Latest news with #FairerFinance
Daily Mail
10-05-2025
- Business
- Daily Mail
JEFF PRESTRIDGE: There's now an utterly compelling case for scrapping stamp duty on downsizers
Ensuring more of us have the means to enjoy later life devoid of financial struggle is the thrust of a new report by consumer group Fairer Finance. It's timely research which I trust attracts the attention of regulators and politicians. The report suggests ways in which people could be encouraged to access wealth tied up in their homes to boost income in retirement. Many homeowners have more wealth in bricks and mortar than they do in pensions, but do nothing with it. Sometimes as a result of not wanting to, but often because they can't. Without better prompting and incentives to utilise this idle housing wealth, Fairer Finance warns the country faces an impending 'later life crisis', with many entering retirement with insufficient income to fund a satisfactory standard of living. Property rich, income poor. It argues that if some of this property wealth were unlocked, it could boost the UK economy through extra consumer spending (Rachel from Accounts, take note). It would also enable more to live their later years in financial comfort rather than financial distress. James Daley, managing director of Fairer Finance, says there are too many 'social, economic and regulatory barriers' which stop housing wealth being part of the retirement planning conversation. He warns: 'If we're to head off a later life funding crisis, policymakers need to start taking action now to bring down these barriers.' The report comes up with numerous recommendations for helping release this equity. The first is to make downsizing easier for retirees to facilitate. A cut in stamp duty costs – even better, its scrapping – is recommended. This should be accompanied by building more retirement-friendly homes, providing downsizers with greater choice. These suggestions are music to the ears of Michael and Lynne Clare, from Swindon. In February last year, I spoke to Michael for an article on downsizing for Money Mail. They were desperate to downsize from the four-bedroom home they had lived in for 37 years. Yet premium prices for bungalows nearby meant a move did not make financial sense. A big impediment, too, was a likely stamp duty bill of £9,250. When I caught up with Michael on Friday, the 79-year-old former salesman for food giant Del Monte (affectionately known to friends as the Man from Del Monte) said their mission to downsize was 'ongoing'. 'A bungalow makes sense because of our age but few are on the market,' he said. Though downsizing means release of a five-figure sum of equity, this will be bitten into by stamp duty of £10,000-plus (rates are higher than 15 months ago), plus estate agent fees, conveyancing and moving costs. 'There are eight houses in our cul-de-sac and four are owned by people thinking of downsizing,' he added. 'But the system makes it difficult because of onerous stamp duty and a lack of suitable properties. I can't imagine Rachel from Accounts will be keen to cut stamp duty for elderly downsizers given the parlous state of UK finances.' Fairer Finance's report also calls for changes in the regulatory framework, allowing financial advice to be more holistic (based not just on financial assets but property wealth, too). Permitting this would enable financial experts to talk to retirees about ways property wealth can be unlocked through downsizing or loans such as retirement mortgages and equity release loans (far more customer-friendly than ten years ago). It also wants the government- backed Money & Pensions Service to embed housing wealth as a key part of its conversation with those who contact it for later life advice. The Equity Release Council, representing lenders, commissioned Fairer Finance's report although it had no influence on the editorial. I trust Rachel from Accounts gets a copy and acts on some of its ideas. It could help save her government, her job and the UK economy from rack and ruin. Don't bank on Barclays not axing branches Barclays' annual general meeting in London last Wednesday was a rumbustious affair as the bank's board attracted criticism on multiple fronts: branch closures, the company's share price and its dividend policy. To make matters worse, political activists also protested outside the meeting and disrupted proceedings once the AGM got underway. Some of the criticism directed at the board seemed a little misdirected given the bank's shares are up more than 40 per cent over the past year and annual dividends are tickling up quite nicely (8.4pence a share in 2024, compared to one penny a share in 2020). Yet opprobrium over the bank's demolition of its branch network was well justified. Data from consumer group Which? shows that over the past ten years, Barclays had led the way in closing branches – more than 1,200 of them. Although the bank has opened 'local' services in some towns impacted by its branch closures, these replacements are minimalist with cash transactions not permitted. In my hometown of Wokingham, for example, the 'local' – located in the community centre - is only open four days a week. Quite ridiculously, it shuts at lunch time which I thought would be its busiest time. Meanwhile, the former Barclays branch, shut in August 2023, remains unoccupied and a blot on the high street. I suppose, supporters of high street banking should take comfort from the assurance given at the AGM that the bank will be announcing no more branch closures this year or next. Yet this is like a football team selling its six best players and then telling fans no more players will be sold this season or next – with any new recruits being inferior to those they replaced. As Barclays confirmed to me on Friday, it has already stripped its branch network to the bone – just over 200 full-service branches now cling onto dear life. Come 2027, I would put money on these branch numbers getting another severe haircut.
Business Mayor
08-05-2025
- Business
- Business Mayor
UK regulator to dilute mortgage lending rules
Stay informed with free updates Simply sign up to the UK financial regulation myFT Digest — delivered directly to your inbox. The UK financial watchdog has announced plans to water down its rules on mortgage lending to make it faster and cheaper for people to get home loans, despite consumer groups warning of increased mis-selling risks. British lenders will be freed from having to provide formal advice or to carry out full affordability assessments when arranging mortgages for many customers, under plans outlined by the Financial Conduct Authority on Wednesday. 'We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage,' Emad Aladhal, the FCA's director of retail banking, said in a speech. The regulator said it would also scrap guidelines for lenders on dealing with interest-only mortgages and on telling customers what support is available when interest rates rise. It said these had achieved their aims and were not providing much benefit. The plans, which will chip away at rules designed to prevent a future financial crisis, are part of the FCA's response to prime minister Sir Keir Starmer's call for regulators to focus on promoting economic growth. 'These proposals can allow lenders greater scope to innovate and develop their own approaches to deliver good outcomes, and in doing so empower borrowers to make the right choices for their mortgage,' said Aladhal. Banks welcomed the announcement. 'The proposals should prove beneficial for those looking to remortgage or reduce their mortgage term,' said Charles Roe, director of mortgages at the UK Finance trade body. 'The changes will help drive the government's growth agenda in a way that benefits our members, and their mortgage customers.' However, there are fears the regulator is diluting consumer protections. 'The FCA will need to watch the market very carefully after these rules come into force to ensure they don't drive a return to the era of mis-selling or catalyse a new era of mis-buying,' said James Daley, head of consumer group Fairer Finance. Under the proposals, lenders would be allowed to do a lighter affordability assessment of a customer when offering to remortgage at a cheaper rate than their existing lender. Last year, 83 per cent of people who remortgaged stayed with their existing lender and the FCA said this reflected 'several barriers or transaction costs, both in time and money' when seeking a mortgage from a different provider. Lenders would be freed from having to conduct a full affordability assessment when customers are reducing the term of their mortgage. The FCA said 41 per cent of new mortgages last year extended beyond the state pension age of 67 and reducing the term would lower the risk of repayment problems 'later in life'. The regulator said it also aimed to make it easier for customers to arrange a mortgage without having to go through the formal process of receiving regulated advice, which includes the lender checking if a home loan is suitable. Recommended In the past two decades, 97 per cent of customers getting a new mortgage have received regulated advice from their lender. That is up from about 70 per cent before the FCA introduced stricter requirements in 2014 in response to the 2008 financial crisis. The FCA said its 2014 rule had restricted 'more than intended' the ability of consumers to opt out of advice when they knew the precise home loan they wanted and were confident of not needing the extra protection of having the suitability assessed. Its rules would not change for higher risk customers, such as those consolidating debt, exercising a statutory 'right to buy' their home, with shared equity arrangements or on lifetime mortgages. The regulator said it was able to dilute some requirements since introducing consumer duty rules two years ago that require firms to ensure customers get good outcomes. But it said there was a risk its proposals could mean people are 'more likely to choose an unsuitable or more expensive product'. Companies have until June 4 to respond to the consultation.
Telegraph
25-03-2025
- Business
- Telegraph
The heat pump trap that could invalidate your insurance
Homeowners are under pressure to dramatically cut their household emissions – but not only can the energy-saving changes cost thousands to install, you could also be lumbered with a pricier insurance premium as a result. These investments into your property don't come cheap. For instance, getting a heat pump installed can cost between £8,000 and £18,000, according to Checkatrade, while a typical solar panel system can set you back £7,500. However, if you want to insure your home in case something goes wrong, you could be faced with higher costs, or find that some of the kit won't be covered at all. Here, Telegraph Money explains what insurance exclusions you could face, and what net zero improvements could mean for your premium. Watch out for insurance exclusions As low carbon technology is a relatively new area for insurers, at present it is not always mentioned in policy documents. Generally speaking, solar panels are included as part of the buildings insurance, according to Compare the Market – but usually only if they have been professionally installed and used according to the manufacturer's instructions. This means your system would be covered for things such as fire or damage to these systems. That said, James Daley, from Fairer Finance, warns that some providers exclude cover for storm damage to solar panels from their buildings insurance. One such insurer is Hastings Direct; although its policy does cover the structure of your home should your solar panel system damage it. With this in mind, the age-old adage applies: always read the small print. You'll also need to pore carefully over the terms and conditions if you have home emergency cover. Policy wording can vary somewhat between providers; some cover heat pumps but not solar panels, while some make no mention of heat pumps, and so on. Mr Daley said: 'A host of insurers, including Esure and HSBC, have exclusions for claims relating to solar heating systems.' Given the cost of repairs to these systems can be expensive, it's perhaps no great surprise to find that some firms are excluding this. Mr Daley added: 'As home emergency policies tend to have fairly low cover limits, most won't pay out enough to cover the cost of damage, even if they don't explicitly exclude claims relating to solar panels.' So what does all this mean? In short, if you've made eco upgrades to your home, you'll need to add them to your list of things to watch out for when buying insurance cover. If someone mistakenly thinks they are covered when they aren't, this could leave them significantly out of pocket, should anything happen. There are fears this could deter some from making the switch to low carbon technology. How heat pumps work Bean Beanland, from the Heat Pump Federation, a lobbying group with members from all parts of the energy and built environment sector, said: 'Most people would imagine these systems to be covered, especially when they are standard products the Government is encouraging people to invest in and install in their homes.' Mr Beanland added that insurers who heavily promote their ESG (environmental, social and governance) credentials should include cover for all low-carbon technologies. Insurance prices could rise As more people look to add heat pumps and solar panels to their homes, we are likely to see more insurers moving updating their policies to include these items, and make clear what is and isn't covered. But this, in turn, could mean premiums go up – albeit by just a little, according to insurance experts. Mr Daley said: 'If you do end up getting a lot of expensive low carbon technology installed, this could increase [your property's] rebuild cost. I don't think it will necessarily increase cost enormously, but in some cases it could push your price up.' This view is shared by Ryan Clay, associate director of insurance services at SPF Private Clients. He said: 'Solar panels are usually included as part of the buildings insurance, provided the buildings sum insured takes them into account. Having such systems in place would therefore only have a small effect on the premium, depending on the cost to replace them, which will be fairly minor. Insurers do not seem to really rate them as too much of a risk.' That said, he points out that insurance premiums are, more generally, on the rise. 'Eco measures may have a minor effect, but premiums are unlikely to shoot up as a result. Increases are more likely to be down to other factors, such as higher building costs,' Mr Clay added. According to the latest figures from the Association of British Insurers (ABI), the annual average price of combined building and contents home insurance went up by £55 (16pc) to £395 in 2024, compared to 2023. The trade body attributed this to a combination of factors, such as surges in weather-related claims including 12 named storms in the 2023/2024 storm season - the most named storms since 2015/2016. The war in Ukraine, it added, along with rising energy prices, and supply chain uncertainty have all contributed to building costs going up. Heatpump installtions across Europe What about the risk of theft? Another issue which could potentially also translate into higher home insurance costs is the fact that heat pumps are located outside your home, and could therefore be at risk of getting stolen. Helen Rolph, of insurance comparison site said: 'If the net zero addition is external to the property, such as a heat pump, this could increase the risk of theft. An insurer will need to take this into account when analysing risk and calculating the premium.' In a bid to keep costs down, it makes sense to take precautions to boost security. Phil Nichols, head of home underwriting at insurer Policy Expert, said: 'Steps such as installing heat pumps out of sight wherever possible, or setting up home security cameras, can help mitigate the risk of theft.' Protecting an external device with a cage can also help. Be sure to keep your insurer informed If you do decide to go ahead with getting eco measures installed, you need to be aware that whenever you have any building work carried out, or when any major changes are made to your property, you're supposed to tell your insurer. Mr Nichols said: 'Existing customers looking to have equipment installed would need to notify us ahead of starting any work. This is a standard part of many home insurance policies. Notifying us allows us to alert customers to any Ts and Cs that might apply while work is taking place.' In practice, anecdotal evidence suggests there hasn't been a big influx of people disclosing their net zero additions, or asking to get their home insurance policies updated, potentially putting many people's homes at risk. Ryan Fulthorpe, home insurance expert at said: 'If you have any eco measures installed midway through an insurance term, you must inform your insurance provider. Failing to do so could lead to your home insurance being invalidated.' 2401 Generation mix for balanced net zero pathway Policies could change as low-carbon technology grows At present, most insurers don't ask whether a customer has solar panels or heat pumps. And insurers we've spoken to say they haven't seen much demand from homeowners for cover for such measures. 'With the growing requirement to convert to eco-energy, this may change,' said David Parker of A-Plan insurance. It might be the case that over time, it becomes increasingly common to find home insurance policies specifically geared towards protecting energy-saving kit. For now, at least, we can only watch and wait, and hope premiums don't rise too much in the meantime. Are air source heat pumps covered by home insurance? Air source heat pumps are cheaper to install than ground source heat pumps but may not be covered in your home insurance policy. This is due to a variety of reasons: Air source heat pumps are installed outside the home, making them more of a target for thieves and vulnerable to extreme weather. Air source heat pumps are expensive to replace with some insurers not covering the full replacement cost. Not all contractors will be able to repair air source heat pumps, which can lead to higher repair costs that some insurers won't want to be exposed to. Therefore, it makes sense to check your policy carefully. It may be worthwhile taking out a separate insurance policy if you own an air source heat pump.
Yahoo
25-03-2025
- Business
- Yahoo
The heat pump trap that could invalidate your insurance
Homeowners are under pressure to dramatically cut their household emissions – but not only can the energy-saving changes cost thousands to install, you could also be lumbered with a pricier insurance premium as a result. These investments into your property don't come cheap. For instance, getting a heat pump installed can cost between £8,000 and £18,000, according to Checkatrade, while a typical solar panel system can set you back £7,500. However, if you want to insure your home in case something goes wrong, you could be faced with higher costs, or find that some of the kit won't be covered at all. Here, Telegraph Money explains what insurance exclusions you could face, and what net zero improvements could mean for your premium. As low carbon technology is a relatively new area for insurers, at present it is not always mentioned in policy documents. Generally speaking, solar panels are included as part of the buildings insurance, according to Compare the Market – but usually only if they have been professionally installed and used according to the manufacturer's instructions. This means your system would be covered for things such as fire or damage to these systems. That said, James Daley, from Fairer Finance, warns that some providers exclude cover for storm damage to solar panels from their buildings insurance. One such insurer is Hastings Direct; although its policy does cover the structure of your home should your solar panel system damage it. With this in mind, the age-old adage applies: always read the small print. You'll also need to pore carefully over the terms and conditions if you have home emergency cover. Policy wording can vary somewhat between providers; some cover heat pumps but not solar panels, while some make no mention of heat pumps, and so on. Mr Daley said: 'A host of insurers, including Esure and HSBC, have exclusions for claims relating to solar heating systems.' Given the cost of repairs to these systems can be expensive, it's perhaps no great surprise to find that some firms are excluding this. Mr Daley added: 'As home emergency policies tend to have fairly low cover limits, most won't pay out enough to cover the cost of damage, even if they don't explicitly exclude claims relating to solar panels.' So what does all this mean? In short, if you've made eco upgrades to your home, you'll need to add them to your list of things to watch out for when buying insurance cover. If someone mistakenly thinks they are covered when they aren't, this could leave them significantly out of pocket, should anything happen. There are fears this could deter some from making the switch to low carbon technology. Bean Beanland, from the Heat Pump Federation, a lobbying group with members from all parts of the energy and built environment sector, said: 'Most people would imagine these systems to be covered, especially when they are standard products the Government is encouraging people to invest in and install in their homes.' Mr Beanland added that insurers who heavily promote their ESG (environmental, social and governance) credentials should include cover for all low-carbon technologies. As more people look to add heat pumps and solar panels to their homes, we are likely to see more insurers moving updating their policies to include these items, and make clear what is and isn't covered. But this, in turn, could mean premiums go up – albeit by just a little, according to insurance experts. Mr Daley said: 'If you do end up getting a lot of expensive low carbon technology installed, this could increase [your property's] rebuild cost. I don't think it will necessarily increase cost enormously, but in some cases it could push your price up.' This view is shared by Ryan Clay, associate director of insurance services at SPF Private Clients. He said: 'Solar panels are usually included as part of the buildings insurance, provided the buildings sum insured takes them into account. Having such systems in place would therefore only have a small effect on the premium, depending on the cost to replace them, which will be fairly minor. Insurers do not seem to really rate them as too much of a risk.' That said, he points out that insurance premiums are, more generally, on the rise. 'Eco measures may have a minor effect, but premiums are unlikely to shoot up as a result. Increases are more likely to be down to other factors, such as higher building costs,' Mr Clay added. According to the latest figures from the Association of British Insurers (ABI), the annual average price of combined building and contents home insurance went up by £55 (16pc) to £395 in 2024, compared to 2023. The trade body attributed this to a combination of factors, such as surges in weather-related claims including 12 named storms in the 2023/2024 storm season - the most named storms since 2015/2016. The war in Ukraine, it added, along with rising energy prices, and supply chain uncertainty have all contributed to building costs going up. Another issue which could potentially also translate into higher home insurance costs is the fact that heat pumps are located outside your home, and could therefore be at risk of getting stolen. Helen Rolph, of insurance comparison site said: 'If the net zero addition is external to the property, such as a heat pump, this could increase the risk of theft. An insurer will need to take this into account when analysing risk and calculating the premium.' In a bid to keep costs down, it makes sense to take precautions to boost security. Phil Nichols, head of home underwriting at insurer Policy Expert, said: 'Steps such as installing heat pumps out of sight wherever possible, or setting up home security cameras, can help mitigate the risk of theft.' Protecting an external device with a cage can also help. If you do decide to go ahead with getting eco measures installed, you need to be aware that whenever you have any building work carried out, or when any major changes are made to your property, you're supposed to tell your insurer. Mr Nichols said: 'Existing customers looking to have equipment installed would need to notify us ahead of starting any work. This is a standard part of many home insurance policies. Notifying us allows us to alert customers to any Ts and Cs that might apply while work is taking place.' In practice, anecdotal evidence suggests there hasn't been a big influx of people disclosing their net zero additions, or asking to get their home insurance policies updated, potentially putting many people's homes at risk. Ryan Fulthorpe, home insurance expert at said: 'If you have any eco measures installed midway through an insurance term, you must inform your insurance provider. Failing to do so could lead to your home insurance being invalidated.' At present, most insurers don't ask whether a customer has solar panels or heat pumps. And insurers we've spoken to say they haven't seen much demand from homeowners for cover for such measures. 'With the growing requirement to convert to eco-energy, this may change,' said David Parker of A-Plan insurance. It might be the case that over time, it becomes increasingly common to find home insurance policies specifically geared towards protecting energy-saving kit. For now, at least, we can only watch and wait, and hope premiums don't rise too much in the meantime. Air source heat pumps are cheaper to install than ground source heat pumps but may not be covered in your home insurance policy. This is due to a variety of reasons: Air source heat pumps are installed outside the home, making them more of a target for thieves and vulnerable to extreme weather. Air source heat pumps are expensive to replace with some insurers not covering the full replacement cost. Not all contractors will be able to repair air source heat pumps, which can lead to higher repair costs that some insurers won't want to be exposed to. Therefore, it makes sense to check your policy carefully. It may be worthwhile taking out a separate insurance policy if you own an air source heat pump. Broaden your horizons with award-winning British journalism. 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