FCA launches crackdown on rogue advisers

FCA launches crackdown on rogue advisers: Two-year campaign aims to stop investment scams and excessive fees

More than 100 financial advice firms are being investigated by the City watchdog as part of a sector-wide crackdown, figures revealed.

The Financial Conduct Authority (FCA) launched a two-year campaign to stop unsuitable advice, investment scams and excessive fees with a warning to firms earlier this year.

It was prompted by concerns that too many pensioners were being advised to move their cash out of gold-plated retirement schemes and into riskier investments.

Crackdown: The Financial Conduct Authority launched a two-year campaign to stop unsuitable advice, investment scams and excessive fees

Fears that desperate savers could be hoodwinked by rogue advisers have also escalated during the coronavirus crisis, which has caused turmoil on stockmarkets and draggged down returns on cash as interest rates have been cut.

And yesterday the FCA confirmed it is carrying out enforcement probes into 107 advice firms, underlining the scale of the crackdown. 

The FCA can launch these investigations if it suspects misconduct, wants to change regulatory permissions or wishes to check that a firm is acting properly. 

The blitz of investigations suggests the FCA is ramping up pressure on financial advisers.

Around 130 advice firms were investigated in the whole of 2019, whereas the figure for 2020 only covers up to last month. 

In a ‘Dear CEO’ letter to the sector in January, the watchdog said it was concerned about a growing number of cases where people received unsuitable advice and became victims of investment scams, firms not compensating customers for wrongdoing and customers being asked to pay excessive fees.

As a result, the FCA vowed a two-year crackdown which will see it focus attention on advice firms and encourage good practice.

Firms must repay £11m 

Two companies and three directors have been ordered to repay £10.7million to pensioners who were ‘induced’ to transfer their nest eggs into more risky DIY retirement funds.

Avacade Limited, Avacade Future Solutions AA, Craig Lummis, Lee Lummis and Raymond Fox were told to hand back the cash by a High Court judge. 

The Financial Conduct Authority said consumers were given unregulated investment advice and were given false or misleading statements. 

Avacade was told to repay £10million, Avacade AA £715,000, Craig Lummis £2.5million, Lee Lummis £2.5million and Fox £1.7million.

Residential landlords ‘cheating taxman out of £1.7bn’

Residential landlords ‘cheating taxman out of £1.7bn’ a year, think-tank says

  • That’s three times higher than £540m reported for 2010, Tax Watch said
  • Money is lost as many landlords fail to declare income on self-assessment forms

Tax evasion by residential landlords could be costing the Treasury up to £1.7billion a year, research by think-tank Tax Watch has found.

Its study discovered the tax dodging could be three times higher than the £540million reported for 2010 – the only year for which HM Revenue & Customs published figures showing the scale of the problem. 

Tax Watch says the revenue is being lost because many landlords fail to declare their income on self-assessment forms.

Tax Watch says true cost of lost tax is far higher than estimated

In 2013, the Government estimated that up to 1.5million landlords had underpaid or failed to declare rental income in 2010.

However, this related only to those who had been taxed on income from their main job through the pay-as-you-earn tax system.

Tax Watch says the majority of residential landlords are self-employed and do not pay PAYE tax. So the true cost of lost tax will be far higher than estimated, it says. ‘We know that tax evasion among self-employed landlords is rife,’ the report says. 

‘The £540million in unpaid tax is attributable to only a third of tenancies at most [so] the total tax gap is then likely to be as much as £1.7billion.’

The report cites research by the University of Warwick that found a quarter of landlords who filed self-assessment tax returns did not declare all of their income.

It was discovered that on average they failed to report 60 per cent of their property revenue.

Tax Watch says a possible solution could be the establishment of a UK-wide landlord database. 

Lebanese cash could flood to Britain as test court case looms

Lebanese cash could flood to Britain as test court case looms

A court case in London could trigger a huge flow of money out of Lebanon and into the UK.

Evidence has been filed in the High Court on behalf of Bilal Khalifeh, a British resident with Lebanese nationality, demanding that the $1.5million (£1.2million) he has in Blom Bank of Beirut be transferred to the UK.

Lebanese banks have imposed controls to stop cash flooding out of the crisis-hit nation. 

If the court case is successful the floodgates could open for claims in courts across the EU

The London hearing will be a test case to decide whether courts will order banks in Lebanon to dismantle these barriers.

If it is successful the floodgates could open for claims in courts across the EU.

Last week’s colossal explosions in Beirut’s port killed scores of people and made 300,000 homeless.

Khalifeh argues that he is entitled to have the funds sent anywhere in the world. Those living in the EU may bring claims in courts in their country of residence.

Blom Bank was unavailable for comment.

Jobless total is heading for 3m in worst slump since the 1980s

Jobless total is heading for 3m in worst slump since the 1980s – and that’s before furlough scheme is wound down

  • Official jobs data due on Tuesday is set to show unemployment hitting 3m
  • Up to 60,000 more people are believed to be claiming unemployment benefits 
  •  The Government’s furlough scheme will end completely on October 31

Unemployment will this week be shown surging towards the three million mark even before the furlough scheme is wound down.

Key figures due on Tuesday are expected to show employment levels heading for depths unseen since the 1980s.

Up to 60,000 more people are believed to be claiming unemployment benefits as job losses mount.

Economists say unemployment using both main measures is already shooting up

The Government’s furlough job retention scheme to help pay staff is being withdrawn and will end completely on October 31.

Economists say unemployment using both main measures – the claimant count and the Labour Force Survey – is already shooting up.

George Buckley, chief UK economist at Nomura, warned: ‘The current increase is the calm before the storm.

‘Not only is the job retention scheme going to end, but there are half a million people who say they are in work but are getting no wages. The danger is that they will end up in the unemployment figures.’

Peter Dixon, chief UK economist at Commerzbank, is forecasting a rise in the claimant count of between 55,000 and 60,000, taking the total to within a range of 2.65million to 2.66million.

Since the virus-related lockdown in March, this figure has soared by 112.2 per cent, or 1.4million.

The claimant count includes some low-paid people receiving in-work benefits, so it is an imperfect measure of unemployment.

Some economists prefer to rely on the Labour Force Survey measure, which will next week give the jobless total for the second quarter of the year.

This currently stands at 1.35million. The independent Office for Budget Responsibility forecasts it to average more than 10 per cent of the workforce next year, which would push up the total by about two million people, to 3.35million.

On Thursday, the Bank of England cut its unemployment forecast to 9% of the workforce

On Thursday, the Bank of England cut its unemployment forecast to 9% of the workforce

On Thursday, the Bank of England cut its unemployment forecast to 9 per cent of the workforce. That would be below the 12 per cent rate seen after the severe economic recession in the 1980s.

Dhaval Joshi, chief European strategist at BCA Research, said: ‘There has been a drip-drip of redundancies in those industries worst affected by the coronavirus – such as retail, airlines, tourism and hospitality – but the crunch point will come this autumn when the furlough scheme ends. That will open the floodgates.’

Figures for gross domestic product in the three months to June will be released on Wednesday. During the three months to May, GDP crashed by 19.1 per cent compared with the three months to April.

Consensus Economics, which compiles all the major forecasts of City institutions, said the average estimate is for GDP to fall by 9.2 per cent across 2020 as a whole and to recover by 5.9 per cent in 2021.

The EY ITEM Club, which uses the Treasury’s computer model of the economy, takes a gloomier view. Its summer forecast downgraded a previous prediction of minus eight per cent this year to one of 11.5 per cent.

The Bank of England now expects the economy to slump 9.5 per cent for 2020 as a whole, down from its previous estimate of 14 per cent.

Rare 50p coins featuring Olympic swimmers sell for £10,000

The rare 50p coins featuring Olympic swimmers that sell for £10,000

  • Some commemorative coins produced for the London 2012 Olympics are rare
  • The original accidentally incorporated wavy lines obscuring the swimmer’s face 
  • Only 600 were released before the mistake was spotted and the coin re-minted

Rare 50p coins featuring Olympic swimmers are selling for hundreds or even thousands of pounds online.

One sold for £410 last week and a similar version sold for £10,100 in June.

Some 29 sports featured on the commemorative coins produced for the London 2012 Olympics. But the original accidentally incorporated wavy lines obscuring the swimmer’s face (below). 

 

Valuable: The original accidentally incorporated wavy lines obscuring the swimmer’s face

Only 600 were released before the mistake was spotted and the coin re-minted.

Until the five-figure record price was reached on eBay in June, rare ‘wavy lines’ coins were selling for £800.

It is not the only 50p piece that attracts collectors – but many are perfect specimens.

In 2016, a set of Beatrix Potter coins was issued to mark 150 years since the author’s birth. A Peter Rabbit coin in this set has sold for £1,000.

Another sought-after 50p is the 2009 example with an image of the Kew Gardens pagoda, which changes hands for £200. Just 210,000 examples were made to commemorate the botanical gardens’ 250th anniversary.