Money Marketing’s Weekly Must-Reads: Top 10 Stories

Will Chancellor Reeves’ Budget deliver? And what’s in store for self-employed advisers? Find out in this week’s top stories:



State pension set for 4.1% rise next April

The state pension is expected to increase by 4.1% in April 2025 due to the triple lock formula. This means those on the full new state pension will receive £230.30 a week, while those on the basic state pension will get £176.45. The rise is based on average earnings growth (4.1%) exceeding both inflation (1.7%) and the 2.5% minimum. However, some pensioners may see a smaller increase due to a rule affecting pre-2016 pensions.

SJP hires Adam Higgs to help drive growth in protection

St James’s Place (SJP) has appointed Adam Higgs as its new head of protection. Higgs, formerly of Protection Guru, will focus on enhancing SJP’s protection offerings and driving growth. He will work with SJP advisers to ensure clients receive adequate protection, aiming to solidify SJP’s position in the protection market. Higgs brings extensive experience from his previous roles at Protection Guru, the FTRC, Foster Denovo, and Scottish Life.

FCA: ‘We’re not against small firms’

The FCA has denied claims it is forcing small advice firms out of the market through increased regulation. Nick Hulme, FCA head of advisers, wealth and pensions, emphasised the value of small firms and their crucial role in closing the advice gap. He acknowledged the challenges faced by smaller firms in meeting regulatory requirements, but highlighted the Consumer Duty as a way to ease this burden. Hulme stressed the FCA’s commitment to supporting all advice firms, regardless of size, and aims to foster collaboration to benefit consumers.

Removing IHT tax break on AIM stocks ‘might make it unfit for purpose’

There are concerns that Labour may scrap inheritance tax relief on AIM stocks in the upcoming budget. This could significantly impact the AIM market, which has already seen a decline in IPOs. Removing this tax break might deter investment in smaller companies, hindering economic growth. Critics argue that AIM is already struggling, with low liquidity and trading volumes, and suggest the government’s PISCES framework as a better alternative for private companies seeking funding.

Financial Life Planning hires Rebecca Tuck as ops director to drive growth

Financial Life Planning, founded by Kate Shaw, has appointed Rebecca Tuck as operations director to spearhead the firm’s expansion. Tuck aims to streamline internal processes and enhance the client experience before expanding the team. The firm, which champions a client-centric approach, is undergoing a rebrand to attract those who feel underserved by traditional financial planning, particularly Gen X women. They are actively seeking new employees who align with their values and client-focused ethos.

Attivo appoints former Schroders director as CEO

Attivo, a chartered independent lifestyle financial planning business, has appointed Jo French as its new CEO. French brings over 25 years of experience in financial services, having held senior roles at Schroders, Benchmark Capital, Pointon York and Embark Group. She will focus on operational improvements, client experience, and Attivo’s investment platform strategy. Stephen Harper will continue as chair, leading the overall business strategy.

Tim Sargisson: Small advice firms heading for extinction

The number of small advice firms is rapidly declining, according to Tim Sargisson, former chief executive of James Hay and Sandringham Financial Partners. He cites increased regulatory burdens, competition, and the rise of digital services as key factors. While niche markets and outsourcing offer potential solutions, they also carry risks. Sargisson predicts that small firms may ultimately disappear, mirroring the decline of traditional high street shops.

Investors’ ‘love affair’ with ESG continues to cool

Investor interest in ESG (environmental, social and governance) factors has fallen for the third consecutive year, according to the Association of Investment Companies. While almost half of investors still consider ESG, this is down from 66% in 2021. Concerns about greenwashing and performance remain, though governance is growing in importance. Older investors are less likely to consider ESG factors compared to their younger counterparts.

Greg Moss: Death of the small firm? Fat chance

Greg Moss, founder of Eleven.2 Financial Planning, challenges the idea that small advice firms are heading for extinction. He argues that small firms are still dominant in the advice market and offer advantages over larger firms, such as greater innovation and better client outcomes. While acknowledging the importance of technology, Moss emphasizes the value of personal interaction and client care, which he believes small firms are better equipped to provide. He also highlights the limitations of large firms, including bureaucratic processes and a focus on commoditised services. Moss concludes that small firms will continue to thrive as long as they prioritise client needs and relationships.

Industry gives final thoughts on FCA’s value for money framework proposals

The FCA’s proposed value for money framework for pension schemes, which closes for consultation today, has garnered mixed reactions from the industry. While broadly supportive of the aim to improve value for savers, concerns remain about potential market disruption, the complexity of the metrics, and the need for consistent application across different pension types. Some argue for a more nuanced approach that considers the diverse needs of the market and encourages innovation.

A MAJOR update has been issued to millions of customers affected by a supermarket bank takeover.

In February, Barclays agreed to purchase Tesco’s retail banking division, which included the acquisition of nearly 3,000 employees.

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Customers have now been informed that their services will officially be transferred and managed by Barclays from November 1.

This follows the regulator’s approval of the takeover yesterday.

Tesco Bank currently offers a range of personal banking and insurance products, including personal loans and credit cards, to over four million customers.

The supermarket bank will retain some of its insurance services, ATMs, travel money, and gift cards.

However, all other services, including credit cards and personal loans, will be transferred to Barclays next month.

Although Barclays will manage these services, they will continue to be marketed under the Tesco Bank name for now.

Tesco Bank stopped offering mortgages through its bank in 2019 after seven years.

It’s 23,000 mortgage loans were sold to Lloyds Banking Group, which Halifax is part of, for around £3.8billion.

Tesco Bank also offered current accounts, which were closed to all customers in November 2021.

Those affected by the switch to Barclays are not required to take any action before the switch, and there will be no changes to their services after it occurs.

WHAT IT MEANS FOR YOUR MONEY

In the short term, it is likely customers won’t notice much change.

Your credit card and personal loans will still be marketed under the Tesco Bank name, and you won’t need to request a new card or change how you’re repaying any debt.

Barclays has said that it will continue to operate the business under the Tesco Bank brand for at least 10 years as part of a “long-term, exclusive strategic partnership”.

While no staff will transfer to Barclays under the scheme, it is anticipated that “approximately 2,523 employees across the UK and India” will eventually move over to the banking giant.

Tesco Bank will continue to operate its insurance products, ATMs, travel money and gift cards under its own roof.

In the meantime, it’s always worth checking to see if you can get a better credit card or land deal elsewhere.

FIND THE BEST CREDIT CARD AND LOANS

To assess all the available cards and personal loans, visit price comparison websites like MoneySavingExpert’s Cheap Credit Club or Compare the Market.

These sites allow you to tailor the perks you’re looking for, whether it’s cashback, air miles, or other rewards.

You should always use an eligibility calculator before applying, that’s because every credit card application leaves a mark on your credit file and can affect your credit score.

Once you run your details through an eligibility calculator and you’ve been shown that you’re likely to be accepted, make a formal application.

To do this, you will need to provide your name, address and email address as well as details of your income so a provider can assess your eligibility.

You will also need to provide details of how much money you want to transfer to the new card, but you can often do this after you have been accepted.

If your application is approved, you will need to transfer the balances within a set period, usually around 60 or 90 days.

Your old balance will then be cleared and you can start making interest-free repayments on your new card.

OTHER BANKING NEWS

Tesco Bank isn’t the only supermarket bank to have been sold in recent months.

NatWest agreed to purchase Sainsbury’s Bank in June 2024.

This follows Sainsbury’s announcement in January that it would wind down its banking division to focus on its retail business.

NatWest said it expects the takeover to be completed by March 2025, and all customers will be moved over by the end of next year.

However, Sainsbury’s will retain some of its banking activities, including insurance and travel money.

Argos Financial Services is also not included in the deal.

Last summer Sainsbury’s Bank offloaded its £479million mortgage book to Co-op Bank.

Elsewhere, Britain’s largest building society announced that it had agreed to a £2.9billion deal to take over Virgin Money in March.

Under the plans, approved by regulators in October, the two companies will run as separate entities.

The Virgin Money brand will be retained for six years before being rebranded to Nationwide.

The move will create a combined group with around 24.5million customers, more than 25,000 staff and nearly 700 branches.

This will make the organisation the country’s second largest mortgage and savings group.

MARTIN Lewis has revealed two reasons why the “vast majority” on state pension won’t get the full £473 boost next year.

The state pension increases every year in a bid to keep up with rising costs, but not everyone sees their payments go up by the same amount.

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Under the triple lock, payments rise in line with whatever is highest out of: wages for May to July, 2.5% or September’s inflation figures.

This week the Office for National Statistics published revised figures of 4.1% for July’s wages. 

It also confirmed that September’s inflation rate fell to 1.7% – making wages the determining factor for the lock. 

The full new state pension will increase from £221.20 a week – £11,502 per year –  to £230.30 a week or £11,975 per year.

However, speaking on this week’s The Martin Lewis Podcast, the consumer expert revealed there are reasons millions will not get the full headline figure.

Martin said: “The figure you will see in most places quoted that state pensioners will see a rise of £475 a year, in practical terms that is an unrealistic figure for the vast majority of pensioners who will not see that rise.”

He then went on to explain that this is due to the figure relating to the full new state pension.

This pension came in in April 2016 and is a “totally new” type of pension for anyone who hits state pension age in or after that time.

Martin continued: “But if you look at the numbers, only one in four state pensioners get the new state pension, the rest are on the old state pension because they hit state pension age beforehand.

“The old state pension is less in its basic form than the new state pension, therefore a 4.1% rise in the old state pension is not as much so the vast majority of state pensioners won’t see £475 a year, they will see £363 a year as the full old state pension rise – it’s much smaller than is often quoted.”

The MoneySavingExpert then went on to explain that even those on the new style state pension can only get the full amount if they have the correct amount of qualifying years.

Under current rules, you need 35 “qualifying years” to get the full new state pension.

He said: “If you don’t have your ‘full’ qualifying years which millions don’t, especially many of the poorest – many of those who are eligible for pension credit – then you won’t get the full rise because it is a 4.1% rise on what you got and the £363 a year for the old state pension is if you’re on the ‘full’ old state pension.”

It’s important to bear this all in mind, Martin explained, pensioners need to have “realistic expectations” of what they can get.

He continued: “But also in the debate over winter fuel payment is what’s often quoted is the triple lock increase of £475.

“But only one in four state pensioners get the new state pension which is the higher amount and many of those won’t be on the ‘full’ state pension – so we need to be slightly careful, many people have come to me and said yeah but they get this triple lock of this much extra a year – but the vast majority of pensioners won’t get the full £475 which is what you will see quoted in many media outlets and many government communications.

“The vast majority of pensioners will see an uplift that is far less than that because the vast majority of state pensioners are on the old state pension and many don’t have the full state pension.”

Topping up your state pension

If you think you’re missing National Insurance years, the first thing to do is check your State Pension forecast.

You can check this as well as the State Pension age through the government’s new ‘Check your State Pension’ tool online at www.gov.uk/check-state-pension.

The tool is also available through the HMRC app, which you can download free on the Apple App Store and Google Play Store.

You might be able to buy back years.

But earning back the years isn’t free, so your voluntary contributions come at a price.

If you fill gaps between 2006/07 and 2015/16, you’ll pay the 2022/23 rates for contributions.

It is worth £15.85 a week, which means it costs £824.20 to buy one year of contributions.

As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year. 

Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.

Someone who was retired for 20 years would get back around £55,000 in total (before tax).

Anyone under 73 can make voluntary pension contributions, as it’s assumed everyone under this age will claim the new state pension.

If you’re below the state pension age, you can check your state pension forecast by visiting www.gov.uk/check-state-pension to determine if you’ll benefit from paying voluntary contributions.

You can also contact the Future Pension Centre by calling 0800 731 0175.

If you’ve reached state pension age, contact the Pension Service to find out if you’ll benefit from voluntary contributions.

You can contact this service in several different ways by visiting www.gov.uk/contact-pension-service.

You can usually pay voluntary contributions for the past six years.

The deadline is April 5 each year.

For example, you have until April 5, 2030, to compensate for gaps in the tax year 2023 to 2024.

The deadline has been extended for making voluntary contributions for the tax years 2016 to 2017 or 2017 to 2018. You now have until April 5, 2025, to pay.

Find out how to pay for your contributions by visiting www.gov.uk/pay-voluntary-class-3-national-insurance.

You could also be eligible for the top-up benefit Pension Credit if you’re 66 or older and your income is below £218.15 a week if you’re single or £332.95 as a couple or if you meet other criteria.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

The Financial Conduct Authority has made it clear its approach to enforcement is changing.

It says it’s a change to increase public confidence in financial services and will require cooperation and commitment across the industry “to stop market abuse, keep our markets clean and build trust. This is how we will attract talent to our sector, bring investment to our shores and grow our economy.”

Quite the challenge but one that is necessary.

After almost 40 years of experience in the industry, I fundamentally believe there is now a strong professionalism underpinning the provision of financial advice and wealth management.

However, there are some reoccurring themes I see which undermine this positivity, including the fact there are still a number of people who struggle to really grasp why the FCA felt a need to introduce Consumer Duty.

For example, one of my colleagues was recently speaking to a senior manager within a wealth firm that had been struggling with its annual suitability review function for its clients. Their timescales were under pressure, with a lack of sufficiently proactive and competent advisers motivated enough to undertake appropriate reviews in a timely manner.

The firm needed to act promptly, not wait to see if the FCA would intervene to address the issue.

Its operational function began to look at artificial intelligence (AI) solutions and, through robust research and a strong testing approach, developed a review solution that reduced the time per client suitability review from three hours to 75 minutes, including adviser time to provide a summary of any recommendations.

However, this led the firm to fall down on its fair value assessment undertaken ahead of July.

The assessment acknowledged the improved efficiency it had achieved and the use of the improved technological solution but it had not taken into account the reduced management/adviser time required to undertake each client review and whether that should have an economic impact on the fee the firm charged to the client for its ongoing services.

It could be the case that the lack of actual adviser time on reviewing the portfolio is compensated by increased time in client meetings or conversations both adviser and client find more beneficial. Increased efficiency doesn’t necessarily mean the cost for the service provided should be reduced.

But the critical aspect here is that there has to be consideration. There needs to be evidence of a rationale as to why the service is value for money, fair and that the client genuinely understands what they are paying for.

Sadly, based on what we see at times, the communication is often lacking or convoluted, and the client finds themselves struggling to really understand what they are getting in terms of service.

Simon Collins is managing director, regulatory, at Konexo, a division of Eversheds Sutherland

INHERITANCE tax and stamp duty are both set for a hike at this month’s “painful” Budget.

In a bid to fill a £40bn black hole in the public purse, Rachel Reeves is also eyeing up a raid on vape duties.

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Inheritance tax is currently charged at 40 per cent on the homes and cash of somebody who has died, if their belongings are worth £325,000 or more.

Currently only 4% of UK adults pay what has been dubbed the “death tax”.

But the amount they are charged could grow as Ms Reeves considers raising the inheritance tax headline rate – though it isn’t yet known by how much.

Meanwhile, house buyers will be charged up to £2,500 more in stamp duty from next year as the Chancellor ends a £2bn discount introduced by the Tories.

Ms Reeves will move the nil rate threshold back down to £125,000 from £250,00.

For first time buyers the the threshold for paying stamp duty will move from £450,000 to £300,000.

The move is set to save the Treasury £1.8bn.

In a major blow for e-smokers, Treasury mandarins are also looking to vapes as another possible product for a tax raid.

The Chancellor is also expected to slash £3bn from the welfare bill in the Budget – with £1.3bn of that coming from disability benefits.

The changes, first introduced by the Tories, will tighten access to sickness benefits through tough new rules under the Work Capability Assessment.

A spokesman for the Treasury said: “We do not comment on speculation around tax changes outside of fiscal events.”

The Chancellor submitted her final Budget plans to Britain’s economic watchdog, the Office for Budget Responsibility, earlier this week.

She also wants to build up a buffer to help keep the country better protected against economic shocks.

One close ally of the Chancellor said: “If we are having to raise taxes, we want to put the money into the people’s priorities.

“The NHS is the number one priority.”