The Death Star of Tax Departments

2006: The Unit - David Mamet

The wealthy need to make sure that their tax records are right up to date. HMRC are now focused on the wealthiest 500,000 people in Britain. They even have an "Affluent Unit" which was set up a year ago but have recently reduced the "ticket price" from wealth of £2.5m+ to £1m+. Mind you this is not high net worth according to HMRC who have the department of departments, the ingeniously named "High Net Worth Unit" which looks at those with wealth of £20m or more. Since it was set up in 2009, it claims to have collected £500m in extra tax - rather more than even HMRC thought they would get.

Its a fairly "big" job for the HMRC, so to help the Coalition has arranged for another 100 inspectors and specialists to be recruited. I dare say that they will command quite significant salaries for their expertise, which may help account for the cost of the projects at £917m... with the expectation that this will achieve additional tax collections of £7bn by 2014/15.

The HMRC (Gareth Hills the ARC President to be precise) seems keen to suggest that each inspector generates 30 times their cost, which is surely a pretty good return if its true. There is some considerable debate about where to focus resources and whether specific departments are necessary, perhaps merely creating bureaucracy. Mike Flemming, tax Director at Straughans is reported as saying that HMRC should focus on £22.3bn in lost taxes due to VAT fraud and incorrect Self-Assessment tax returns - which covers pretty much the rest of the population. So be warned, getting your tax return in on time is important, but not as important as getting it right.

Has Clegg implied the means-tested State pension?

1938: Test Pilot - Fleming

The LibDem conference concluded with Nick Clegg's speech. You may have seen him on the news last night talking about cutting some of the free benefits to rich pensioners. He said "it is difficult to explain why Alan Sugar's free bus pass should be protected when housing benefit is being cut". Now I don't want to get too political, but I doubt that Alan Sugar uses the bus and if he has been sent a free pass, I suspect it is in the bin and never been used (wild speculation on my part). 

One would have thought it would be wiser to ask people to apply - hang on a moment, according to the DirectGov website you only get a free bus pass when you apply for one and the same is true for the London freedom pass. So I very much doubt that Lord Sugar has ever applied, which begs the question what on earth does Mr Clegg mean? Perhaps he is suggesting that there should be no free bus passes? let's face it, anyone with a car is less likely to apply and they are only available to people with disabilities or of State pension age with modest to low incomes. I'll take a wild guess that Mr Clegg does not wish to alienate these groups.

So what of the Winter fuel allowance? to which he also referred  well this is paid to households that are in receipt of a State pension. It isn't really claimed, it's paid as a bit extra, with a couple of exceptions - those claiming child benefit, council tax benefit or housing benefit all need to claim it. It's worth £100-£300 dependant upon age and the number of people that you live with.

I'm therefore perplexed at what he is really meaning. It occurs to me that this is merely a warming up of a notion that may gain momentum. The notion being that some people are wealthy enough not to need State support or benefits. If I might suggest this would possibly include the State Pension, which is probably the only "benefit" that most "wealthy" retired people could receive. There is probably some mileage in this, after all a similar thing has happened to child benefit. However, if this were to become practice, it would mean that the State Pension would become means-tested, which if the case begs the question of why pay national insurance? and where is the line drawn? Whilst I'm not wishing to stir the pot (well, maybe a little) I suspect that Mr Clegg has inadvertently indicated the way in which his or the Coalition Government's thinking may be going. Any thoughts? How about those with final salary pensions like the NHS paying a pension of over £35,000 a year? how much "guaranteed" income do you think might render you ineligible for a State Pension if it became means-tested?

Lawyers Expect A Close Shave With HMRC

2011: The Lincoln Lawyer - Furman

It may be many years since the UK launched a proper taskforce, but HMRC is effectively going out all guns blazing in its campaign for collecting owed taxes. At the moment they are focusing on Lawyers . It basically works like this, HMRC know roughly how many clients each practice has, therefore it can look at average revenues and spot those that look a little bit low on their declared income. Previously HMRC has attacked Doctors, Dentists, Tutors and Coaches, however Lawyers are the first "high risk" group being attacked by the taskforce.

Other "high risk" groups include the hair and beauty trade in the North East, thought to owe around £3.5m in tax. Restaurants in the South East and Solent are also under review (£2.5m), the Scottish motor trade (£3m) and the grocery and retail trade (£7m). There are now over 30 HMRC Taskforces in operation, all launched since May 2011.

There are various ways to legitimately reduce your income tax. The most obvious being to make pension contributions, which attract tax relief at your highest rate of tax. Charitable Giving is also a way of reducing tax burdens and of course means that your money goes to a source that you are concerned about. If you are need assistance do get in touch, otherwise perhaps some of the no win, no fee cases may be concluding earlier.

Party for £4billion?

1993: The Last Party - Levin

You will be aware that the LibDems are in Brighton for their conference. Today Danny Alexander is expected to announce that the Coalition Government are making progress towards their pledges to clamp down on tax dodgers. He is expected to announce that £4bn has been recovered this year, which is on the way to the £9bn target by 2015. Whilst this is good news, I'm not entirely sure that doing the job of collecting owed taxes is something to shout about - anymore than one would praise a ticket inspector for checking people had tickets.

The LibDems also seem to be discussing and widely supporting the break up of RBS and Lloyds Bank, two of our national banks. I doubt that many would disagree that it would make sense to use public banks to fund the economy, however the detail of such agreements is rather vital. Simply taking over other debts so that businesses can borrow from the usual culprits again is little more than a game of pass the parcel. As with most political conferences, there's a lot of razzle and dazzle - no doubt over the next 2 months we shall witness a pretty grim display of this at its worst in America. Hopefully amidst all the glitz and bunting are some good ideas about how some of the world's economic problems will be tackled positively. Something that we look to politicians to take the lead on implementing, but at the same time aware that ultimately we are responsible for our own actions and need to play our part in economic life.

Hoping For Long Term Results

2012: Hope Springs - Frankel

I'm a fan of Meryl Streep - but her latest film "Hope Springs" is not as advertised (in my humble opinion). The radio and tv adverts suggest that this is a hilarious comedy. Whilst it has its comedic moments, this is actually a story of an empty nest couple who have a marriage without intimacy. Weathered by the years it is a well observed, but all-too sugary unveiling of lives built upon functionality, which becomes dysfunctional. This film lands some tough punches, but ducks the really big questions.

At the weekend I was at a family celebration for a 50th wedding anniversary and the week before a 25th. We all probably have a reaction to these "landmarks" however whilst I am very much an advocate that relationships must be worked at in order to thrive, (often the work is hard) there is a degree to which there is a portion of luck involved. For starters, that both desire to want to work at the relationship and perhaps that time is not cut short by events way beyond our control. Luck, it might therefore be acknowledged, however "small" is perhaps a vital ingredient. Turning this to the world of investment, I'm not a fan of "luck" yet often those that have the best stories to tell were frankly, lucky - the sort of luck that does not get repeated regularly. Fund Managers work to get their research to a level where one would observe that perhaps investing is nothing more than a science, yet the truth is that the research is little more than a basis for decisions, not a crystal ball. Interpretation is an art and sometimes they get lucky and sometimes they don't. Many of them are bright and skilled at what they do, but over the longer term, the "luck" tends to average out as performance reverts to "average".  This is why, my clients are encouraged to take a long-term view of investments, we don't think that its possible to consistently beat the market (unless you cheat or the market is rigged). As with relationships, the quality is in the effort made to gain understanding, to meet expectations and work together for the same ends.

Dictum Meum Pactum

1953: Latin Lovers - LeRoy

I have to admit that I often feel "plebeian" in my dealings with my Bank. Whilst I know that Banks are massive impersonal organisations, the promise (and payment) for a personal service differs considerably in understanding between my Bank and I. I tend to expect personal to mean, handled by a person - with whom there is a relationship that is based upon understanding beyond box ticking, to my Bank it seems that whilst this is their claim, every phone number provided is an automated call centre with a rabbit warren of PIN, alphanumeric options and "let me put you through to a different department" responses. Despite the heavy rain and falling temperature, my office reached boiling point yet again following another lengthy blow by blow regurgitation of my problem and attempt to find solutions. It is with a degree of sadness that I find much fault in my Bank. As with many Banks they seem to display an attitude where customers serve them not the other way around.

It is amusing to note the folly of the Conservative Chief Whip over the weekend. The truth is plain for those that wish to see it, as sad as it is. The depressing state of  those "in power" are giving "leadership" a very bad name and displaying none (or very few) of the necessary qualities, choosing instead to apologise for things they did not do and ignore the things they did. Many of our leaders should win gold medals for their gymnastic agility with meaning-less words. I was at Public School too, Prep School in particular was a place where the term "pleb" was used in a derogatory fashion (by certain staff and pupils) perhaps fed by a schoolboy's poor grasp of very limited Latin, which otherwise was a struggle. Thankfully I know better, (and was reasonably ok with my Latin) because I grew up and don't spend time (as far as I'm aware) with people that have such attitudes. Radio 4 had an interesting insight into the term "pleb". However, perhaps I should be less quick to judge. I can be demanding and rather impatient when things don't go my way, most obviously displayed by bad banking and bad driving. Holding my tongue is a life lesson that I know I need to work on too, particularly when it comes to reading some of the nonsense in the financial pages. So sincere apologies to anyone at my Bank that caught my ire and those drivers that I accuse of cutting their license off a packet of cereal. mea culpa. As my Latin Master once wrote "must try harder".

Fudging Independent Terms

2011: Miss Representation - Newsom

Financial advice is either independent or it isn't, by which the new terminology is "restricted". Independent is not fifty shades of grey, you cannot be a little bit pregnant or a little bit dead, you cannot be a little bit independent. I can certainly agree that some of the 2013 restricted advisers may be very good indeed, after all every adviser has to achieve a minimum standard of qualifications. However, it seems a little odd that one might chose to be "restricted" as opposed to independent in my opinion. Clients admittedly may not always mention the importance of independence, but frankly I believe they simply expect it. Those that chose to seek advice from a bank or insurance company really should be aware that the advice they receive is very limited indeed, some people still don't recognise this, but then they are probably not the sort of people that really understand the importance of good financial planning. The lack of knowledge on this issue is due to a failure on the part of the regulator, media, government, financial services generally and quite obviously financial advisers and those that claim to represent them.

Today the Association of Independent Financial Advisers (AIFA) has announced that they intend to change their name to Association of Professional Financial Advisers. This signals their clear intention to "represent" both independent and restricted advisers. Sadly, I don't feel that they have done a very good job to date representing IFAs so I'm sending off my application to the IFA Centre, to have the case for independent advice represented at Government, Regulator and European levels. I believe, like the IFA Centre that clients want and deserve proper independent financial advice, I would go a step further and suggest they they also want and deserve proper financial planning - which is in my view the only good way to make any financial plan meaningful.

Independent Thinking - Singing It Loudly

1946: Stand Up And Sing - Rogell

Another day, another trip into the City. This time I was attending an event about the new world that is due to start from January, its a new world to those within financial services, but of course probably not to you. In a nutshell, there was a very good presentation by Gillian Cardy about why independent financial advisers ought to remain independent. Somewhat preaching to the choir you would think, but alas many firms feel so threatened by the new rules, that they would rather limit their options (and those of their clients) to a much reduced range. This will deem them as "restricted advisers" which I dare say will not be explained as well as it ought to be (the way the FSA, soon to be FCA require).

As I hope is obvious, I believe very clearly that independent financial advice is the best sort of financial advice. I'm not restricted to only advising on some products, but on pretty much anything. The important and rather obvious point is that being independent, I have access to the whole of the market and represent my clients best interests. As we have always worked on a fee basis we can also clearly demonstrate that there is no bias in selecting any product or provider - we get paid the same whatever is selected. Certainly an independent financial adviser has more research to do and arguably needs more skill and knowledge, but as far as I'm concerned we have been operating under the new 2013 rules since 1999. Our clients face little real change as a result. Our fees are properly and fairly priced. The main changes that we face are the improvements to technology and therefore we can constantly improve our services. So I'm expecting next year to be better than ever for our clients and I'm expecting to continue providing a great service, hoping that they will sing our praises.

Back to the Classroom - Financial Education

2009: An Education - Scherfig

I'm feeling somewhat older at the moment. I took my daughter for her first day at University on Monday. Home is quieter and it will take some getting used to. As a father, I wonder if I have prepared her well enough for the new adult responsibilities which include paying bills, too much assistance and learning is very much impaired, too little and feelings of being overwhelmed can quickly stir. Finding the right balance of parental input gets a little harder each year as the process of "letting go" is of as much value to the parent as it is to the child - or at least, that's my take on it.

Harking back to my own student days, I know is many years ago, but it doesn't seem that long ago in some senses. At that point, a credit record was not a topic of conversation. The prospect of running out of money meant not eating (or drinking) so careful balancing of accounts needed to happen. Today, the standard student bank account comes with an overdraft and one that increases each term. This is of course is the age of credit, but if ever there was a word more misappropriate, then I have yet to learn of it. Many students starting their first year this term will be playing the game of catch-up, it is one that they may not ever "win". Contrary to initial statements, pretty much all Universities charge £8,000+ or more per year. Student "digs" are comfortably £3,500+ for starters, then its the food and living student life - so how much should a student be able to live on each week? For many University will be an economic decision, not merely an academic one. However in a world where jobs are scarce, having up to date relevant skills is vital and I suspect that University is possibly not really an option, but a necessity.

I have met hundreds of people over the years who had a very poor financial education and the consequences of this can have a long-term impact on their ability to make good financial decisions. A large part of the missing education is relatively straight-forward, but can feel like learning a foreign language. A real problem when it comes to money matters, is frankly one of trust. Rarely is it wise to completely trust someone with whom you have a "business arrangement" - perhaps a high level of trust yes, (even very high) but you should always leave room for some doubt (yes even with me). Motivation has a direct link with trust. So being clear about what it is that you are paying for is important. Financial services is full of the wrong motivations. Better remuneration for bigger returns, paid to sell products and so on. Trust is a theme that we tend to return to regularly throughout life, getting better at trusting requires a gradual letting go - much like being a parent and seeing the child through to adulthood. There is good experience and bad experience, both are useful. There isn't a perfect University course, politician, doctor, accountant etc any more than there is a perfect financial adviser. However, there is a scale. I would suggest that the transparency of the relationship is a very helpful starting point. 

Public Sector Pensions - Goalposts Moving Again

2008: The Deal - Schachter

Public Service pension schemes are undergoing a huge amount of change at present. As you may know I advise many Consultant Doctors as well as quite a few people working within "public service". Yesterday, the Government issued its Public Service Pensions Bill. This may seem like yet another cost cutting exercise, but I have serious concerns about it. In essence we all know that public service pensions are very good and most of us would be lucky to have one, however that does not mean that because we don't, those that do need to be reprimanded, which is frankly what it looks like. There is a fundamental change to the way the schemes operate, switching from a final salary basis to a career average basis. This will almost certainly mean lower pensions for most members of the scheme. In addition the member contribution is also increasing signficantly, this is on the back of several "shake ups" previously.

Those within 10 years of retirement (generally aged 50+) will not be impacted by the new proposed rules. However everyone else is likely to pay more, get less and retire later. Not exactly a winning combination if you are trying to incentivise a workforce. I'm in the process of properly reading the Bill and will be outlining further thoughts in time. However, envy should have no part to play in policy making and I am concerned that this sort of goalpost moving is exactly the sort of ill conceived idea that makes normal, moderate people give up on the political classes, creating an unhealthy dynamic, which in a European context has resulted in some fairly dire consequences.

Medics See-Through Outsourcing.

1963: The Man With The X-Ray Eyes

The medics amongst you may be interested in the changes that seem to taking hold of radiology departments. This is not a new story and I have talked at length with clients about the impact of the internal changes within the NHS due to outsourcing of services and and in some instances a potential reduced perceived need for certain Consultants.There's a fairly pithy blog that I follow by a doctor which often points to the growing privatisation of NHS services. Retired Consultant Bob Bury writes an interesting piece in Hospital Doctor today. As you will be aware, I advise quite a number of Consultants and GPs who are all at the receiving end of a taxation assault against them, which I believe to be largely due to the last Governments inability to do the maths on the Consultant Contract and GP Contract. I have never met a doctor that is in pursuit of money, even those with very large private practice incomes are very "patient focused" the money just kind of follows. Of course if you are ever unfortunate enough to need their skills, then you really appreciate the training and experience that they have gained over many years.

Saving money (by buying cheaper) is not always a great way to operate. Nobody wants to be ripped off, but equally we know that cheap does not equal quality - just look at the row between Virgin Trains and the Government at the moment.

You Are Being Watched

2008: Eagle Eye - Caruso

Death has just become more taxing. The HMRC are somewhat smug about their new computer upgrade which seems to work - perhaps the first state computer system to work properly? Its a strange world when you frame collecting tax as helping the nation to reduce its national deficit, yet that is precisely how HMRC seem to be portraying themselves. Now, I know that there are some people that dodge tax and of course should pay up - and there are those that hide vast sums offshore, however, collecting the right tax should be "normal" not seen as a positive move to reduce the debt reduction. The debt, which seems to be a constantly moving target, is reduced by repayment, which means in UK plc we need to produce more, sell more, and buy fewer imports. We need to create jobs and get good sustainable businesses started (yes, I know you know). So who has some good ideas about how to do this? apparently the politicians don't have many.

The tax system is one that now seems to be increasingly moving to one of sentiment. Back in medieval times, of course it was the King that taxed the population, who is seems were largely poor. It would appear that something of a reversal is occurring, with a 75% tax rate in France. This is not much better than taxing the poor and frankly is simply a philosophy based on envy. The rich must pay their taxes, which should be fair to all. So I have little sympathy with those who pay less than their au pair, tax must be fair.

HMRC are claiming to have already recovered £26m in unpaid inheritance tax. This is because their new super computer ("The Connect") made by Detica and owned by BAE systems, can sift through and cross reference bank accounts, employment history and company ownership and property purchases. So be warned, if you haven't been declaring tax properly, you are now officially playing a game of "chicken" with HMRC. Don't believe that HMRC won't find out, this is the new technological age and one where advisers are culpable if they don't whistle blow. Thankfully not an experience I have ever had. This is the age of the electonic eye.... just realised that my last post was about personal data security... I'm not getting paranoid (I hope). Anyway, for financial planning that is open, transparent and above board that won't get you into problems with the taxman, well, you know where I am.

As its Friday, have a look at this trailer for Eagle Eye, not a bad film, topical for the times - particularly in light of news that Britain may become a CCTV drone nation in the next 5 years.

Stop Your Junk Mail and Crank Calls and Crime Against You

2011: Anonymous - Emmerich

It may surprise you just how much information is "out there" about you. This is now being used by all sorts of people and the final straw that broke the camels back (mine) this week was a flurry of phone calls to my home telling us that there was something wrong with our computer. This was (and is) of course a complete scam. This leads the unsuspecting to download some software onto their computer for any number of potential crimes committed against you. Of course being criminal, they pay no attention to data protection laws (or any other) and persist with contact.

So what can you do? well start by having a look at 192.com. Try looking up yourself. If this worries you then you can opt out, something that 192.com have to comply with. To make your life a little easier, here is the form that you need to fax to them and the relevant page, which is buried within the site itself. Removing yourself from the Edited Electoral Register is also a shrewd move. It is your right under section 11 of the Data Protection Act 1998 to have your name and address excluded from the Edited Register on a permanent basis. Each person must inform the Electoral Registration Officer separately that they want to do this. I understand that this needs to be done with your local council, you can find out precisely where this is by going to this DirectGov link. You might want to send Keith Marsden, the MD of 192.com your thoughts on how you don't want your data sold. I hope that it goes without saying, we protect our client data and never sell it to anyone.

Is It A Good Idea To Rename Something "Old"?

1943: Old Acquaintance - Sherman

Clients with Skandia policies or investments will be seeing a different name on their statements and documentation. Today, it was announced that the Skandia name will be gradually phased out in favour of its owner's name Old Mutual. Whilst this will bring and end to questions like "are those the people that make trucks?" I have to admit that I don't yet appreciate the purpose of this. Certainly those at Old Mutual have already begun the marketing initiative to reassure everyone and talking of "one business, one vision" but frankly Old Mutual is a much lesser name than Skandia and it seems a little odd to be promoting anything with the term "old" in it, particularly when the industry is one that is constantly changing. After all we don't even call a State pensioner an O.A.P anymore. Not that there is anything wrong with being old.

I know that there will be a "business justification" for this, and I'm certain that someone from Skandia will attempt to persuade me that there is. However, I can't help but think that multi-national branding has more to do with egos rather than anything else. Skandia are not alone in this, financial services is riddled with name changes and this leaves people confused and a little fed up that so much money is wasted on a new paint job. Of course this is not exclusive to financial services, the football stadiums around the country are gradually being renamed by corporate sponsors, though again, to what end. Does anyone really fly with Emirates because it is mentioned as the stadium? or Etihad? I'm not convinced that this is marketing money well spent, though I'm sure a those involved in the marketing process are all rather pleased.

Anyhow, over the next 2 years, we will all be changing references to Skandia to Old Mutual Wealth - OMW. So I did a quick google on OMW acronyms. On My Way, Oh My Word, Old Man Winter, Online Model World, One Minute Wonder, Oh My Wow, Oh My Waffle, Organizational Mastery Workshop and Observation Monitoring Well.

A PB is a Team Event

2005: Tennis Anyone?  - Logue

Well, he did it. Despite the critics that couldn't swallow their own medicine, Andy Murray has broken through the British grand slam wall (of 76 years). He did this last night, by beating the defending champion Novak Djokovic in New York. When asked what he thought had taken him "suddenly" to this new higher level, he cited the improvement in his own game and his coach Ivan Lendl. Modern sport is very much a team effort and all those that we saw achieve a podium finish over the summer (and many that didn't) are helped by a huge team of specialists. The right support can deliver the right results, but of course ultimately the individual will have to perform on the day, putting into practice all that the wider team have worked so hard to instill.

Financial planning could be viewed similarly. The planner and his or her team is providing the coaching, encouragement and sometimes "tough love" (of speaking the truth) but ultimately it is the client, you, that has to go out and earn the income, buy the house, run the business and so on. Its a team effort and I hope that our clients feel that we provide a support team to help them achieve great things too.

Paralympic Legacy? Starts in Life

2012: The Bourne Legacy - Gilroy

The "summer of sport" in London has now come to an end with a thrilling closing ceremony for the Paralympic Games. Now attention turns to the legacy that was promised and the hope that anyone with a disability is treated fairly. Politicians will be quick to capitalise on what they see as the virtues of the experience, as will many others. The Paralympics was quite simply brilliant. Witnessing the final stages of 4 years (more or less) of training to culminate in a truly awesome display of genuine friendly but serious competition was a lesson to world leaders and those that run any organisation, be it in the realm of business, politics, service or charity.

The Paralympics have caused many to pause to reflect on the way we view people with "disability" and "disability" itself. We are also reminded of the need for personal fitness and of course a sense of connection to a wider community. In terms of a legacy, well everyone will have their own opinion on this, but as with all legacies, the best are started in life, not in death. This plays neatly into the need to have a clear idea of where it is that you want to go, what you want to "achieve" - what you want to "succeed" in. All very loaded words, but of course have very different meanings to each person. This is an area that as a financial planner, I have experience in helping clients to reflect on their values and what it is that they truly want from life.

Better Late Than Never

1949: Death of a Salesman - Miller

I have never liked commission. I don't think its entirely bad, it does help people to pay for advice. However, I have always argued that if an adviser is paid to sell products, then it is hardly surprising that it is products that are advised. Hence when I set my own firm up in 1999, I did so without the normal problems inherent within financial advice. I charged fees for the work and a fixed implementation fee, which was the same irrespective of the type of product. This saved our clients thousands of pounds (and continues to do so).

Today the Managing Director Martin Wheatley of the FSA, soon to become the FCA, announced that he wants to see and end to mis-selling created by sales incentives. He is particularly concerned to tackle Bank staff who are incentivised to sell their products - everything from a bank account, credit card, cash ISA, loan all has a commission incentive to the Bank staff. He said:

“Why is it that every time I walk into the bank to do something simple, like pay my credit card bill, the person behind the counter asks me if I would like to extend my credit, take out more insurance or look at their competitive mortgage rates? When did this happen? Banks for me used to be a service – a place where you would go in, stand in a queue, have a pleasant chat with the clerk and go about your daily business. Some time ago, this changed – financial institutions have changed their view of consumers from someone to serve to someone to sell to.”

This does not apply solely to Banks, it applies to financial advisers, Fund Managers, Investment Companies and pretty much anyone within financial services. I'm with Mr Wheatley on this in principal, however we need to be careful not to throw the baby out with the bathwater. Motivations and incentives certainly need to be in place. People do not wake up and form a queue at my door for impartial fee based financial planning. I have to play my part to promote what I do and make people aware of why they should consider using my services. That's even part of the motivation behind this blog post. So whilst I'm in full agreement, a note of caution as big budget Banks and Investment Companies may simply flood us all with information overload and of course if base salaries for these sorts of employees were to rise to offset the "lost" bonuses, it is likely to lead to either higher costs, passed on to us all or increased redundancies, which is passed on to us all in the form of additional State benefit burden. So yes Mr Wheatley I fully agree, but don't let them get away with a smoke and mirrors dance on how this plays out.

The Truth About Mortgages

1997: The Borrowers - Hewitt

The FSA published its review of the mortgage market on Friday. This did not make happy reading. Since the credit crunch crisis began (and yes I do not believe it is over) the difference between the rate that people borrow at and the Bank of England base rate has widened. Prior to the crunch, the average difference or "spread" between 2005-2007 was only 0.50%, it is now above 3.0%. The difference might be described as profit to the lender.

I'm still amazed to see that as of Q1 2012, income is only verified for around 70% of  "low risk" borrowers - meaning that they are remortgagers and movers. "Higher" risk borrowers such as first time buyers have their incomes verified in 87% of cases, which the FSA think is an improvement on the lower level of around 70% in 2008. I don't see why income is not verified in every case, unless there are exceptional circumstances. Even assuming sensible lending based on verified income, this would suggest that there is a margin for error of around 30% which is hardly inspiring confidence in the market.

Financial Advisers (rather than Banks) used to arrange around 64% of mortgages, now this has reduced to around 46%-56% according to the FSA. This reveals a growing market share of mortgages sold directly to consumers by Banks and Building Societies.

In terms of what people can borrow, there seems to be a shift by lenders, some of whom are lending 4.5x to 5.5x income. However compared to pre-crunch, lenders are not offering as many high multiple lending. This is precisely why a specialist mortgage broker (not me) is required to source the best mortgage based upon your circumstances, particularly as the number of mortgage products is returning to pre-crunch levels, but still lower at 2,991 different mortgages available. This is despite the fact that there are still relatively few mortgages requiring a deposit of 5% or less, although more are becoming available. The bulk of borrowers  now have 25%-50% deposits. The proposition of interest-only mortgages has also reduced considerably, though this was a general trend over the last 10 years. The balance of power has altered, in part due to the collapse in the number of financial advisers offering mortgages, (which would include ourselves) almost halving since 2005. The result has been that the top 20 mortgage lenders have gained an increased market share, now at 94% of the entire mortgage market, I suspect you could name them all. On the whole, though mortgage sales have remained fairly static since 2009 at less than half the amount it was in 2005.

Die Hard With A Record Collection

1988: Die Hard - McTiernan

Bruce Willis, is known for his action movies, but it seems that he is probably more mindful of his mortality than some of the characters he plays. Bruce is contemplating taking Apple i-Tunes to court about his music collection. It seems that he was reflecting on his mortality and the inheritance he would leave for his children. He has worked out how much he has spent downloading music and figured that this is a considerable sum (it is for most people). If this were a record/CD collection it would simply be part of his estate that is passed on. However, as it is i-tunes - Apple argue that the music is effectively rented - by way of a license, which expires when the purchaser does, it cannot be passed on to his daughters (or anyone else).

Anyone that is a fan of real music will appreciate the irony. Record companies have been fiercely attempting to survive the digital age, record shops have closed and most "young people" rarely buy a physical CD/DVD etc. My own view is that this was a response to two things - firstly, the overly high prices charged for CDs and secondly the advent of technology that enables copying on a huge scale. The record industry has altered, but become increasingly more protectionist. It is little wonder that people object to paying high prices when music and film superstars seem to have very lavish lives.

What I object to is the constantly changing formats. I would be happy to exchange my old VHS movies, for a DVD for £1 or so, but why should I really pay the full price again? and then its Blueray... until the next thing in 3 years time. Apple, whilst they are hugely creative and make beautiful "stuff" one is often left feeling that somewhere we are all paying too much for things that do not last. This might also be true of their share price. The short-term shelf-life of most technology really does beg the question of whether this is a case of knowing the price of everything but the value of nothing.

So be warned, buy the hard copy original and then copy it to i-tunes, legitimately. After all the only real purpose of i-tunes, is so that you can easily alter the music collection that you carry around with you, not so that you can become music "renter". I'm with Bruce Willis on this one who has turned a little "Pirate" in an attempt to challenge the status quo. I'm reading a book by Kester Brewin called "Mutiny" about Piracy at the moment. This is also a timely reminder to think about what it is that you record and what you leave behind and to whom.