We often read about unattractive interest rates offered by banks, charges imposed by intermediaries or fees charged by asset managers.
It is no surprise, therefore, that
a growing number of people are saving or investing through alternative models such as peer-to-peer lending.
So is such criticism of traditional lenders fair, or are UK savers and investors actually getting a fair deal? The question was hotly debated at the CISI’s Annual Integrity Debate in London this month. A number of media commentators, meanwhile, have claimed that the deal savers and investors are getting is decidedly raw.
Poor return1.2%
The annual charge for storing gold and silver bullion coins with The Royal Mint
Consumer finance website Moneyfacts.co.uk found that out of 643 ‘non-ISA’ savings accounts on the UK market today, only 107 – one in six accounts – pay interest at or above the 1.88% rate required to keep pace with inflation.
The website also reports that there is only one regular savings account on the market that can match the 5% interest offered by the top-paying current account, which Sylvia Waycot, Editor at Moneyfacts.co.uk describes as “quite ludicrous”.
Waycot does note that ISAs “present a slightly better picture with 116 out of 224 offering rates that beat inflation”, but adds: ”Sadly, even these accounts are losing their sparkle as many providers have put little effort into attracting ISA money.”
Moneyfacts.co.uk comment
Million times better
The banking industry, however, gets a pat on the back at This is Money. The financial website reports that the Current Account Switch Service helped one million people change who they bank with between last October and the end of August this year.
This month marked the first anniversary of the free nationwide switching tool, which was launched by the Payments Council and adopted by UK banks and building societies. The service promises consumers a swift and safe move to a new bank account.
This is Money story
Hedge funds ‘face revolt’ over fees
Across the Atlantic, the ‘two and 20’ fee structure that has richly rewarded hedge fund managers over the years is under fresh attack from investment consultants, reports
Financial News.
Hedge funds have traditionally charged an annual fee of 2% of assets under management plus 20% of performance. But Damien Loveday, Global Head of Hedge Fund Research at Towers Watson, a leading global professional services company said: “We believe a better way of tackling fees is by assessing the skill managers offer to clients, rather than paying for market-based returns. ‘Two and 20’ should not be the norm.”
Loveday added that his clients were reluctant to pay more than one third of returns generated by managers’ skill (as opposed to market-related movements) – half of the current levels.
Financial News report (sign-up required)
Questioning the gold rushSavers and investors fed up with low interest rates might be interested to learn that The Royal Mint has launched an online system designed to make buying, storing and selling gold and silver bullion coins easier.
The new site,
royalmintbullion.com, provides live pricing information for gold and silver at a rate linked to the current precious metals price.
Once a customer sets up an account and purchases some coins, they will either be delivered to the person's home or stored on-site in a protected vault.
Critics, however, have voiced concerns that the price of having the coins stored by The Royal Mint – 1% plus VAT for a total of 1.2% annually – is exorbitant, reports
Money Observer magazine.
Laith Khalaf, Senior Analyst at investment platform Hargreaves Lansdown, said: “At an annual charge of 1.2% this looks like a pricey way to hold gold, when an exchange-traded fund can give you the same exposure for around a quarter of the annual cost.”
Money Observer story
Seen a blog, news story or discussion online that you think might interest CISI members? Email
lawrence.cohen@wardour.co.uk