Julian Knight: Financial advice gap has become a chasm
New commission rules have left low and middle-income individuals out in the cold when it comes to expert guidance
Sunday 13 January 2013
I have come across the first case of someone I know being flummoxed for financial advice following the ban on commission that came into force in the new year. This individual, who has an above-average salary, but by no means a fortune, is finding it nigh on impossible to get advised on an investment ISA worth about £10,000.
An independent financial adviser, who has been used by members of his family in the past, is not interested in his custom as it is a small scale transaction and the cost of doing a thorough financial fact find would be "prohibitive".
This is typical of IFAS who are trying to morph into wealth managers to capture the lesser-spotted beast, the high-net-worth individual. As for this man's bank they have recently fired their advisers. Meanwhile, the government's Money Advice Service when it comes to investment choice it's totally useless as it's couched in such huge caveats that it's blandness personified.
So where does this man go for unbiased advice? The answer is they have a chat with me but I'm not allowed to give advice as such. There isn't so much an advice gap as a chasm. There is some potentially fantastic long-term customers that are going to waste.
Package fees rise
Why anyone would go for a fee paying "packaged" current account bemuses me. You get no better service than the non-fee paying customer but with some low rent insurance products thrown in.
Perhaps, as with my bank, you get a separate area to sit in and more counter staff but like a car dealer you should ask yourself who is paying for all these unnecessary add-ons? Look in the mirror.
Most galling is when you see people in debt difficulty with these accounts, there is an expense that could be eliminated immediately. And once the banks have you signed up they have almost carte blanche to ramp up the fees. Take the Clydesdale for instance which has just upped its monthly current account fee from £12.50 to £13.50 – that's about 8 per cent and I bet your salary hasn't risen by that much this year.
Of course, you don't get any better service for this and in fact the costs after the initial opening are very low for the bank so it's pure profiteering from the Clydesdale – which cast your mind back has in the past pursued it's mortgage customers for debts caused by its own maladministration.
The Clydesdale or Clotsdale as I dubbed it after this debacle is clearly not following the maxim of its parent company in Australia which is "More give less take".
Backdoor tax grab
I loathe self-assessment time. I'm sure I'm not alone and the Government's Child Benefit changes discussed on the next page mean hundreds of thousands of people are going to have to fill out self-assessment forms for the first time.
Many of these will be public sector workers – some of whom it is surprising to see are in the top 10 per cent of taxpayers but there you go. These people hadn't filed in the past because their entire income was derived from PAYE therefore they paid their taxes automatically.
However, with the need to fill in self-assessment forms the Government can expect to scope a tidy sum from the savings accounts of these individuals. Any interest earned that is not in an individual savings account will be taxable at the higher rate rather than the basic rate which is automatically deducted from banks and building societies.
Extra jobs are not a bonus
Normally, the news that 1,000 extra jobs have been created in financial services would be very welcome news indeed, a sign of success you'd think. This time around though the 1,000 are at the Financial Ombudsman Service and the only reason they are being brought in is that financial institutions are continuing to drag their feet over the many thousands of complaints that flood in each month. The jobs drive reflects the continued failings of the financial services industry, instead of hiring perhaps the regulator ought to up its fining regime.
In the scheme of things the £4bn drawn down from the £80bn available through the Bank of England's Funding for Lending is tiny.
But what it has done is give banks the confidence – along with a potentially softer line on the level of reserves they hold being adopted behind the scenes by regulators – to shun savings once more. As a result, savings rates are falling and introductory bonuses, as I report on page 92, are being shelved. On the upside rates are continuing to fall on mortgages and just as I think they can't go any lower they do just that. Yet another occasion where savers are losing out to bolster borrowers. In the long run we will all be poorer for this.
Fuel poverty could kill 100,000 vulnerable people over the next 15 years, charity warns
Phoenix Life: Chance of a refund for overcharged policyholders has risen
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Simon Read: That's right, BT, they'd rather pay for a free service
Bank-beating exchange rates on your international payments
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 Prince Harry leaving the armed forced to pursue conservation projects in Africa
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads