Fishing exploits no.1 in a series of six billion…

Well it was off to Hanningfield Reservoir the other day for a spot of trout fishing. Also an early birthday treat for my fishing partner, Andrew, aged 13 and 364/365ths.

 

Before you go thinking I’m some sort of expert fisherman, I’m not. In fact what I gained wasn’t fish but more experience:

  • If you think it’s easy to spin for game fish e.g trout, try doing it for most of the day using a heavy carp rod. Next time I’ll get a lightweight spinning rod of some kind.
  • as for (a) above but try doing it on a boat.
  • yes, you can get sunburnt on a cloudy day in June if you’re not careful.
  • an “8 fish” ticket is probably a tad optimistic.

Well we did see the odd fish being caught but not by us this time. I suspect we’ll stick to carp. We can’t eat them but at least we get some action when we go to Wakering.

If you can’t trust your bank……

It seems to me that the BBC’s Panorama programme is getting a little lightweight. The June 13 program about banks’ selling practices was a good example of an opportunity missed.

It ‘s fairly common knowledge, at least in the industry, that product mis-selling has been going on amongst our high street banks for years, so the program wasn’t really telling us anything new. What they could have done, especially since they used undercover reporters, was go much deeper than they did.

For example, and quoting from Panorama’s site comments:

“ I was a Lloyds Bank manager who was glad to take early retirement in 1992, when the rot had already set in. As an example, shortly before I retired, Lloyds managers were told the bank prohibited them to grant a personal loan to a customer unless Payment Protection Insurance was sold, although customers could not to be told of this requirement as it was illegal.”

That’s pretty damning stuff and I suspect there’s a lot more where that came from.

Yet in this program, Panorama simply relied on a couple of individual cases, where the facts and dates were not fully set out, and then added some talking heads. The ”experts” brought on board to comment comprised (a) an IFA, (b) a representative of BestInvest, which is mainly an execution-only seller of investments, and (c) some old chap who called himself a claims adviser. Not one of those experts could be considered to be impartial.

The fact that one participant noted that she received full compensation after a successful claim with the Financial Ombudsman Service (FOS), but was still £000’s out of pocket due to the fees (or was it commissions?) paid to a claims adviser, was ignored by the reporters. Indeed they failed to point out to the viewing public that it costs nothing to complain to the FOS oneself.

I suppose the programme reinforced the general advice that banks are not always acting in your best interests. At no time did they suggest the alternative of using independent financial advisers, but they did, dangerously in my view, appear to promote the “do it yourself” approach since they found a smart recent retiree who had invested her own fund and was happy to do so. It’s not that easy, nor sensible, to try and go it alone, especially if you need that money to get by on.

Panorama could perhaps have mentioned, in a programme about complaints on financial products, that IFAs only account for about 1.5% of complaints raised with the FOS, but hey, that isn’t exactly a headline grabber.

Anyway, if Panorama are looking for any more IFAs to dish the dirt on the Banks in exchange for free advertising of one’s practice, I’m available! Otherwise, if you want a sensible portfolio of investments which matches your personal circumstances and appetite for investment risk (or lack of it), with no surprises, hidden charges or small print, you know where to come.

(Un)Friendly Society

The other day I received a big glossy pack from one of my family’s car insurers. I won’t say which insurance company, but if it was a butterfly it would be a red one.

It wasn’t car insurance they were selling, but an investment plan of some kind in conjunction with a Friendly Society. Again, I won’t say which one, but it’s to be found north of the border. Now, (as every good IFA knows) there is a quirk in our tax system (which goes back to the Battle of Hastings or Magna Carta or something) which allows individuals to invest in a Friendly Society plan and receive tax-free returns. The only problem is, the maximum allowed is £25 per month or £270 a year. So they tend to be mostly shunned by IFA’s and consumers alike since they are pretty trivial, especially when compared to ISA allowances.

Nevertheless, it sounded pretty good. Looking further at the glossy pictures and precious prose, I saw that one could actually invest greater than £25 p.m., but would incur tax at source on any excess premium. Fair enough. The investment was a 10 year plan and included a small amount of life insurance… aha! Yes it’s a Maximum Investment Plan too! – quite innovative, mixing up a friendly society plan with a MIP. The deal with MIPs is that if you hold them for a minimum term (e.g 10 years) no further tax is payable on growth even for higher rate or additional rate taxpayers.

But, as ever, the devil is in the detail. With my accountant hat on, I wanted to see the charges. Crikey! – 50% of the policyholders’ contributions in the first year would be deducted as a selling expense. Ongoing charges, (ignoring charges for the little bit of life insurance), were 1.5% AMC for a tracker fund (default) or the alternative managed fund. Oh, and there is a £1.00 a month plan charge deducted from the tax-free element, so that’s and extra 4% deducted every month against a £25 p.m. premium.

What I thought was a bit off, was that the charges were not really mentioned in the glossy letter which, when opened, became a very simple application form. Nor were they mentioned much in the small brochure, also attached. However, and as required by the FSA (hurray), there was a key features document with less pictures and lots of writing, setting out all the costs. Having found the charges, I looked for the reduction in yield figures over the 10 year term, and found that the tax-free plan would see a 7% gross investment return in the fund reduce to 3.4% after charges. In other words, more than half any investment growth would be lost in the charges.

Not exactly Admirable, eh? – and not so Friendly. Oh, but I forgot – they give you £15 in M&S vouchers for every plan you take out.

So that’s all right then.