Regulator puts the boot in, but will it make a difference?

The FCA got tough over ID theft insurance, but don’t expect the industry to change its ways

Personal Finance editor

When will the financial services industry ever learn? This week we have had the Financial Conduct Authority (FCA) setting its stall out as a new-style regulator by ordering the industry to refund premiums gathered between 2005 and 2011 for largely useless ID theft insurance. Millions will see premiums returned which could amount to many hundreds of pounds. What’s more, the financial firms will have to take the initiative in this and actually contact individuals with a compensation offer which looks more than fair – hopefully putting the kibosh on the no win no fee vultures in the process.

I was a longstanding critic of the old Financial Services Authority – and I was far from alone in that – but if this is the sort of decisive consumer redress action we can expect from the new FCA then I am delighted. I would like to believe that the banking sector will learn from this latest costly mis-selling scandal, but the fact that the real spike in sales of bogus ID theft insurance happened just as the proverbial was hitting the fan over payment protection insurance mis-selling indicates to me that the industry still thinks that the right response to being exposed for doing wrong is to go and do a different type of wrong in another part of its business to fill in the profits gap rather than genuinely learn the lessons. 

Maybe though, this time with a stronger, more vibrant regulator in view, the banking industry will finally learn that packaging up useless insurance and mis-selling it routinely is frankly a mug’s game – but I won’t be holding my breath.

The wrong product

After more than two decades of effort by campaigners, the insurance industry seems to be finally taking a more active approach to ensuring people at retirement get an annuity which suits them best.

The Association of British Insurers has just compelled its members to publish their annuity rates on their website so people can compare them. However, this move seems to have taken for ever and some providers have been dragged kicking and screaming into this most basic of steps. The truth is that a substantial minority – if not a majority – of people who buy an annuity go for the wrong product either because they have an illness which should mean they are due a higher payout or they fail to take account of inflation or proper provision for a surviving partner.

The insurance industry has been complicit in this and just publishing some rates, however welcome, is nowhere near enough. In my view we should bar insurers from offering annuity rates to their pension savers, in effect forcing everyone to shop around and stopping people simply buying the annuity which is offered by their pension provider.

Buy-to-let trap

It really is beginning to feel like the early 2000s all over again.

This week I received news of a new batch of “guaranteed rental” property developments – aimed at buy-to-let investors. This included for the first time some apartment blocks in the big northern metropolitan cities. This was a signature of the property boom of the 2000s with a plethora of apartment blocks springing up catering for that often mythical panacea of property programmes and the inexperienced buy-to-let investor, the young professional.

Many first-time. buy-to-let investors bought these apartments off plan, often not even travelling to the town or city they were based in – a crazy leap in the dark. I know of one lady after being handed a large home in a divorce settlement remortgaged to buy four apartments in Manchester off plan, without viewing, to supply a regular income.  The market then went pop and she was left with flats that were difficult to rent out and a hefty mortgage on the family home; not a good position to be in.

Things have definitely got better and many of these ghost developments are picking up. Building worked mothballed for the past five years is now coming on stream and with them are some seemingly tasty incentives such as the guaranteed rental offers that have found their way into my inbox this week.

However, if you are thinking of buy-to-let shun anywhere you don’t know well, resist the hype and understand that you will be paying for any incentive offered through a mark-up on the price.

In fact, if I was looking at buy-to-let now, I would focus on areas where there are improvements to local transport or infrastructure on the cards, where there was a student population nearby and, crucially, somewhere I am familiar with and able to get to and from easily.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Arts and Entertainment
(L-R) Amanda Peet as Tina Morris, Melanie Lynskey as Michelle Pierson, Abby Ryder Fortson as Sophie Pierson, Mark Duplass as Brett Pierson and Steve Zissis as Alex Pappas in Togetherness
TV First US networks like HBO shook up drama - now it's comedy's turn
Pool with a view: the mMarina Bay Sands in Singapore
travel From Haiti and Alaska to Namibia and Iceland
The will of Helen Beatrix Heelis, better known as Beatrix Potter, was among those to be archived
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Nigel Farage: 'I don't know anybody in politics as poor as we are'
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

    Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

    Selby Jennings: Quantitative Research | Equity | New York

    Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

    Selby Jennings: SVP Model Validation

    Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    Day In a Page

    Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

    Aren’t you glad you didn’t say that?

    The worst wince-and-look-away quotes of the year
    Hollande's vanity project is on a high-speed track to the middle of nowhere

    Vanity project on a high-speed track to nowhere

    France’s TGV network has become mired in controversy
    Sports Quiz of the Year

    Sports Quiz of the Year

    So, how closely were you paying attention during 2014?
    Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

    Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

    From Armstrong and Miller to Pointless
    Sanchez helps Gunners hold on after Giroud's moment of madness

    Sanchez helps Gunners hold on

    Olivier Giroud's moment of madness nearly costs them
    A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

    Christmas without hope

    Gaza fears grow that conflict with Israel will soon reignite
    After 150 years, you can finally visit the grisliest museum in the country

    The 'Black Museum'

    After 150 years, you can finally visit Britain's grisliest museum
    No ho-ho-hos with Nick Frost's badass Santa

    No ho-ho-hos with Nick Frost's badass Santa

    Doctor Who Christmas Special TV review
    Chilly Christmas: Swimmers take festive dip for charity

    Chilly Christmas

    Swimmers dive into freezing British waters for charity
    Veterans' hostel 'overwhelmed by kindness' for festive dinner

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect