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Review of 2013 finances

Happy New Year

Welcome to 2014, we hope that you had a festive Christmas and a happy New Year. 2013 was a challenging year for most when it came to balancing their finances with much happening in the economy to keep us on our toes. Here at we answered a wide range questions varying from finding mortgages for first time buyers to helping those who wanted the most from their savings or pensions. We also took on the road by visiting organisations and speaking with their employees on a one to one basis within their workplace. We offered them a free 30 minute financial health check, which reviewed their finances and gave them an opportunity to speak to a money advice specialist without leaving their office.

So what else happened in 2013?

Overall 2013 proved to be an unpredictable year. At the start of the year the financial industry welcomed the arrival of the Retail Distribution Review (RDR), which saw the commission payment structure for investment products change for Financial Advisers. Also the Financial Services Authority (FSA) was replaced by the Financial Conduct Authority and the Prudential Regulation Authority.

Another act that was passed in 2012 and then implemented at the start of 2013 was the EU gender directive. Also known as the ‘the European ruling on gender’ the act meant gender-based pricing could no longer be considered when calculating insurance rates. This hit financial products such as pension annuities and life insurance. The implications of the directive meant that many women lost out when it came to renewing insurance products.

Also in 2013…

We saw the well known high street retailers HMV, Blockbuster and Jessops struggle to compete within the market. Competition in the digital market from websites such as Amazon and further eroded sales of DVD’s and games in particular, which left companies such as HMV in debt to the tune of £220m.

The housing market continued to yo-yo

The cost of buying a house increased with home-buyers in the London area bucking the trends.
According to data from the Council of Mortgage Lenders (CML) first time buyers reached 5 year peak as approved mortgages for first time buyers was up by 50pc and the number of people buying their first home was at its highest level for five years.

However, second-time buyers struggled to move from their starter homes. Research conducted by the Post Office indicated that second-time buyers were experiencing significant barriers that prevented them from moving from their starter home into a second home.

The Step-Up Report, which involved research on more than 1,000 homeowners, revealed that the average age of a second-time home buyer had risen to 42. This is up from 35 in 2009.

The much anticipated ‘Help to Buy scheme’ which was announced in the Budget in April 2013 was launched three months earlier than planned. Help to Buy, a government initiative aimed at making buying a home more accessible for those with a smaller deposit, will allow people to take out a mortgage worth up to 95pc of the value of the property.

Saving didn’t get any easier

Savers still struggled with the average ISA interest rate hovering at around 3%.

Throughout 2013 there was much discussion about the Child Trust Funds (CTF) and the option to transfer the fund to a Junior ISA (JISA). Following on from repeated pressure to act and in a move which will set to make many parent investors happier, the Government announced on 23rd December 2013 that as of April 2015 parents will be allowed, if they wish to transfer their CTF to a Junior ISA.

Pensions continued to be hit hard

FCA launched Pension Annuity Probe, which saw an investigation into pension annuities after it was revealed that there are growing concerns British pensioners are not getting a fair deal in return for their pension fund when they retire.

As of 1st October we saw the biggest shake up of pensions with the introduction of ‘Auto-enrolment of Pensions’, which results in millions of workers being pushed into saving for their retirement. Automatic pension scheme came into play.

Energy becomes a real ‘hot potato’ topic!

Energy prices increase again! The cost of water and sewerage in the average UK household rose at an inflation-beating rate, by some 3.5pc with all of the major energy providers increasing their prices, some by a staggering 10pc!

Payday Loan companies come under scrutiny

Payday loan companies, who have seemed to have appeared out of nowhere in the past 12 months have attracted interest from all sides during 2013. They became popular since the economic downturn, and they have prospered hugely from consumers who are desperate for a short term cash solution. They also came under further and intense scrutiny from Advertising Regulators in relation to the way they share their data with other providers and explaining how interest is calculated to their borrowers.

In other news…

The Chancellor of the Exchequer, George Osborne delivered a “Budget for our aspiration nation” in April and he announced the new ‘Help to Buy’, a new scheme aimed giving the housing industry a boost and explained how economic recovery is “taking longer than anyone hoped”.

RBS and Natwest continued to embarrassingly experience several system failures, which left many of their customers without access to their much needed cash. On the other hand the banking industry underwent a major IT overhaul. Under a new initiative known as “7 day switching”, which came into play in September, allowed consumers to switch to an alternative provider with less fuss.

The UK Economy avoided triple-dip recession and George Osborne welcomed news that Britain's economy expanded by a stronger-than-expected 0.3% in the first quarter of 2013 boosted by the healthy performance from the services sector.

In September the government gave formal notice to the stock exchange to privatise the Royal Mail. In October Royal Mail shares were sold making Royal Mail worth £4.9billion, with shares jumping nearly 50pc their value. This left City bankers’ defending themselves against allegations from MP’s that the business was undervalued.

We also saw UK unemployment rate fall to its lowest level since 2009 with the number of people claiming Jobseeker's Allowance in November falling by 36,700 to 1.27 million.

Should any of the review stories affect you directly such as help with your mortgage or understanding your pension please get in touch.

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