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FYI - In the news

City dwellers save with car share Car share clubs and service are attracting growing numbers of users, says the Sunday Times, as people realise just how much running a car costs. It compares the typical cost of a car share club at £1,500 a year against the cost of running a three-year-old second-hand car of £2,600 a year. For younger drivers, the high cost of annual motor insurance adds to the attractions. London lockout for first-time buyers Four out of five first-time buyers in London and the South-East cannot afford the typical new-build property, says the Mail. To be affordable even to 40% of buyers a new-build property would have to cost £250,000 or less compared with the typical London price of £435,000. The biggest reason for this is the chronic shortage of land released to build new homes on in this area. Affordability in London has worsened by 38.8% since 2007 compared with an average for England of 3.3%, as house prices have rocketed but wages have stagnated. Price comparison: its about profits. Simples! Many consumers believe price comparison websites are unbiased and run for their benefit, says the FT, and adds bluntly: they are deluded. Research by the Competition and Markets Authority found that consumers did not typically think price comparison websites were pushing any particular supplier or product, and often described them as “unbiased” or “there to help consumers” - but in fact these sites make money by charging a commission to suppliers’ energy companies, insurers or lenders when you switch or sign up via their platform. As the FT points out, the way the results of your search are presented can be biased by the commission deals they have. Moreover, a growing number of providers now refuse to be included in the searches. Do yourself a favour, says the FT, and at least use more than one comparison site if you are looking for the best deal. Business owners miss out on RBS compensation Royal Bank of Scotland, taken into public ownership after the financial crisis in 2008, has excluded thousands of small businesses from a £400m compensation scheme it set up in response to a long-running scandal over alleged mistreatment of customers, reports the Financial Times. Allegations that RBSs Global Restructuring Group mistreated 12,000 companies it was meant to help are being investigated by its regulator the FCA. It now appears that the banks compensation scheme may exclude 8,000 businesses that were included in the investigation into GRG that the FCA commissioned. Select Committee launches student loan enquiry The powerful Treasury Select Committee of Parliament is to launch an inquiry into student loans, reported the Financial Times. Former education minister Nicky Morgan now chairs the committee and will review the effects of changes in policy since 2009. One former education minister, now a member of the House of Lords, described these changes as like the ill-fated poll tax: “each bolted-on reform trying to make it more acceptable simply added to the costs and made it more baroque, and hastened the day when the whole system was going to collapse.” Dice loaded in favour of HMRC A mere 14% of cases taken to tax tribunals to taxpayers are decided in their favour, says the Financial Times, with the rest being decided in favour of HMRC. In a third of cases heard since 2009, the judgements included penalties for taxpayers, mostly on account of late filing of tax returns. Researchers say there is “very narrow scope” for challenging penalties imposed for failing to submit returns or pay tax on time. Heads they win, tails you lose When it comes to inflation, changing definitions means the government wins and you lose, says the Financial Times. The Retail Prices Index, which normally runs at a higher level than the Consumer Price Index, is used to benchmark things like train fares, alcohol taxes and student loan costs, but the newer CPI is used for most benefits and pensions. The costs of both students and retired peoples typical spending may be rising significantly faster than the CPI. Parents still missing out on free childcare Thousands of parents are still missing out on the 15 hours of extra free childcare promised by the government, says the Sunday Times. To be eligible for the full 30 hours, parents of 3-4 year-olds must work at least 16 hours a week and earn less than £100,000 each. But they also have to get a validation code and thousands are still trying to get one – and will not be able to claim for any childcare costs they have already incurred. Experts said there was a shortage of places made worse by a gap between what the government pays per hour and what childcare providers charge. Changing options in travel insurance The losses people incurred on the failure of Monarch Airlines are prompting changes in travel insurance, says the Times. Less than a third of policies cover such failures as standard, but more are offering it as an add-on. This cover is more valuable now that the costs of accommodation are often far greater than the cost of the flight. There are also new policies that enable you to top up the cover you have with your current travel insurance. Watch out for ruin risk with drawdown People using the pension freedoms to draw income from a pot of investments may be taking more risk than they realise, says the Telegraph. Citing research by actuaries, it said that in almost a third of cases people’s money could run out years before they died. This is because these drawdown strategies involve consuming some capital, and unlike annuities this exposes you to investment risk. With a typical balanced strategy, an annual return of 3.6% would see a 65-year-old man’s capital last until age 90 - but over a third of men now aged 65 are expected to live beyond that age. Experts advised covering essential spending with annuities or other income sources so that invested capital would last longer. Japan: on the up, and cheap Japans economy is on the up, says the Telegraph. It has recorded six consecutive quarters of economic growth and the stock market – which accounts for 9% of the value of all shares globally - has hit its highest level since 1996. Unemployment is virtually non-existent and companies, which used to be stingy with dividends, are increasing their profits and paying more out to shareholders. By comparison with the US and Europe, Japanese shares are cheap, so the market could march on upwards.

The above content should not be construed as advice – please contact us if you wish to discuss how your finances might be affected by any of the above.

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