Clampdown on market rigging

Key benchmarks in the financial markets, including significant foreign exchange rates, the London Gold Fixing and the price of Brent crude will be subjected to strict regulation from April next year.

The clampdown comes in the wake of the Libor scandal, over the attempted rigging of interbank interest rates.

The Chancellor has confirmed a list of 7 indicators -- in addition to Libor -- where manipulation will be formally banned.

Those found guilty of manipulating these benchmarks would face up to 7 years in prison.

The full list, recommended by the official Fair and Effective Markets Review in September includes:

*The WM/Reuters 4pm London Fix, which is the dominant global foreign exchange benchmark

*The Sterling Overnight Index Average (SONIA) and the Repurchase Overnight Index Average (RONIA), which both serve as reference rates for overnight index swaps;

*The ISDAFix, which is the principal global benchmark for swap rates and spreads for interest rate swap transactions;

*The London Gold Fixing and the LMBA Silver Price, which determine the price of gold and silver in the London market; and

*The ICE Brent index, which acts as the crude oil market's principal financial benchmark.

The financial watchdog, the FCA, will consult on the detail of the new rules over the next few weeks.

Pension charges over 3%

Independent body set up to look at high pension charges finds some pension savers in old schemes being charged more than 2% or even more than 3% a year.

Out of £67.5bn of pension savings looked at by the Independent Project Board set up by the Association of British Insurers in response to concern about high charges:

£42bn had charges under 1% a year

£25.8bn was exposed to over 1%

£13.4bn of that potentially exposed to over 1.5%

£8bn of that exposed to over 2%

And £0.9bn exposed to over 3% in annual charges.

http://www.fca.org.uk/static/documents/defined-contribution-workplace-pensions-ipb.pdf

The government is banning charges over 0.75% in NEW schemes from April next year.

How to get a Pensioner Bond

Pensioner Bonds are an exclusive investment for the over-65s with a rock solid government guarantee and market-beating rates of interest. But how can you get them?

When are Pensioner Bonds available?

They won’t be available until January and we won’t be told the exact day on which applications open until that day actually dawns.

For that reason, it’s a good idea to register on the National Savings & Investments website, if you haven’t already, to receive the information. Here is the link.

Which is the best way to apply?

When the day comes in January, you will have the choice of applying over the internet (via National Savings), by phone or by post.

There could be a rush to apply, so the postal method could take too long. Funnily enough, you would have to download the form or phone up for it in any case.

Many will opt for the internet, as long as the website doesn't freeze up, rather than risk being held on the phone for ages.

Which bonds should I buy?

You can put between £500 and £10,000 in a fixed rate 2.8% one year bond and between £500 and £10,000 in a 4% three year bond.

Obviously most people will have less than £20,000 to salt away and a large proportion will be investing less than £10,000.

If you are one of those and wondering which bond to choose, it is worth noting that the three year bond appears to pay a better rate of interest even if you cash it in after a year and pay the penalty of 90 days interest.

But both of them pay more than equivalent bonds from banks and building societies.

What do I need to have with me when I apply?

If you are applying over the internet or by phone, you will need to have your debit card handy. It has to have your name on it.

You will be asked to give your bank details and to enter your address.

They might send you a form by post for you to sign and confirm the application.

Applying by post, you would have to get hold of the form, fill it in and send it back with a cheque.

When will they take the money?

If you apply online or over the phone, the investment is deemed to have started on the same day, even if they ask you subsequently to complete a confirmation form by post.

You will receive confirmation by email or, if you choose, in a letter.

If you apply by post, the investment would start on the day the application is received, assuming in both cases that the bonds haven't been over-subscribed by that time.

When will I get my interest?

The interest is paid on maturity, in other words at the end of the investment term, or when you cash in the bond.

So it's a good way of salting money away for a decent rate of interest, but not much use if you are looking for an account which pays you interest every month.

Second wind for house prices?

The latest Halifax house price index shows price increase continuing to moderate last month, though a leading economic consultancy suggested the Chancellor's stamp duty reforms could give the market a "second wind".

Halifax reported that house prices rose by a relatively modest 0.4%, reversing a slight drop the previous month.

The annual rate of increase declined for the fourth consecutive month, to 8.2%.

However, Matthew Pointon, housing specialist at Capital Economics commented that yesterday's cut in stamp duty announced by the Chancellor would give house prices a boost over the next few months.

Although there would be no repeat of the surge in values seen over the past 18 months, he suggested prices would get a second wind.

He predicted that the direct impact would amount to less than 1 per cent, as buyers used the leeway provided by the typical gain of £4,500 to offer more.

But the indirect impact was likely to be larger as the reforms lifted confidence and cut costs.

Halifax expects further moderation in prices but issued a statement on the stamp duty changes saying, "The average homeowner will be financially better off under the new structure and the changes should encourage more movement in the housing market as transactional costs will be reduced for many".

Rabbits out of the hat

We all wonder what eye-catching give aways, reforms or consulations the Chancellor will put on show today.

Stamp Duty
One being mooted is a reform to Stamp Duty, whereby you'd pay a bit more on each extra portion of the purchase price of a home, replacing the current method of paying a higher rate on the whole purchase price each time the price goes over a threshold.
This change is already being brought in Scotland.

Pensioner Bonds
Special high interest bond for pensions, starting in January. Yes, we already know about them, but Osborne's likely to say more about the rates being offered.

Inheritance Tax
The Conservatives wanted to raise the threshold to £1m from £325,000. One for the Budget, maybe.

Personal Allowance increases.
Going to £10,500 in April, but perhaps we could be given detail about the stepped increases to the further goal of £12,500.

Pension Tax Relief
Lots of speculation recently about taking full tax relief from 40% taxpayers, taking them down to the standard 20% or something in between. And lots of warnings that a Tory Chancellor wouldn't do this. The lure is the billions of pounds that could be released to cover the Tories' promise of £7bn in tax cuts if they won the election.
A possible half way house would be to restrict the tax relief for 45% taxpayers.

Fuel Duty
Keep going with the freeze.

Peer to Peer lending
More about including this and Crowdfunding in tax-free Individual Savings Accounts. And more on promoting new Financial Technology. The Chancellor's very keen on cyber-banking and how the UK can be a leader.

That's a start, anyway.

Housing market cooling

Leading banks say that the cooling of the property market has continued in recent weeks.

The number of mortgages approved for house buyers was down 16% in October compared with last year, at just over 37,000, according to the British Bankers Association.

High house prices and tougher rules on mortgage applications appear to be holding buyers back.

Matthew Pointon of Capital Economics commented that the figures reflect a "sharp slowdown in housing demand", though a flurry of cheaper mortgage deals could revive interest.

The Halifax predicted that overall growth in house prices would slip to between 3 and 5 per cent next year, after peaking at 10 per cent in July.

However, the number of house sales is still on the up according to data from HM Revenue & Customs, which takes into account purchases for cash as well as mortgages.

HMRC reported on Friday that there were 114,000 transactions in October, a rise from 102,000 in the same month last year.

Your rights to stop tax officers grabbing cash from your account

This how HM Revenue & Customs explain ways you now be able to challenge their planned power to grab cash directly from bank accounts. 

Its what they call Direct Recovery of Debt and it only applies to people who they say have ignored 4 demands by letter or phone.

Direct Recovery of Debts – routes of appeal and opportunities to object to HMRC

Debtors will have several ways to challenge the use of DRD:

- Taxpayers already have appeal rights if they do not agree that the tax or tax credit debt due is correct. The exact process differs depending on the type of tax, but usually involves first requesting an internal review by HMRC. If the taxpayer does not agree with HMRC’s decision, they can appeal to an independent Tribunal. DRD will not affect these existing rights.

- Debtors who are considered for DRD will receive a guaranteed face-to-face visit from HMRC’s agents. Even those who have failed to respond to the numerous attempts to contact them  – by letter, telephone or SMS message – will again be made aware of their debt and have a further opportunity to discuss their case. This will confirm beyond doubt the identity of the taxpayer and that the debt is owed.

- Once DRD has been applied, debtors will have as a minimum 30 days before any money is transferred to HMRC. During this window, in which money is held in their account, the debtor can get in touch with HMRC directly and object to the use of DRD if they believe HMRC has made a mistake, or that removing the funds will cause undue hardship. HMRC will promptly carry out an internal review of their case. If there is clear evidence that DRD action will cause undue hardship, it will instruct the debtor’s bank to release an appropriate amount to the debtor.

- If the debtor still does not agree with HMRC’s decision, they will have a further right to appeal to a County Court on HMRC’s use of DRD or on the grounds of hardship.