Friday, 28 March 2014

FCA investigates itself

The Financial Conduct Authority says there will be an investigation into the way details of its inquiry into life insurance schemes were made public.

Shares in some of Britain's biggest financial institutions fell sharply in the wake of the announcement that it would look at whether some policies set up between the nineteen seventies and 2000 still represented good value for money.

This stockmarket episode started out with major criticism of insurance companies' charges for old pension and endowment policies and news that the Financial Conduct Authority would launch an inquiry.  It ended with a major embarrassment for the City watchdog itself -- with the authority being forced to launch an investigation into the way it had handled the announcement.

The authority had briefed the Daily Telegraph -- the resulting story suggested there would be action to give millions of savers a better deal, so share prices in insurers plummeted, some down 16 per cent at one point.

Furious insurance industry chiefs complained that a disorderly market had been created -- the Authority then published a statement saying talk about cutting the charges was overblown.

The investigation into the way the matter has been handled will in part be carried out by an external law firm.  It's the first  major setback for the authority since it started work last spring.

Friday, 14 March 2014

Working till you drop?

If you suffer from bad health in later years, then earning your living into ripe old age becomes a tricky proposition.

The government has accelerated the timetable for pushing up pension age, with a pension age of 68 now set to be implemented in the mid-2030s.

One thing that really matters is whether people are actually able to work that long. Figures today from the Office for National Statistics provide an insight into how serious the challenge might be for some people.

The stats show how the time you can expect to live in good health varies from place to to place - it's called healthy life expectancy.

Men in affluent areas can expect to live to 82.7 years, with 70.5 of those in good health.

But in deprived areas life expectancy is 73.4 years and healthy life expectancy is just 52.1 years.

Women live longer. The situation for women in affluent areas is that life expectancy is 85.7, with 71.5 years in good health.

But there is a wide gap in the most deprived areas: there women can expect to live to 78.9, but healthy life expectancy is only 52.5.

So a woman in a deprived area might live a long life but suffer 26 years of poor health.

Compare all those numbers to the path the government plans for pension age for both men and women: 66 in 2020, 67 in 2026-8, 68 in the mid-2030s.

After that 69 is likely to be introduced in the 2040s and 70 will come soon after that.

Does that make sense if people might struggle physically to continue in work?

Well, the whole point of the changes to pension age is cope with the consequences of life expectancy continuing to grow coming decades.

But clearly there is a need to improve the health of people in deprived areas to make it more likely that they can work longer and live to draw their pensions.

Tuesday, 4 March 2014

Service charges rip-off?

Housing associations and local authorities are to be included in an investigation into the service charges, sometimes thousands of pounds a year, which are imposed on home-owners with leasehold property.

The Office of Fair Trading is launching a market study into the charges, paid by 5 million leaseholders in England and Wales for maintenance of the shared areas of their building and for roof repairs.

It is acting on concerns about overcharging, commission paid by contractors to freeholders to win business and the lack of choice for leaseholders over who does repair work.

Since it gave warning of the investigation in December the OFT has received complaints that leaseholders with public sector landlords face just as many problems as those in the private sector - so the scope of the study is being expanded.