Intelligent Investor

Make use of the Financial Ombudsman Service

Alan — Sat, 18 Feb 2012 03:36:03 +0000

The financial crisis has meant that many people are losing their jobs and are struggling to borrow money. It is important that people realise that they have a right to complain against any injustice they feel has been made against them.

The Financial Ombudsman Service exists to protect people and pursue their complaints. They have recently released figures that have shown their workload has greatly increased in recent months and it is expected that this trend will continue throughout 2012.

People are facing more financial pressure and this is encouraging them to complain more when they feel a financial injustice against them has been made. Unfortunately, many people are largely unaware that the service exists and that it comes at no cost. It is capable of defending consumers who have been wronged by private, or public, bodies.

The purpose of the service is to right any wrongs and put people in the position they would have been in if they had never been wronged. The ombudsman services are wide-ranging and cover many different areas including police complaints, pensions, communications, finances, surveyors, Parliament and health services.

It estimates that in the current financial year it is already answered over 1 million enquiries by customers. It is expected that before the year is out a further 300,000 new cases will have been investigated. It is estimated that in the next year the number of cases is going to rise by 25 percent if the current trend continues. One of the main reasons for the increased workload was payment protection insurance which has been missold by several providers.

Running the ombudsman service is an expensive process and the principal ombudsman, Tony Bormann has stated, “We want to see that the companies who have the most complaints against them contribute more to running the service. For example, we would like to see the companies who have three complaints against them start paying us a fee. Anything less and they would not have to pay.”

The ombudsmen service usually starts to take action about two months after the initial wrongdoing. A company are given this amount of time to correct anything that has gone wrong but if they fail to do this then the ombudsman will investigate. This service is free of charge to a consumer and it means they do not have to find expensive legal representation.

The ombudsman make a decision about whether they will take up the case and if they do they will put forward proposals that will hopefully resolve the issue. This often comes in the form of compensation to be issued to the consumer. While there are no financial costs to the consumer they do have to make an effort to submit enough evidence and have a specific enough complaint.

The situation with ombudsmen in different European countries varies and in most cases there is a national ombudsman as well as those dealing with issues on a local basis. Some countries currently don’t have an ombudsman service however, such as Turkey, and people there would have to start one following EU regulations.

The head of the Ombudsman Association in Britain and Ireland is Peter Tyndall who has said that the ombudsman service in the UK is too fragmented. He also commented that there are inconsistencies in regard to devolved powers and what can be investigated

He recently highlighted how it is possible for complaints to be pursued against hospitals but not against hospices. In the vast majority of cases there is an independent body who would be able to deal with a consumer complaint and this is worth investigating if you have a dispute.

Compare credit cards online to save on interest

Alan — Sat, 11 Feb 2012 13:13:45 +0000

There are numerous credit cards on the market today and this is largely because many institutions are now offering them that are not banks. Department stores often offer specific credit cards that offer a discount in their store that can be used anywhere. Finding an appropriate credit card can be a very challenging process these days because of the wide choice available.

Fortunately, it is possible to compare credit cards online so you can make sure that you are getting the best deal and that the card is the right one for you. All of the figures and facts about different credit cards are available by just clicking a mouse which makes the whole process very easy and convenient.

Credit cards are a very popular way of borrowing in the UK and it was estimated last year that the amount of credit card debt in the UK is nearly £60 billion. When you consider that this much money is being borrowed through a credit card it would be wise to make sure that you are getting the best deal.

Personal finance is different for each person and there is no credit card that will fit everyone. By comparing credit cards you are sure to be able to find one that suits your financial needs. Many people have the misconception that a credit card is all about APR and credit limits but there is much more to it than that.

Many people apply for a credit card to deal with emergency situations, such as a cash flow problem, and they pay it off responsibly every month. If you are one ofthese people you should make sure that there is a decent grace period which allows you to pay off the debt you have accrued without having to pay large amounts of interest. Most credit card companies now run this sort of system as it encourages customers to spend sensibly.

If you are using a credit card to make large purchases it can be a good idea to make sure your credit card has a low annual percentage rate, which is commonly called an APR. This is the amount of interest you will have to pay on a debt over an entire calendar year, the lower this figure, the less you have to pay.

Credit cards can be a good way to pay for expensive purchases if you are responsible with them. Finding a credit card with a long interest-free period allows you to pay off a large item over a period of time, such as a holiday, or new furniture. Six months is a pretty standard interest-free period but you should look around to see if you can get yourself a better deal.

Cash advances from a credit card are expensive and they will charge you for withdrawing money out of a cash machine. If cash is what you are after then a credit card is probably not the right way to borrow as it is an expensive way to get money in advance.

Shell to close its salary pension scheme

Alan — Sun, 05 Feb 2012 02:48:03 +0000

Commentators have described the decision by Shell to close its salary pension scheme as an unsurprising move. Just because it is unsurprising doesn’t mean that this is not a significant decision for the company, and it marks an important moment for the financial future of many people.

This is the final company in the FTSE 100 to end the final salary pension scheme for all new people entering the company. In a statement the company commented, “We are closing this pension option to fall into line with the rest of the market in the UK.” Those who already have the pension will not be affected, as will all people who are joining the company before the scheme closes.

Many people describe this type of pension as perfect and its closure has certainly been in the pipeline for a very long time. Since 2002 it has been clear that most companies are struggling to afford the pension schemes they were offering and since that time the number of generous pensions has significantly fallen.

The problem with these pension schemes is that people are living longer and companies cannot afford to pay out such generous pensions for a longer period of time. They were simply unsustainable and companies had to shut them down. Falling share prices also did not help the situation.

Employees who are currently working at Shell will be grateful that they retain these beneficial pensions as many people, and other companies, have not been so lucky. Some companies found that they simply could not afford to run their pension schemes so generously and had to end the final salary pension offers for all of their staff, not just those who are joining the firm.

Since 2002 the number of companies cancelling this entire type of pension has increased by over 30 percent.The National Association of Pension Funds has shown that since 2008 the number of this type of pension scheme available has significantly reduced. Last year figures showed that around a quarter of schemes were shut and in 2008 this figure was only three percent. The Association have also said that they expect this trend to continue.

Another name for these final salary schemes is defined benefit schemes and these are being changed to something which is known as defined contribution schemes. These are fundamentally different type pension and in almost every way inferior to the previous type.

A defined benefit scheme gives you a good idea of what you will retire on as it will be an average of the salary throughout your career, or your final salary. With a defined contribution scheme the size of the pension is largely unknown and it will depend on how much your employer and you donate to your pension throughout your time as an employee.

Many people will find they have saved a good amount of money throughout their careers but as they approach retirement the amount of money could fall meaning that the amount paid out is significantly less.

Virgin money announces new monthly charge

Alan — Sat, 04 Feb 2012 12:51:45 +0000

The newly-created Virgin Money, which emerged from the ruins of the Northern Rock building society, has announced that all current account holders will face a maintenance charge, even if the account doesn’t go overdrawn.

Jayne-Anne Gadhia, the chief executive of Virgin Money, defended the move, claiming that banks which promise free banking are actually just clawing the money back from their customers through hidden charges, such as overdraft fees.

Director of Banking at the Financial Services Authority, Andrew Bailey, made similar comments in a speech last month, when he accused banks of advertising free accounts when there was really no such thing. New customers opening accounts with Virgin Money will face charges of around £5 per month – and consumer experts fear the move could open the floodgates for other financial institutions to make the same move, while also putting pressure on families at a time when money is tight.

Virgin Money is hoping to lure new customers to its latest venture, despite the charge, by offering account holders special deals on memberships at their UK-wide chain of health clubs. Savers can also benefit from a new Virgin Isa, offering an impressive 2.58% interest rate.

The two main savings accounts available are the Virgin Easy Saver and Virgin Easy Access Cash Isa are not just easy to use, but customers are able to transfer money directly from Isa accounts held at other banks. There are no penalties for making withdrawals and the initial rate is not dependent on bonuses and so will continue after the usual 12-month period.

Classic cars increase in value more than gold in 2011

Alan — Thu, 02 Feb 2012 18:05:46 +0000

If, when you decided to invest in a classic car you had bought the right one, your investment would have performed at more than double the performance of gold. Classic cars really are the smart place to park your money, and the fact that they are out-performing gold proves this. The Historic Automobile Group International (HAGI), have just released their annual figure for 2011, and the results are astonishing.

The figures show that is some sectors of the classic car market have increased by over 20%, while at the same time gold, the traditional certainty at times of economic strife, saw a growth of only 9.93% during 2011. This means that depending on which classic car you invested in, you could have out-performed gold by more than double.

Dietrich Hatlapa, 48, is the founder of the independent investment researchers HAGI (www.historicautogroup.com), who are based in London. He has said of the latest survey that they had discovered that classic cars were moving independently of any other area of investment, and this made them very attractive to both investors and collectors alike, especially in the present economic clime.

HAGI, founded in 2007, produces a series of indices charting the top levels of the classic car market. The HAGI Top Index, measuring the performance of 50 key collectible classic cars, advanced by 13.89% in 2011. However, another HAGI index calculation reveals a segment of the top market that has achieved amazing 21.65% growth in 2011. That’s the return offered by the HAGI Top with Ferrari and Porsche removed. (In 2011 the HAGI F Ferrari Index advanced 10.58%, while the HAGI P Porsche Index returned a more modest 4.53%, after strong growth in previous years.)

Hatlapa, a former investment banker, commented: “The figures demonstrate very clearly that this is not a uniform market; performance varies from marque to marque and from model to model. Choice and timing are key, and that’s what makes it so fascinating, applying a judgement call on a model or marque you consider is due for rotation.”

Hatlapa also highlighted five models that have outperformed the general market in 2011:

Bentley R-type Continental Fastback by HJ.Mulliner, 1952-55 (208 produced): fine examples trading at £400,000 at the start of 2011 were commanding £500,000-plus by year end.

BMW 507, 1956-59 (252 produced): £500,000 buys fine example at start 2011; now £750,000 for best cars.

Mercedes-Benz 300SL Roadster, 1956-63 (1858 produced): cars trading at £350,000-375,000 at start 2011 now selling at £475,000-500,000-plus.

Aston Martin DB5 saloon, 1963-65 (1063 produced): prices have advanced from £325,000 to £400,000-plus for fine examples.

Jaguar XJ220, 1992-94 (281 produced): was £140,000; now £180,000-plus for best.

In 2011 Hatlapa, a life-long classic car enthusiast, published a ground-breaking 350-page book, Better Than Gold: Investing in Historic Cars, a unique in-depth analysis and overview of the global classic market. For the first time Hatlapa quantified the capitalisation of the top sector of classic car market (cars worth more than £100,000) at £30 billion. In-depth historical research also revealed that this market sector, as measured by the HAGI Top Index, had increased by a factor of 30 in the 30 years from 1980 to 2010, returning a compound annual growth rate (CAGR) of more than 12.6%. Over the same period gold returned a CAGR of 2.17%.

Dave Selby, 52, senior analyst at HAGI, gave examples of specific transactions which illustrate the growth that has been achieved in the classic car sector. “A 1939 Mercedes-Benz 540K Cabriolet-A bought in October, 2007 for £660,000 subsequently sold in December, 2011 for £848,500 [Coys], giving a return of 28%,” he revealed.

Other examples cited by market watcher Selby are: George Harrison’s 1964 Aston Martin DB5 saloon, bought for £220,000 in October, 2007 and sold for £342,500 in December, 2011 (Coys); a return of 55% over four years.

A 1955 Aston Martin DB2/4 drop-head coupe bought at auction in 2003 for £58,700 made £227,000 when it came under the hammer again in May, 2011 (Bonhams); a return of 287%. This same car had also traded in September, 2009 for £181,900; its £227,000 realisation in May, 2011 represents a 25% price advance in well under two years.

However, while the figures are impressive Dietrich Hatlapa adds a note of caution: “Simply because a model, a marque, or indeed the overall market has performed well in the past, that does not mean it will continue to advance at the same rate in the future. Often there can be better opportunities among models that have perhaps underperformed and may therefore offer more up-side.

“This market is textured, multi-layered, highly segmented and also affected by changing tastes and fashions. However, long-term trends show that classic cars have historically provided a high degree of capital preservation, with attractive returns. Currently the market is undergoing a drive to quality and the advice has to be, buy the best in terms of history, condition, originality and provenance. Although the market experienced a dip in the second half of 2009, values for the best examples of the most desirable cars held firm.”

HAGI has a policy of not making public forecasts of potential future performance for individual models or marques, although the group does undertake bespoke research projects for individual and institutional clients.

Hatlapa concludes: “This sector has many attractions in this day and age: supply is broadly finite – they’re not making Bugatti Type 57SC Atalantes any more; the market is global; the asset class is uncorrelated with other investment classes; historic cars are a tangible asset with real asset characteristics, a highly sought-after feature since the financial crisis of 2007-09; once a model has become collectible it’s never become uncollectible. Plus, classic cars are fun to own and drive.”

30 percent of peoples disposable income is being spent on mortgage payments

Alan — Fri, 27 Jan 2012 18:01:25 +0000

It is estimated that around 30 percent of peoples disposable income is being spent on mortgage payments for those who have purchased a new home. This is the latest figure that gives an idea of what people are spending their disposable income on in the final quarter of 2011.

Mortgage payments are at their most affordable level for nearly 15 years and in the north of England and parts of Scotland mortgage payments are as low as 20 percent of peoples’ disposable income. This information has come from the Halifax. This is the lowest point since 1997 when it was estimated around 25 percent of a person’s income was being spent on the mortgage. It is a significantly better figure than the average over the last three decades which stands at about 37 percent.

The study also highlighted the difference between the repayment rates in the north and the south of the country indicating that there is a significant divide in England. London, particularly the district of Kensington and Chelsea was rated as the least affordable place to live where mortgage payments can be up to 80 percent of the persons disposable income.

The cheapest area to live was East Ayrshire in Scotland were only around 16 percent of disposable income is spent on a mortgage. Since the income peak of 2007 mortgage payments have reduced by nearly 50 percent. House prices as well as mortgage rates have also fallen and Scotland now sees the most affordable homes in the UK.

Northern Ireland, Humberside and Yorkshire are other areas where mortgage payments are more affordable than the national average, these three areas together have an average mortgage repayment of 20 percent of earnings. The south-east is one of the most expensive regions with repayment rates being over 30 percent of disposable income.

The Bank of England has said that with interest rates at an historic low, this means that mortgage deals are available cheaper than ever. Halifax have stated that the affordability of mortgages has helped prop up the housing market in a time when household budgets are being squeezed.

A housing economist from the Halifax is Martin Ellis who has commented, “Lower mortgage rates and a fall in the cost of housing has meant that more people are able to buy at house. Unfortunately the deposit is still very high but for those who can afford it this is a very good time to enter the housing market. The affordability of these mortgage rates are one of the reasons why housing demand has been so strong throughout 2011 despite the economy’s decline.”

Lending criteria is continually become tighter and lending conditions are becoming more strict. It is expected that banks are going to increase the number of mortgage products that they are offering, which is beneficial to consumers, but only those who are able to meet the stricter lending standards. Estate agents have also become concerned that the demand will begin to fall off when the stamp duty relief for first-time buyers ends in the spring.

TraderPlay teaches you Tricks of the Trade

Alan — Tue, 24 Jan 2012 14:17:22 +0000

TraderPlay has been developed by TraderPeople, and is the brainchild of Chris Hobcroft, Jonathan Rose and Chris Hobcroft, who between them have 15 years of experience in the technology and trading sectors. This new online game offers players real time and risk free access to the stock market and there are real cash prizes up for grabs.

This is a thrilling new online game, that is completely free to play, and brings the mysterious world off the stock market to the masses, and gives everyone a taste of what life is really like for those who spend their lives on the trading floor.

TraderPlay is a virtual game played in real time, and gives finance enthusiasts, aspiring traders and nosy novices, the chance to practice and hone their skills using the latest up to the minute accurate prices and data, without having to step away from their desks, and most importantly, they will part with none of their own money.

Players are awarded £1,000,000 (GBP) of virtual money and use this to enter live trading competitions where their profits and losses contribute to the overall leaderboard. Gamers are encouraged to challenge friends and contacts to go head-to-head using the website’s in-built Facebook app, and see who has triumphed when the markets close. For those that show a natural skill, there is even real money to be won – or potentially the opportunity to catch the eye of industry headhunters.

TraderPlay streams live financial market data, and offers players the chance to invest in a comprehensive choice of assets – foreign currency, equities and commodities. For those who are new to trading, it offers in-depth tutorials to educate and help players reach higher levels of achievement and game satisfaction.

TraderPlay is developed by TraderPeople, and is the brainchild of Jonathan Rose and Chris Hobcroft, both of whom have a combined 15 years’ experience in trading and technology sectors.

Commenting on the launch, Jonathan Rose, CEO of TraderPeople said:

“This is an exciting time for us. The launch of TraderPlay will boost our gaming credentials and allow us to really make our mark on the financial trading game scene.

“Financial markets have been historically viewed as inaccessible, with a perception that they are too complicated for the everyday person. Since the recession, trust in banking institutions, and the stock market has declined massively, and caused a negative impact on how the nation views the markets, and namely those who work them.

Perhaps the positive outcome here, is that people have started to question what exactly it all entails, and are more inclined to want to throw their own hat in the ring, and trading games are a perfect way to do this, risk-free.

“When looking at what else was out there, we saw only over simplified and boring alternatives, or those that didn’t reflect the reality of what was truly happening on the market. Worryingly, we also saw many ‘games’ that were merely sales tools for businesses, which actually called for users to take a punt on their own money.

“TraderPlay is a fast paced option and is extremely simple to engage with. Players can log on and place trades in a matter of minutes, and log off again. It’s clearly set up for players to be able to monitor their performance over the duration of the competition.

A big draw will obviously be the opportunity to win real cash prizes if they’re doing well, but within a few hours of using it, players really will begin to understand how the markets work, and make informed decisions as to where to invest their virtual money. If anything, TraderPlay offers the nation a chance to show the ‘overpaid’ traders how, if given the chance, there is no reason why the average person couldn’t make similar decisions based on information readily available.

“We’re delighted to launch TraderPlay and are confident our audiences will enjoy it as much as we’ve enjoyed creating it. We’ll be keeping an eye out for recurring names on the leader board – who knows, they could very well be the traders of the future!”

To start investing, risk-free, visit www.traderplay.com and see how you fare on the TraderPlay leaderboard.

MPs want to see a drop in car insurance premiums

Alan — Tue, 17 Jan 2012 16:10:56 +0000

Ever increasing premiums for motor insurance are pushing hard pressed motorists to their limits financially, but finally there may be a glimmer of light at the end of the tunnel. A committee of cross party MP’s are challenging the industry to try and get them to reduce their prices.

The committee has said that the prices of car cover have spiralled out of control due to the increasing volume of claims for whiplash injuries. It has accused lawyers and insurers of cashing in on the trauma of accident victims by charging fat fees simply for passing on their names to companies who specialise in claims.

MP Louise Ellman is the chairwoman of the Transport Committee, and she says that solicitors, insurers and claim companies are the ones who have driven up the costs of car insurance. She is demanding that these charges be made more transparent and that customers are given clear and concise information on the referral fees and who is benefitting from them.

This has inevitably led to a lot of finger pointing between the legal and insurance industries, with each trying to blame the other for the ever increasing prices. The CE of the Law Society, Desmond Hudson, says the it is the insurance industry that is fuelling the costs of accidents and then passing it on to their customers, and some companies are known to pay compensation to claimants without checking if they were actually injured.

John Spencer, the director of Spencers solicitors, has said that insurers are often making offers without asking for medical evidence. Their aim is to buy off claims before the injured party seeks independent advice and receives proper representation.

Used cars and consumer rights

Alan — Tue, 10 Jan 2012 13:12:21 +0000

The Bedford Borough Council Trading Standards Committee is asking motorists to be careful when they buy a used vehicle due to the fact that they may not be receiving all of their consumer rights. A new national campaign has been started by the OFT (Office of Fair Trading) to help address used car buying, due to the fact that they have seen an increase in complaints stemming from used car buying experiences.

According to the Campaign, the general public needs to be more aware of what they should have access to when they purchase a used car, including the fact that the car must be fit for use, be deemed satisfactory, and match the description in advertisements. If a car is not able to live up these standards then it is actually a faulty car and customers have the right to ask for a refund, repair, or replacement without paying anything additional.

If a vehicle is purchased online or over the phone they also are allotted a seven day period in which they are allowed to cancel their order with no questions asked. When a customer purchases direct from a private seller they have limited rights compared to at a car lot, but it still must match the description that the seller offers in order for the transaction to be legal.

The campaign advises that customers visit or call Consumer Direct before purchasing a used vehicle to make sure that they get exactly what they deserve for their money.

Ten Tips for Forex Traders

admin — Thu, 05 Jan 2012 13:28:51 +0000

Forex trading can be a difficult and complicated thing to manage – especially for newcomers. With a number of different factors which will influence the market, forex trading can be both a lucrative and difficult trade to master.

For those new to the game, here are ten tips to help you get off to the best start:

1. Learn the different platforms

Forex trading is not as clear cut as some people think and there are actually a number of different platforms across which this type of business can be conducted. Make sure you consider all of these carefully and choose the one which is best for you.

2. Look at how others trade

This will often be a good way for you to identify how traders react to certain changes and developments. Imitate the success of others by using social trading. These copy trader techniques are a good way to begin attaining success early on.

3. Do your research beforehand

Never enter the market blind but make sure you do your research before you begin trading. Understand exactly what forex trading is and what is involved and make sure you are fully prepared.

4. Use a professional service

These can help to advise you on the best course of action when it comes to your forex trading and is therefore a great way for you to get off to a positive start. Make sure that you use a service you can trust and consider giving them permission to trade on your behalf in certain situations. This will make the process far less disruptive and help you take advantage of the best rates when they are there.

5. Keep up to date on the news

Forex trading is heavily impacted by forex news and therefore keeping up to date with this is vital. Not only do you need to know what world leaders are saying and doing but you also need to keep an eye on stock markets and global events.

6. Act decisively

Speed and precision are integral for successful forex trading so you need to ensure you are able to act decisively. Often you will need to make fast decisions over your investments to attain success.

7. Be bold

As stated above, speed will often be of the essence so it is important that you are prepared to be bold with your decisions. This is one skill that cannot be taught but is vital for successful trading.

8. Identify the risks

It is important to remember that, as with all businesses and investments, risks will be involved. Identify these and make sure you are prepared for every outcome.

9. Look for patterns

Identifying patterns experienced on forex markets is the easiest way for you to learn how to stay ahead of the curve. Make sure you pay attention to how the market changes in certain situations and use this information to influence your later judgements.

10. Read guides

These are available in numerous forms and can be an invaluable resource to new traders. Make sure you read up on trading techniques and other aspects to do with forex trading before joining in on the action yourself.