at the centre of what they do? I think so. And that would be good for all of us – even ultimately the banks themselves… But when I have suggested this to one or two bankers in charge of strategy for a couple of the big banks, they laugh – out loud. More

 This post was answered almost immediately by a blog by James Gardner at Bankervision.

Zopa’s strategy is to be immaterial to banks

“Zopa rely on credit scoring, just the same as banks do. Zopa, if it is to be disruptive, needs to be creating lending to new customer segments either underserved or not served by traditional banks… They could be, but they choose to do the same things banks do, but with a nice little social layer on top.”  More

Both these bloggers have vested interests – one is closely associated with Zopa and the other works for a UK bank. But the debate has caused a stir in the wider financial services industry. It was picked up by The Financial Services Club Blog: 

Why social finance, and particularly Zopa, matters

Zopa “passes the £50 million of loans milestone and does 40% of that in just this year alone. Compared to the banks the numbers are of course tiny, but the pace of growth is quite remarkable.” … The same is true of SmartyPig, a business that teams with banks. SmartyPig tell me that they currently have $170 million in core deposits in the US, and projections are to hit $500 million by year end. This is for a business that only launched in April 2008, and one that spends nothing on advertising. More

But what we at Money Matters want to know is whether UK individuals who have used Zopa have got a good deal. At the start of the year, Matthew Vincent wrote a piece about a new online auction site for fixed-term deposits - and although he found that online lending exchanges such as Zopa were offering higher rates of interest, he suggested that these rates could come down as the number of lenders using Zopa increased.   

So what is your view of Zopa – have you used it to borrow or lend money?

Matthew Vincent

Are Chinese markets heading for a fall? US investors will be hoping that this news, from, does not presage worse to come - as will UK investors in the Gartmore China Opportunities fund, which the Investment Management Association says was one of the most heavily bought this summer:

China sell-off sparks flight from risk

Equity markets fell sharply on Monday after fears of overheating in China triggered one of the country’s largest one-day declines… The main cause of the shares plunge in China appeared to be concern over government efforts to rein in bank lending, which has been diverted to the country’s stock and property markets following the unprecedented credit boom in the first half of the year. The Shanghai Composite lost 5.8 per cent, its biggest daily loss this year and 12th largest on record. More…

A further indicator of this overheating sentiment is the number of sharedealing accounts opened by Chinese punters in the past week: 484,799, according to data from the nation’s clearing house. And that’s not a blip. Exuberant Chinese private investors opened more than 2.4m broker accounts in the four weeks to August 7, Bloomberg reports.

Sharlene Goff

The official figures are showing a fall in home repossessions - and a rosier picture of the housing market – but is this the full story?

Arrears on loans from some of the more aggressive specialist lenders such as Gmac are already running into double digits. And with unemployment set to rise further over the next few months, more people could struggle to meet their mortgage payments.

We’d like to build up a true picture of who is running into difficulty with their loans and would be interested to hear your experiences.

Maybe you’ve lost your job, or the bonus you were expecting hasn’t materialised. If this is the case are you having trouble paying your mortgage?

Was it too easy to gain credit at the peak of the market from aggressive lenders such as Northern Rock and Halifax? Or were you encouraged to convert your existing home into a buy-to-let investment when you moved house? Maybe your mortgage lender has failed to pass on interest rate cuts to you?

Lenders are telling us they are more willing to help homeowners out of difficulty but is this really the case? If you have approached your lender for help what has been their response?

Share your views by typing your comments below, or by visiting us at Twitter.

Ellen Kelleher

Sometimes, the exaggerated language in the press releases we receive here is cause for laughter. 

Consider the following comments about the fluctuations in the sugar price issued late last week by traders at Newedge, a commodities broker in Chicago:

 ”ICE Raw Sugar is standing on the edge of a cliff. After an inside day yesterday, today’s price action is alarming for the bulls. As long as October 09 (SBAV9) remains under 22.44, it is at high risk of a free fall. Strong caution is warranted.
“Like a pendulum that has been pulled too far up in one direction, we expect violent oscillations, of declining amplitude, as volatility subsides.”

Lucy Warwick-Ching

No one likes paying tax. But if you don’t pay what you owe then you could find yourself with a letter from the taxman saying that you’re under investigation.

And that is now more likely than ever to happen after the Revenue this week won a battle to force over 300 banks to reveal customer details. If the banks do not appeal against the order then very soon  hundreds of thousands of people with offshore savings will start getting letters from their banks informing them of a Revenue & Customs trawl of their accounts.

Tax advisers everywhere have been furiously publishing press releases on what savers need to do to protect themselves. One thing that caught my eye is an amusing book on what to do if the taxman comes calling, by BDO Stoy Hayward, which landed on my desk today. 

Lucy Warwick-Ching

Listen to the latest Money Show, the FT’s personal finance podcast, for up-to-date news and insights from the industry. Today’s show is now LIVE.

This week we take a more indepth look into the default retirement age as Matthew Vincent, personal finance editor of the Financial Times, invites Andrew Tully, senior pensions policy manager at Standard Life onto the show to be our special guest.

The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

This blog is no longer active but it remains open as an archive.

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About our bloggers

Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.

Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.