This email was sent to Money Box subscribers on 21 January 2011

Dear Listener

The cost of compensating investors and others for financial shenanigans (my word!) will rise to £323 million in 2011/12. The Financial Services Compensation Scheme announced this week that it would take that amount in its annual levy from investment managers and IFAs to repay investors who lost money in 2010/11. Administration costs will take £7 million and the rest will go to customers.

 

Most of the money - £247 million – is to compensate customers of Keydata Investment Services, Lifemark. IFAs will have to pay a record £93 million of the levy – the most allowed under the FSCS’s complex rules. The £233 million balance will be paid by investment managers. More than 200 IFAs went to court to try to establish that they should not have to contribute towards these costs. But earlier this month Birmingham High Court threw their case out.

 

Many IFAs remain very angry that they have to foot the bill at all as they did not recommend the Lifemark products. Some also question why the compensation has been triggered as the fund is still trading and has some value. 

 

But that will not stop them having to foot the bill – and either pass the cost on to their customers or take lower profits.

 

***IN MONEY BOX THIS WEEK***

 

We lead with a story about VAT fraud. Not the guys who move stuff from country to country reclaiming VAT each time (carousel fraud) but small time VAT cheats who are not registered – or ‘between VAT numbers’ as one trader once told me – but who nevertheless add what is now a nice easy 20% on to the bill and pocket it. We explain how to check their bona fides (and their VAT registration!)

 

With inflation above expectations is now the time to fix your mortgage – yes [ ], no [ ], maybe [ ]. We find out which box to tick.

 

A major High Street bank (oh OK it was Barclays) is fined a record fine for retail banking of £7.7mn. In addition it will have to track down and pay out £60 million compensation to most of the 12,331 customers to whom it sold ‘balanced’ and ‘cautious’ funds that turned out to be one-sided and risky.

 

And still with banks (that’s a line from the script), are packaged current accounts good value for money at £12.99 a month for (mainly) loads of free insurance? – definitely [ ], sometimes [ ], never-in-a-million-years [ ].

 

Finally tum ti tum ti tum ti tuuum, tum ti tum ti tum tum… [repeat to taste] we investigate the Archers (or specifically the Pargetters and Inheritance Tax). Has Nigel really avoided it by using a trust….

 

Find out how you scored on our two questions by listening to Money Box, live on Saturday at 1204. Repeated Sunday at 9pm and listen any time via the podcast page www.bbc.co.uk/podcasts/series/moneybox Check out our website www.bbc.co.uk/moneybox to read web pieces, download transcripts, follow links, send us stories or ideas you want us to look into and Have Your Say on VAT fraud.

 

This newsletter is available at bbc.co.uk/moneybox/newsletter (tell your friends who don’t subscribe) and, as I mentioned, you can keep up with my random but timely thoughts on money 24 hours a day at twitter.com/paullewismoney.

 

On Wednesday Money Box Live will look at borrowing and debt with professionals from debt charities and a rate expert from MoneyFacts. What are the best – and worst – ways to borrow money? And what if you get into debt difficulty?   You can call the programme when lines open on Wednesday at 1330 GMT. The number to call is 03700 100 444.   Or you can send an e-mail through the website at www.bbc.co.uk/moneybox

 

 

Best wishes,

 

 

Paul

 

PS don’t forget the programme trail on Breakfast on BBC 1 between 0845 and 0900 on Saturday. And I am also due on Breakfast on Thursday at 0640ish and then answering viewers’ emails at 0810ish.

 

 

 

 


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