The accepted wisdom in the City in recent decades has been that the Financial Conduct Authority (FCA) has deviated from its original purpose. Rather than regulating financial services in order to preserve the reputation and trustworthiness of legitimate businesses and safeguard investors from unfair or nefarious practices, its purpose has become to strangle them with red tape, raise the cost and effort of doing business and discourage investors from anything but an ultra-safe, low return investment.

Hence the death spiral of the London Stock Exchange, the pervasiveness of the belief that all businesses are out to rip-off their customers, the relentless net selling by ordinary investors of shares and investment funds, and the encouragement of mis-selling campaigns. The present government is assumed to be entirely on the side of those wishing to regulate the City and the investment world to death.

The message from Simon Walls, director of markets at the FCA, to investment company directors at their recent conference, was entirely the opposite. “Our objectives, to make markets work well, to secure an appropriate degree of investor protection and to advance market integrity, are deliberately vague so as to move with societal expectations,” he says. “We have set out a new five-year strategy, which has four rather than 23 components. It represents a shift in tone more than in regulations, though some of those are changing.”

That change in tone around investment culture emanates from the top. “The remit from the government”, says Walls, “is now very clear: we should trust in the structures we have in place for when things go wrong rather than try to prevent anything from going wrong in the first place.”

How to change investment culture

It was good to hear, too, that financial services are not seen as the enemy. “We are now clear that financial services are good for people and investing is a fundamental part of helping people navigate their lives,” says Walls. “An interpretation of consumer protection that means nothing can ever go wrong holds us back as a society. This applies to banking, insurance and asset management. With the shift from defined-benefit to defined-contribution pensions, we can’t afford to have people not saving. To achieve their goals, they need the power of compounded returns.”

Wall is very critical of the over-interpretation of rules. “There is a sense that the industry thinks that the FCA wants more than it does,” he says. “Everyone has risk and compliance people whose job depends on this space so we get calls for more prescriptive rules. We are trying to change that culture. The industry is asking to be nannied too much.” A lot of the kowtowing to overbearing rules is based more on myth than reality. The FCA does not, for example, require a statement that your capital is at risk in advertisements.

A lot of energy has been focused on regulation, but you also “need to get the message across about the importance of investment”, says Walls. He is particularly concerned about the results of a survey of 10,000 people that the FCA undertakes. “There are seven million people in the UK with more than £10,000 in cash, but no investments. Barclays calculates that this means there is £430 billion to £600 billion of cash uninvested. Too many people just don’t get investment. When we interview these people, 30% say they are afraid of scams and 29% say nobody has helped them get started. Just 9% get full financial advice.”

New rules next year on targeted support will relax the requirement for advisers to know everything about the individual when they give guidance. “Treating every single investor as a unique person was a bit much. There will always be a place for full financial advice, but we have to accept that 91% of people are unable to access it.”

One of the things potential investors are going to have to accept is that they could lose money as well as make it. You can’t have the upsides without the downsides. If equity markets dropped 25% this year, that doesn’t mean the message on investment should change. “We are 18 months into our change of tone, but attitudes will remain delicate until we have got through a full investment cycle. You can only test resilience to risk when bad things happen.”

Learning to love leverage

No change in investment culture can happen without healthy financial services, of course, and Walls is optimistic about the outlook for the industry in the UK. “London is unambiguously the world’s number two in financial services and there are a lot of areas where we are number one… But to get anything like the investment culture of the US, we need to fundamentally change people’s attitude to risk.”

We should learn to love leverage, for example. “I love the fact that investment companies are closed-ended (have fixed capital), which is fantastic for lots of areas, such as private equity, where there are problems related to liquidity mismatch for other types of funds. I like the use of gearing – if something is a good idea, I want a bit more of it for my money. Seeking great risk-adjusted returns needs to be the primary concern for investment companies, not regulation.”

Walls accepts that a full revival of the UK’s financial sector will require more than better regulation. “Tax comes up a lot in discussions but there is nothing I can do about that.” For that, investors will need patience.

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City regulators are proposing new rules on pension transfers amid growing concern that savers are losing out. The Financial Conduct Authority (FCA) wants to impose new requirements on pension providers to offer more detailed information when savers consider transferring from one defined-contribution pension scheme to another.

Until now, the FCA has been most concerned about protecting savers with defined-benefit schemes (where pension benefits in retirement are guaranteed), for whom a transfer to a defined-contribution scheme offering no guarantees almost never makes sense. However, the regulator now believes many savers arranging supposedly more straightforward defined-contribution schemes may also be losing out.

Consolidating multiple pension pots

The intervention reflects huge growth in the defined-contribution sector, especially since the introduction of the auto-enrolment workplace pensions system. Many savers now have several small pots of pension savings, built up as they have moved from one employer to another, as well as when saving outside of work. Consolidating these small pots by transferring all or most of them into a single pension arrangement can be a good option for savers, who get economies of scale in a larger fund as well as the ease of having to track fewer accounts.

However, the FCA’s research suggests most savers transferring pensions do not take independent financial advice, choosing a new provider for themselves rather than getting help to choose the best possible provider. “Few consumers who transfer consider factors such as fees and charges, investment choices, decumulation options or potential loss of guarantees or benefits,” the regulator warns. The cost of a misstep can be substantial, particularly given the wide range of charges made by different pension providers. The People’s Partnership found that a 30-year-old with average earnings who moves a £10,000 pot of savings away from a provider charging 0.4% a year to a rival levying 0.75% could end up with a final fund worth almost £33,000 less.

The not-for-profit financial-services business calculated that collectively, savers could eventually miss out on £1.7 billion owing to poorly informed transfers made over the year to June 2025 alone. Many savers also fail to identify benefits they are giving up and not replicating by moving provider, such as opportunities to retire at an earlier age or enhanced benefits for dependants. And some plans offer a much wider range of options when savers want to start drawing down income as they move into retirement. The FCA therefore plans to require providers to provide much more detailed information when a saver proposes to move a pensions pot to them, with data that enables more meaningful comparisons of the likely outcomes of the transfer, particularly in relation to charges. It believes the introduction of digital pension dashboards, through which savers will be able to see details of all their pension pots in a single online portal, will make it much easier for providers to offer useful information.

Experts are supportive of the proposals, but some had hoped the FCA would go further. In particular, the FCA has no plans to ban providers offering incentives to persuade savers to choose them, such as reduced upfront charges or even cashback benefits. Critics argue such incentives distort decision-making, blinding savers to the long-term impact of challenges such as higher charges.

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Nationwide has been fined £44 million over failings in its anti-money laundering systems between October 2016 and 2021 that allowed millions of pounds of fraudulent payments to be deposited into current accounts.

One of the most serious cases involved a customer who was able to receive £27.3 million in fraudulent Covid furlough payments over 13 months. The criminal deposited £26 million of this into their personal Nationwide current account over just eight days.

The fine is the largest penalty ever issued to Nationwide by the Financial Conduct Authority (FCA).

An investigation by the financial regulator found Nationwide had “ineffective systems” for performing due diligence and risk assessments on its customers and for correctly monitoring their transactions.

The FCA also found the building society was aware that some of its customers were using their personal current accounts for business activity – a breach of its own terms.

At the time, Nationwide did not offer business accounts and so did not have the correct processes in place to manage the financial crime risks that come with business activity.

It was therefore unable to effectively identify and manage money laundering risks among its customers with personal current accounts, while also not having an accurate picture of which of its customers presented a higher risk of financial crime.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Nationwide failed to get a proper grip of the financial crime risks lurking within its customer base. It took too long to address its flawed systems and weak controls, meaning red flags were missed with serious consequences.

“Building societies and banks have a key role in the fight against financial crime. Firms must remain vigilant in this fight.”

Nationwide fine reduced thanks to full cooperation

The watchdog says Nationwide cooperated fully with their investigation and that the building society has invested significantly in its financial crime processes since July 2021.

It added that the building society was initially set to be fined just under £63 million, but qualified for a 30% discount after it agreed to resolve the matter.

Since 2021, the FCA has imposed 13 fines, totalling just under £301 million, on banks for anti-money laundering systems and controls failings.

A spokesperson for Nationwide said: “Nationwide identified these issues, which relate to controls in place before July 2021, through its own reviews, and voluntarily brought them to the attention of the FCA. The Society cooperated fully with the FCA investigation, and we are sorry that our controls during the period fell below the high standards we expect.

“Since 2021, Nationwide has invested significantly in all aspects of its economic crime control framework in order to ensure our systems are robust.

“We do not believe that these controls issues caused financial loss to any of our customers and remain committed to preventing economic crime and protecting our customers and the wider UK economy from fraud.”

Millions of drivers who unknowingly signed up to unfair car finance agreements are finally in line for compensation after the Financial Conduct Authority (FCA) confirmed how much wronged drivers could get under a redress scheme.

But that is not the only reason the FCA made headlines this week. Their ban on the sale of crypto ETNs was lifted on 8 October, meaning investors can finally buy them via UK providers with products listed on a regulated exchange.

Some investors have more reasons to be cheerful too, as the price of gold passed $4,000 per troy-ounce for the first time in history.

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On 8 October, UK retail investors will once again be able to invest in Bitcoin exchange-traded notes (ETNs), which will be listed on the London Stock Exchange.

The UK financial regulator, the Financial Conduct Authority, banned them in 2020, saying that crypto assets cannot be reliably valued by retail consumers because “these assets have no reliable basis for valuation”.

It was also concerned about “the prevalence of financial crime, extreme volatility, inadequate understanding by retail consumers, and the lack of legitimate investment need.

These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products”.

This accurately described many crypto assets at the time, but I believe it was heavy-handed to include Bitcoin, along with the other major projects such as Ethereum.

Other countries have recognised this, and it is right that Britain should do the same.

In 2020, Bitcoin was emerging as an institutional asset, as it already had an active futures contract in the US.

Bitcoin exchange-traded funds, or ETFs, were launching in Switzerland, Germany, Brazil, Hong Kong, and Canada, and a US version was being discussed. (In Europe the ETFs are often called ETNs or ETPs, exchange-traded products.) The US ETFs were approved in January 2024.

They were a huge success, and the iShares Bitcoin Trust has grown into an $88 billion product, marking the most successful fund launch in BlackRock’s history. Two months later, the UK regulator revised its 2020 statement, saying that crypto ETNs could list in a new segment on the London Stock Exchange dedicated to professional investors only. It reiterated that crypto assets were “high risk and largely unregulated. Those who invest should be prepared to lose all their money”.

Then, as Bitcoin has enjoyed three years of relative calm, in June this year the Financial Conduct Authority (FCA) announced it would lift the ban on crypto ETNs for UK retail investors. “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”

Catching up with the world on Bitcoin

The FCA recognised that Bitcoin was thriving and that the UK had become an overly cautious outlier. London is a major financial centre, and banning innovative financial products, risky or otherwise, would ensure London’s long-term irrelevance.

A little regulation is a good thing, but too much will certainly kill you. Some of its concerns were legitimate, because many crypto assets are intrinsically worthless. But Bitcoin, along with some other important crypto projects, stand out from the crowd.

For example, crypto assets are volatile, but even in 2020, Bitcoin was much less so than the rest. Its 360-day volatility was in line with Marks & Spencer or Legal & General at the time, and today it is even lower.

Bitcoin has also inspired many innovations, such as the stablecoin, enabling cash transactions in real time over the internet, and non-fungible tokens, which pave the way for the tokenisation of real-world assets. There have also been bright ideas in decentralised finance (DEFI), new trading technologies, and perpetual futures contracts. Many of these ideas are finding their way into mainstream markets. I think the next generation will not differentiate between equities and crypto as they will essentially merge.

Yet still to this day, many ask what Bitcoin's purpose is, and what value does it represent? I think the answer is simple, and the clue lies in its high correlation with the technology sector. While many describe it as electronic gold, its price doesn’t behave like it. It correlates with technology stocks because it is a technology. It has become the de facto reserve asset of the internet.

When you consider how fast AI is growing, and that it operates 24/7, can traditional banking keep up? Bitcoin trades instantly and settles within minutes. It is a very liquid asset trading around $40 billion each day, which is not as much as gold’s $150 billion, but is more than the most liquid stocks in the world, and growing.

The history of crypto regulation in this country mirrors the development of the asset.

As Bitcoin has matured, the regulator has shifted its stance.

At the time of the ban on 6 October 2020, the price of Bitcoin was £8,189. Today it is £84,497. There must have been concerns that Bitcoin was extremely risky, because I cannot recall a case where investors have been prevented from buying a publicly traded asset before.

In UK regulatory circles, we should presume that Bitcoin was seen to be highly toxic. As the FCA is at pains to point out, Bitcoin might still lose you all of your money, but it is also recognised that it could do the opposite.

For those who are intrigued but wary, I have the solution. By holding the 21Shares Bitcoin and Gold ETP (Zurich: BOLD), you get the best of both worlds. It tracks the BOLD index, which I created five years ago. By regularly rebalancing, it adds value by taking profits from the stronger asset, and adding to the weaker, which also keeps a lid on risk. And by owning gold alongside Bitcoin, losing all of your money becomes impossible.

Charlie Morris is the CEO and founder of ByteTree. It offers investment research for private clients through the Multi-Asset Investor (bytetree.com/the-multiasset-investor), in addition to other research services.

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Currently, the best fixed rate cash ISAs can help you grow your tax-free savings and are returning up to 4.72% on your cash.

ISAs are some of the best savings vehicles you can use in the UK, as they allow for up to £20,000 of tax-free savings a year.

If you're seeking the best cash ISA with a fixed rate, we list the top options currently on the market. We look at how many ISAs you can have in another guide.

Best 1 year fixed rate cash ISAs

If you’re willing to lock away your money for one year without withdrawing any of it, you could grow your savings by up to 4.7%.

Best cash ISAs up to 18 months

If you are after an account that keeps your money growing for up to 18 months, you can earn up to 4.32% using one of the following savers.

Best 2 year cash ISAs

Two-year fixed rate ISAs are a good option for people who want to grow their money in the medium term without worrying about micro-managing their savings. Savers can earn up to 4.71%.

Best 3 year fixed rate ISAs

Savers who are willing to lock their cash away for three years can access interest rates of up to 4.66% by using one of the following savings accounts.

Best 4 year fixed rate ISAs

If you’re putting your money away for four years, you can earn up to 4% using one of the following accounts.

However, it is worth bearing in mind that if you are willing to keep your money in savings for an extra year, you can access a higher interest rate of 4.72%.

Best 5 year fixed rate ISAs

A five-year fixed-rate ISA is a good option for long-term savers who are trying to save towards a financial goal in the future.

The following accounts allow for up to 4.72% returns on your savings.

Increasing numbers of investors are being targeted by cryptocurrency scams, particularly on social media.

Lloyds Bank has revealed a 23% annual rise in customers reporting being scammed by fake cryptocurrency adverts.

The bank attributes much of this to a new wave of fake crypto adverts circulating on social media, targeting young victims. 

Fraudsters are trying to take advantage of increased interest in cryptocurrencies, especially after the Securities and Exchange Commission approved the first Bitcoin exchange traded funds for US investors, while values have hit record highs. 

Social media plays host to 66% of crypto scams, particularly on Instagram and Facebook, according to Lloyds research.

Victims lost £10,741 on average to crypto scams, which overtakes the loss on any other type of fraud - up from £7,010 in 2022. 

The rise comes as the cost of living continues to bite household finances, and more people are susceptible to ‘get rich quick’ promises, which scammers commonly use. 

“Often fraudsters will advertise investments in an asset that doesn’t exist or hasn’t yet been built, so don’t hand over your cash unless you’re 100% confident you’re being sold a genuine, bona fide investment,” says Laura Suter, head of personal finance at AJ Bell.

“Nothing is guaranteed when it comes to investments. If a company you’ve never heard of says it can deliver Guaranteed returns of any amount, don’t touch them with a barge pole.”

The cryptocurrency market has already been under a crackdown from the Financial Conduct Authority (FCA) since earlier this year.

Crypto trading firms have been forced to give first-time investors a ‘cooling-off period’ to ensure investors fully understand the risk. The FCA also banned advertised ‘refer a friend’ bonuses from 8 October.

“The government is pressing ahead with plans to regulate crypto in line with existing financial services, which should help to tighten up the sector,” adds Suter.

“Disturbances in the cryptoverse like the FTX scandal have heightened the global regulatory focus on crypto and the risks it might pose to consumers and financial stability, if left to its own devices.”

Knowing what a crypto scams look like can help you avoid them.

What do crypto scams look like?

There are two main ways to spot crypto scams, according to Lloyds. 

The illusion 

The fraudster will pose as an investment manager and tell you that they will invest your money on your behalf, promising huge returns. 

The scammer may show you a fake investment account showing funds that are already making a profit, but in reality, there is no genuine investment platform or cryptocurrency involved- the scammer is creating an illusion. 

It’s a tactic scammers use to trick you into thinking the investment is real, and you will make a huge return. Once they get as much money as they can out of you, they will simply disappear. 

The takeover

If you’re looking to open an account on a legitimate investment platform like Coinbase or Binance, fraudsters could jump on this opportunity to ‘help you.’

Scammers will either offer guidance in setting up your account or tell you they can set it up on your behalf. 

Once you have deposited your funds, scammers will trick you into giving your login details to them or giving them control of your digital wallet, which they can then use to control your invested money. 

Lloyds says crypto scams can come in other forms too, for example when you’re asked to pay for something with cryptocurrency. These can be common with romance and impersonation scams. 

Experts also warn that despite the scams, entering the crypto market is a risk in itself, and you should mentally prepare to lose all your money when trading crypto. 

Suter says: “Crypto is a highly volatile asset in a market which is lightly regulated, so investors must be willing to swallow a whole load of risk before diving in. Crypto poses multiple risks to consumers. Fraud and scams are rife, but even if you buy legitimate crypto, the most obvious risk is the potential for large losses.”

Myron Jobson, Senior Personal Finance Analyst at Interactive Investor recommends not to put all your eggs in one basket when it comes to crypto and to only allocate a small amount of your money.

“Cryptos remain a high-risk investment because of how much and how quickly their value can change unexpectedly,” he says.

“But, whatever your approach to risk, cryptos should only be a small proportion of a well-diversified portfolio.”

How to avoid crypto scams 

Sometimes, crypto scams might not be as obvious to spot, so try to spot finer issues first. 

Be wary of social media- First things first, question any investment-type post or message on social media, especially crypto-related. Fraudsters can easily spread fake adverts and message you directly. Look out for signs telling you that you are guaranteed a return on your investment that you won’t get anywhere else. And if you get a message out of the blue, it’s most likely a scam. 

Know the regulations- The FCA has regulated the crypto market to an extent, so know the rules before entering. ‘Refer a friend’ schemes are now banned, so any adverts like this are most likely scams. 

Since October 2023, crypto platforms wishing to market to UK customers have had to register with the FCA for anti-money laundering purposes. You can check if a platform has complied on the FCA's registered cryptoassets webpage.

Plus, the FCA has encouraged more firms to advertise warnings about the risk of losing money, so you can spot which adverts are genuine. Jobson adds: “Regulation of cryptoassets is developing at pace. Promotions targeting UK consumers now fall within the FCA’s remit. 

The government also plans to introduce laws for the crypto industry before Parliament by 2024. Progress is being made to protect consumers from fly by night fraudsters operating in the crypto space, but there is still a long way to go before a comprehensive regulatory framework for cryptos is in place.”

Never share your login- A legitimate investing platform will never ask you to share your own login details. So, if you get asked this, don’t give it away, as it’s probably a scam. And you should never transfer funds to another account that isn’t in your name, as at that point, you will have lost control of your money. 

Don’t use the cloud for back-up on security- When you access your crypto portfolio through an exchange or wallet, it requires you to log in with a password and a ‘seed phrase’ for an extra layer of security. As data stored in the cloud can easily be hacked, it’s a good idea to write down your login and any extra security information on a piece of paper and hide it safely within your home. You should stay away from storing confidential information on any device that is prone to being hacked.

Use the FCA website- Fraudsters can easily set up fake websites or social media accounts to imitate legitimate firms. To check if they are genuine, you can go onto the FCA website and find the contact details of the firm that has reached out to you. See if they match the site that you can see.  

Be vigilant- Avoid clicking on any social media pop-ups that are trying to lure you in by promising you a load of money. Similarly, if you receive any messages on social media regarding ‘quick rich’ schemes, see that as a red flag and ignore it. This will most likely be a fake social media account trying to scam you. Also, it’s a good idea to set up two-factor authentication where you can on apps and websites. That way, any hacker would need your phone or another device to authenticate your login. 

Investment platforms have been warned they need to demonstrate they are offering ‘fair value’ to customers with money in cash, following concerns that investors are being fobbed off with unacceptably low interest rates.

MoneyWeek recently revealed a number of platforms paying less than 2% to those with a cash balance on their investment account. 

The Financial Conduct Authority (FCA) has now written to the bosses of investment platforms, emphasising the need to prove that their customers are benefiting from ‘good outcomes’ ‒ including the interest paid on cash balances ‒ following the introduction of Consumer Duty rules over the summer.

So what does this mean for DIY investors? And what should you do if you believe your platform is underpaying.

Investment platforms under scrutiny

In a letter to the chief executives of investment platforms, which has also been published on the FCA website, the regulator emphasises some of the ‘key harms’ around platforms which have been identified and what it expects platforms to do about them.

It also pinpoints ‘emerging risks of harm’, with the interest paid on cash balances chief among them.

The FCA argued that where interest payments are accrued, these need to be considered as part of the ‘fair value’ assessments firms must undertake as a result of the Consumer Duty regulations.

It adds: “Our expectation is that firms deliver fair value to customers and support consumer understanding in line with the requirements of the Consumer Duty.”

Back in July the regulator wrote to investment platforms to quiz them on the sorts of interest rates being paid on customer cash, emphasising its desire to see people benefit from “better value across all of their financial products”.

The concern is that investors are unwittingly suffering from holding money in cash with investment platforms, compared with other accounts.

In the letter, the regulator makes clear that it will not hesitate to take action against platforms if it believes that customers are not receiving fair value.

Why do investment platforms have our cash?

There are all sorts of reasons why investment platforms might hold cash belonging to one of their customers.

Some investors like to deposit money with the platform as cash, before then opting to put it into a specific asset like a stock or investment fund.

In other cases the returns from an investment, such as the dividends or proceeds from an asset sale, are held in cash until the investor decides what they wish to do with them.

As a result, platforms are liable to be holding significant amounts of consumer cash at any one point, even if in each case it’s only for a relatively short period before it is reinvested or withdrawn.

How much interest are investment platforms paying on cash?

Research carried out by Moneyweek earlier this month made clear just how poor the rates of interest being paid on cash by investment platforms really is, with some paying less than 2%. AJ Bell pays 1.95%. One of the largest platforms, Hargreaves Lansdown pays just 2.75% for holdings of less than £10,000. 

While rates vary significantly between providers, some admitted to paying paltry returns ‒ in one case, no interest is paid at all.

Even the most generous rate from BestInvest at 4.35% lags behind the base rate itself.

Given this, investment platforms are now under pressure to justify those mediocre interest rates. 

If investors could enjoy better returns from mainstream easy access accounts, it becomes more challenging for platforms to explain why these customers should accept tiny rates while their money is held with the platform in cash.

Getting a better return from your money with investment platforms 

The FCA’s warnings to investment platforms highlight the importance of investors doing their due diligence when determining how to invest. 

While the priority for most investors will be finding a platform that offers access to their most desired assets, like particular funds, it’s also crucial to take into account other factors. 

That includes the fees and charges you’ll have to pay as a result of your investing activities, but also what sort of return you will get on the money you keep in cash with the platform, for however long that may be.

Checking whether your investment platform offers a savings service, where you can get a decent rate on your cash is a good start, but equally it’s useful to consider your longer-term plans. 

If you have a significant sum sitting in your platform account that you don’t intend to invest in the near future then you will be better off moving that cash into a dedicated savings account paying a more acceptable rate of interest.

Santander's 5.2% easy access rate mentioned in this article is now off the market. See our guide to best savings accounts for the latest offers on cash savings.

High street giant Santander has boosted the interest rate on its easy access savings account hitting a table-topping 5.2% - making it the best deal on offer by the bank in 14 years. 

Santander’s rate is now the closest to the Bank of England base rate of 5.25% - though it doesn't beat the rate of inflation, it is still a decent offer if you have cash savings that you may need to use in 12 months or less. 

Santander's rate hike follows as the competition in the savings market heats up and a warning from the Financial Conduct Authority that banks were not doing enough to give savers better rates. 

The FCA found only around 28% of large high-street banks pass interest rate rises onto easy-access savings accounts. 

Since the FCA crackdown, Nationwide, Chase and Starling are amongst some of the banks that have upped rates on their savings products.

Andrea Melville, Director of Current Accounts, Savings and Business Banking at Santander said: “We know now more than ever people want their money to go further and this account is one of the ways we are helping customers maximise their savings income.”

Here’s everything you need to know about Santander’s interest rate hike, how it compares to other accounts, and why savers will need to act fast to get it. 

This article may contain affiliate links – when you purchase through links on our site, we may earn a commission*

How much interest can I earn with Santander’s easy account? 

Santander’s easy access account means you can now earn a whopping 5.2% AER (variable) - this is the bank’s highest rate in 14 years. 

You can open the account with £1 and save up to £250,000 - but note, you will only be protected for up to £85,000 by the Financial Services compensation Scheme should the bank go bust. 

Interest is paid annually, and the rate drops to 5.08% AER if you choose to receive interest monthly. 

The introductory rate is applicable for 12 months and once the account matures after one year, your money is transferred to a Santander Everyday Saver or another account of your choice.

When the account reverts back to its original rate, it will drop to 2.5% AER.

Who can have the Santander 5.2% interest account?

The good news is Santander’s account is available to both new and existing customers and you do not have to have a current account to take advantage. 

If you are looking to open the account, you will need to act fast as this deal is only available until 17 September 2023, and could be withdrawn before that if there is high demand.

You can open the account online, on the Santander app, in branch or by phone. 

How does the Santander easy access account compare to the rest of the market? 

The Santander Easy Access Account limited edition tops the easy access table with its new 5.2% rate. As the account only requires £1 to open, it will be in high demand. 

If you miss the chance to open the Santander saver, here are some other easy-access accounts offering top returns, just below Santander: 

• Shawbrook Easy Access Account is offering 4.93% AER- open this account with £1,000, online
• Monument Bank Easy Access Saver is offering 4.85% AER- open with £25,000, on the app 
• Chip Instant Access Account is offering 4.84% AER*- open with just £1, on the app

There’s a good variety of easy-access savings accounts below Santander’s rate which can be opened from as low as £1 or up to £25,000.  

What other products has Santander hiked its rates on? 

Santander has also upped the rates on its fixed ISA accounts as of 4 September. 

• The Santander One year Fixed ISA has upped its rate from 4.15% to 5.05%
• Santander’s Two year fixed ISA was hiked its rate from 4.2% to 5.1%

Neither rate tops the ISA tables, as the top 1-Year Fixed ISA is offering 5.78% by Shawbrook. The top 2-year fixed ISA offered by Aldermore stands at 5.61%. 

If you are interested in putting your money away tax-free, check our best cash ISA guide for the top rates on the market.  

Bank of Baroda, the second largest public sector bank in India, is to close up shop in UK retail banking after 66 years of operating in the market.

The bank, which is regulated by the Financial Conduct Authority and is protected by the Financial Services Compensation Scheme, provides savings accounts and current accounts to the UK market, but has said it was now exiting the UK following a business strategy review. It will wind down Bank of Baroda UK's retail operations and close all savings and current accounts.

In a statement, the bank said the decision “reflects the group’s overall strategy to focus on those areas where it can make the greatest contribution” but said it is remains "committed to its long-standing presence in the UK through its wholesale banking branch".

The bank will complete what is known as ‘solvent wind down,’ meaning it will handle the closures of all its accounts itself. 

With savings accounts being one of its more popular offerings, here’s everything you need to know if you hold money with Bank of Baroda UK.

When is Bank of Baroda closing in the UK? The dates to note

For savings and current account holders

You have until 12 January 2024 to take your money out and transfer it to another bank. You must transfer your money out by then or you may find it difficult to access your cash after this date. Existing UK customers should have received a notice of termination - if you have an account but have not yet had this notice, email the bank as soon as possible on customercare.uksub@bankofbaroda.com.

For dormant accounts

If you have a dormant or inactive account, Bank of Baroda will be closing these accounts on 12 September. If you have money in an account not used for a while, you should look to get in touch with the bank as soon as possible.

Fixed term accounts

If you have a fixed term account, you can choose to leave your money with the bank until the account matures - so, you don't have to close the account. But you should let the bank know at least 14 days in advance where you would like to transfer the money once that account reaches maturity. 

How do I close my account?

You can close your account with Bank of Baroda by filling out a account closure form. It requires your personal and bank details, plus your customer ID. 

The form can be submitted to the bank via email, post or in one of its 10 UK branches based in London, Manchester, Birmingham and Leicester. 

If you are submitting the form in a branch, you will need to take ID with you, for example your passport or UK driving licence. 

The bank is offering a ‘goodwill’ payment of £25 for anyone who closes their account before 12 January 2024.

How can I get in touch with Bank of Baroda?

If you have any issues or concerns, you can contact the bank directly on 0333 155 3333 or email them on customercare.uksub@bankofbaroda.com. 

What can I do if I am having problems accessing my cash at Bank of Baroda UK?

If you have not used your account for a while or your personal details have changed (such as your address) you may find it takes longer to get your cash, so it is important you act fast to avoid any delays. The bank does not operate online and some processes may take longer.

If you miss the deadlines or are unable to get your money, you can contact the Financial Ombudsman to complain. 

Where to transfer your savings

Bank of Baroda’s savings accounts often hit best buy tables in the past which is why it has been popular with UK savers - but while this was the case some 10 years ago, it does not offer competitive rates anymore .

The base rate has gone up for the 14th consecutive time to 5.25% and the latest rate advertised for Bank of Baroda was 0.25%, so taking your savings out as soon as possible makes sense.

MoneyWeek has been tracking the savings market and here is a round up of other savings accounts and what interest you can earn. 

Easy access savings

Theses are the top easy-access savings accounts on the market right now: 

• Beehive Money Bonus Saver -  4.9% AER. Open with £1,000.
• Chip Instant Access Account -  4.84% AER. Open with £1.
• Shawbrook Easy Access Account - 4.83% AER. Open with £1,000.

One year fixed savings

This is what’s on offer right now for the best one-year fixed savings accounts. 

• SmartSave 1 Year Fixed Rate Saver - 6.01% AER. Open with £10,000.
• United Trust Bank 1 Year Fixed Bond -  6% AER. Open with £5,000.
• Charter Savings Bank 1 Year Fixed Bond -  6% AER. Open with £5,000. 

You can also keep up-to-date with the latest rates on savings by signing up for our newsletter. 

Tickets are now on sale for our annual investment conference, the MoneyWeek Summit on 29.09.2023 in London. Book now  at www.moneyweeksummit.com.

Book before 10pm on 8th September 2023 to benefit from our End Of Summer Offer: MoneyWeek subscribers can book 2 tickets for £399 (normally £499). Not a subscriber? Get £80 off standard tickets using code: DISCOUNT80.

Influencers who talk about money - known as finfluencers - are increasingly growing with social media flooded with them, dishing out ‘financial advice’. But are they sending you down the right path? Often with little knowledge or understanding of the products and services they are promoting, are regulators doing enough to protect consumers?

For those of you who do not know what a finfluencer is - it’s essentially an influencer who talks about money. If you have young adult children or grandchildren, the chances are they are following one of them.

No bad thing you could argue; financial education has been somewhat lacking, so why shouldn't an influencer fill the gap?

But it’s become somewhat problematic. In recent years, we’ve seen influencers giving out wrong information, poor advice and even leading their loyal followers down the wrong path.

Often paid to promote a product, they do so with minimum knowledge and research around what it actually does.  

We’ve all seen it - invest in crypto and be rich, buy this stock, or stop paying into a pension because the government will steal your money,  the list goes on.

Celebrities too have jumped on board to exert their influence over financial products. Kim Kardashian has shared her ‘tips’ on buying crypto and love Islander are also bombarded with opportunities to promote products and have unknowingly led their followers into high risk get rich schemes.

Some influencers appear genuine - but it just takes a little research to find out how genuine they may be. I’ve seen some finfluencers talk about saving and budgeting, but also aggressively push matched betting links. 

I should stress, there are some doing an excellent job, but as their following grows, it’s important they are educated and understand the risks they expose their followers to.

After all, this isn’t about buying the latest mascara - people can lose all their money, fall for scam or get into deep debt by following the wrong information. 

FCA cracks down on finfluncers

It comes as no surprise to see the Financial Conduct Authority step up its actions against these influencers.

The FCA says that 58% of the under 40s who’ve invested in high-risk products like cryptocurrency were influenced by social media hype. 

As Sarah Pritchard, executive director at FCA, markets, says: “We’ve seen more cases of influencers touting products that they shouldn’t be. They are often doing this without knowledge of the rules and without understanding of the harm they could cause their followers.”

The FCA has teamed with the Advertising Standards Authority to warn finfluencers that some financial promotions could be a criminal offence and aims to provide them with clear guidelines to follow which they should check before agreeing to promote products.

Whether this is enough though remains to be seen as the number of influencers and celebrities grow and financial education remains low.

Nationwide, Santander and HSBC are among the larger banks and building societies that have hiked the rates on their savings accounts throughout August. 

This follows the Bank of England upping the base rate to 5.25%,- the 14th consecutive rise.

The push for better savings rates comes from the regulator Financial Conduct Authority (FCA) that found the largest savings providers had only passed 28% of interest rate rises onto their easy-access accounts. Savers with one-year fixed savings accounts fared better – around half of the rate increases were passed on. 

As a result, the FCA will review the savings rates that banks are offering every time there is a base rate change and prompt them to increase their rates. The FCA has warned that "robust action" will be taken against banking giants if rates do not get passed on. 

Some smaller providers have followed suit and raised their savings rates, with Chase and Starling increasing the offering on their savings accounts. 

Here’s a full round-up of all the providers, big and small, that have recently upped their savings rates and how they compare to the rest of the market. 

This article may contain affiliate links – when you purchase through links on our site, we may earn a commission*

Savings rates changes – large savings providers

If you’re looking for a good return on your savings, these are the banks that have hiked their rates on their easy access and one-year fixed products.  

• HSBC - new savings rates are live. There's no rate change on their one-year fixed bond. 
• Lloyds - New rates are live. 
• Nationwide - is offering the most attractive increase on its saving products, with a 0.75% hike on its One-year Triple Access Online Saver. The large building society will hike its rates for the fifth time this year on various savings products between 16 August and 1 September. 
• Santander has responded to the base rate hike by raising only two of its savings products this time, on its Good for Life ISA and Rate for Life savings account. The new rates are live. There's no rate change on their one-year fixed bond. 
• Barclays told MoneyWeek that they plan to raise rates on a variety of its saving products, including fixed bonds and ISAs between 15 August and 1 September. But no details have been given on new rates.

One takeaway from this round-up is that all five banks have raised or will raise the rate on their easy access savings offering. But there’s a catch. Natwest and Lloyds are offering different rates depending on your balance. 

Although rates go up to 3.3% with the Natwest Instant Saver, that’s only if you save more than £250,000. If your bank balance is less than £24,999, the rate drops to 1.75%, which only equates to a third of the Bank of England’s base rate. 

Savings rates changes – smaller savings providers

Here’s what some of the smaller bank providers are doing with their easy access and one-year fixed savings accounts. 

• Starling Bank - has hiked the rate on its one-year fixed savings account from 3.25% AER to 5.25% AER 
• Chase - the rate for Chase's easy-access savings account has increased from 4.07% AER to 4.1% AER
• Shawbrook Bank - has upped the rate of its easy access savings account to 4.93% AER and its easy access ISA to 4.43% AER
• Paragon Bank -  the new double easy-access account (which is limited to two withdrawals per year) is now 4.75% AER. If a third withdrawal is made, the rate drops to 1.5%.

It’s evident that the smaller banks are offering much better rates on their savings products compared to larger banks, with the best savings rates averaging around 4% to 5%.

How do the latest bank rate hikes compare to the rest of the market?

While the recent rate increases from banks are welcome, how do their savings accounts compare to savings rates overall? 

Easy-access savings top rates

• At the time of writing, Shawbrook's easy access account has a top rate of 4.93% AER. it can be opened with a £1,000 deposit. 
• If you’re on the search for an even lower starting deposit, you can start saving in the Chip Instant Access account* with just £1. With that account, you can earn 4.84% AER on your savings, plus unlimited withdrawals.
• Monument Bank's easy-access savings account is offering a return of 4.81% AER. But, to get that rate you'll need a minimum deposit of £250,000.

One-year fixed savings accounts

If you're willing to lock your money away for a year, the best one-year fixed savings accounts are offering rates on the 6% mark.

• Investec Bank tops the table with 6% AER but the account requires a hefty minimum deposit of £5,000
• Kent Reliance is offering a rate of 5.98% AER on its one-year bond, and you can open the account with £1,000
• Charter Savings Bank also lets you earn 5.98% AER on your savings, but the account requires a minimum deposit of £5,000

The big advice when it comes to bagging a good rate with a smaller bank is, their rates change daily. So you have to act quickly if you like the look of one. 

If you’re keen on stashing your cash away tax-free, it's worth considering a fixed-rate ISA which is offering similar rates. 

The Financial Conduct Authority (FCA) is cracking down on savings providers that aren’t passing rising interest rates onto customers following new consumer duty rules which came into play today. 

The FCA met with some of the country’s biggest lenders early July to tell them to speed up savings rates increases. But it has now announced providers will have to prove they’re offering “fair value”, otherwise it will take “robust action” by the end of 2023. 

The regulator announced a 14-point action plan to ensure savings rates are being passed on appropriately. The Bank of England’s base rate is currently 5%, which should in theory mean higher savings rates. 

But the rates on most products remain paltry, especially when compared to the rapidly rising rates on mortgages. 

Here’s what the FCA announced, and how it could affect your savings. 

FCA cracks down on poor savings rates

The FCA found the largest lenders have passed only 28% of the base rate increases on to easy access accounts. As for fixed savings accounts, banks have passed on about 51% of rate increases. 

“Given how people have seen interest rates on their mortgages, credit cards and loans soar, this is grossly unfair,” says Helen Morrissey, head of retirement analysis at Hargreaves Lansdown. 

As part of its action plan the FCA will review the timing of firms’ savings rate changes each time there is a base rate change, as this is when providers should be upping their rates. 

The Bank of England is expected to hike interest rates at least twice more this year, meaning lenders should be revising their rates regularly. 

The FCA will also publish an analysis every six months of firms’ easy access savings rates, looking at the difference between on and off-sale savings deals. 

“Banks have been slow to increase rates on cash savings -particularly those in easy access accounts and we’ve seen a gulf emerge in the market between smaller firms offering better rates than their larger, more established competitors,” adds Morrissey. 

Currently the best easy access savings account is the Oxbury Personal Easy Access Account. It offers a rate of 4.55%, and can be opened with £1,000. 

While the rates on easy access accounts have climbed over the past few months and several providers are offering rates over 4.5%, this continues to lag behind the base rate – not to mention inflation, which is currently sitting at 7.9%, which means consumers are not making any real returns. 

The best one-year fixed account savings account is the FirstSave 1 Year Fixed Bond, which offers 6.1% AER. You can open it with £1,000. 

The FCA also said firms need to prompt savers with accounts paying little or no interest to look at better options. 

What does “robust action” mean? 

The regulator said it will take “robust action” in just a few months’ time if firms don’t demonstrate fair value. It added this could include fines. 

“Saving rates have picked up thanks, in part, to intense scrutiny from the FCA and MPs who have challenged some banks and building societies that had been miserly with their savings rate increases,” says Myron Jobson, senior personal finance analyst at interactive investor. “The regulator hopes that its 14-point action plan will keep up the pressure.”

“However, any reprieve in cash savings rates is being drowned out by the stubborn persistence of high inflation - with the real value of savings remaining in the doldrums,” adds Jobson. 

“Those who can afford to put money away for five years or more should consider investing for the potential of long-term inflation-beating returns that far outstrip savings rates.” We expand on this in our article: Savings vs investing: which is better to help you make more money?

The Financial Conduct Authority (FCA)  has told some of the country’s biggest banks to boost progress on improving savings rates for customers amid accusations of profiteering. 

Currently, the top savings accounts are offering rates of up to 7% for existing customers, but the industry average is well below this.  

Following a meeting with bank bosses, including those from HSBC, Barclays, Lloyds and NatWest, the regulator said the lenders recognised they “needed to do more to help their consumers access the best rates.” 

But Sheldon Mills, FCA executive director for competition, said "It's not for me to set rates for banks." 

Banks under pressure due to low savings rates 

Despite the soaring cost of loans and mortgages, banks have been attacked for not passing higher interest rates onto savers. 

According to Moneyfacts, the average two-year fixed mortgage rate is 6.52%, with the savings rate on offer from some high street banks well below that figure. Despite increases in recent days, the average one-year fixed savings rate is 4.83%.

The FCA said: “We have started to see some positive action by banks and building societies to improve their rates, and to ensure their customers are benefiting from better value products. We now want to see that progress accelerate.”

The meeting comes ahead of the Consumer Duty roll out - a new string of regulations the FCA said will “put consumer interests at their heart… to ensure their customers are benefiting from better value products.”

High street banks are also facing pressure from MPs. Earlier this week, the cross-party Treasury Committee wrote to the banks asking whether they believe all their savings rates “provide fair value” to customers. 

Dame Angela Eagle, a member of the Treasury Committee, said: “This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.”

"With interest rates on the rise and our constituents feeling squeezed by rising prices, it is only right that the UK's biggest banks step up their measly easy-access savings rates," Harriett Baldwin, chair of the committee, said in a statement. 

Banks boost rates in response

The good news is, banks seem to be getting the message. Ahead of the meeting with the FCA, HSBC unveiled a 0.65% increase on Fixed Rate Saver accounts  - its one-year Fixed Rate Saver increased to 5.05% and two-year Fixed Rate Saver is now 5.1%.

Lloyds is also boosting its rates across its Fixed Rate Cash ISAs from 12 July. Its one-year fix will increase by half a percentage point to 5.45%, with its two-year fix rising to 5.5%.

But any reprieve in cash savings rates is “being drowned out by the stubborn persistence of high inflation,” said Myron Jobson, senior personal finance analyst at interactive investor. 

“Those who can afford to put money away for five years or more should consider investing for the potential of long-term inflation-beating returns that far outstrip savings rates,” he said.

Compounding the problem is the issue of inertia, with many savers not shopping around for better rates. £250 billion is sitting in bank and building society accounts paying no interest, while £945 billion is in instant access accounts.

At the same time, banks are recording booming profits. 

NatWest reported a 50% bump in profits during the first quarter of 2023 to £1.9bn, while Lloyds filed a pre-tax profit of £2.26 billion, up 46.4% year on year. Barclays reported pre-tax profits of £2.6 billion, up 27%. HSBC meanwhile tripled its quarterly profits to $12.9bn.

In a statement issued alongside its quarterly report, HSBC said the surging profits were a result of “higher net interest income in all of our global businesses due to interest rate rises.”

Bank bosses have been summoned to a meeting with the financial watchdog to discuss concerns surrounding interest rates for savers lagging behind the cost of mortgages.

The Financial Conduct Authority (FCA) expects chief executives from HSBC, NatWest, Lloyds and Barclays, as well as from smaller lenders, to attend on Thursday amid allegations of “blatant profiteering”.

Higher interest rates have resulted in banks increasing mortgage rates sharply, yet savings rates are not rising at the same pace. 

The average easy access savings rate today (5 July) is 2.48% while the average 1-year fixed savings rate is 4.80%, according to Moneyfacts. 

Meanwhile, the average 2-year fixed residential mortgage rate is 6.51% and the average 5-year fixed residential mortgage rate is 6.02%.

The Bank of England raised its base rate to 5% last month and further increases are now expected.

Chancellor Jeremy Hunt has said it is an “issue that needs solving” amid households struggling with the cost of living crisis.

But sources were playing down the likelihood of a charter being drawn up in the vein of the one agreed between Chancellor Jeremy Hunt and the big mortgage lenders.

Meanwhile, Rishi Sunak said the Financial Conduct Authority (FCA) wanted to deliver “better deals for savers”.

The Prime Minister told the Commons Liaison Committee: “What the Chancellor said is the issue needs to be resolved.

“I know that he has met recently with the FCA and they have agreed to deliver better deals for savers by driving competition and increasing reporting, which I think they are doing in the next few weeks, in particular, to make sure that savers are benefiting from higher interest rates.

MPs on the Treasury Committee were stepping up their campaign to increase saving rates for lenders, which are failing to keep up with soaring mortgages.

They wrote to the four biggest lenders demanding answers to their concerns that saving rates are “too low” in the light of the base interest rate reaching 5%.

Dame Andrea Leadsom, the former Cabinet minister who sits on the committee, said that “it’s quite clear they have failed to pass on the rise in interest rates to savers”.

Colleague Dame Angela Eagle added: “This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.”

From the end of July, a new consumer duty will be introduced to force financial firms to put consumers at the heart of what they do.

THE BEST SAVING RATES

Even though returns on cash savings accounts are still negative in real terms as inflation at 8.7% eats away at even the most competitive savings rates, if you have cash lingering in an account that pays a poor return, then here’s where you can shift your money to to get a boost.

The best easy-access savings account pays 4.21% from Chip Instant Access Saver. It is only available to existing customers and managed in-app.

The best savings account for existing customers is First Direct’s Regular Saver that pays 7% for 12 months. Monthly savings are limited to a maximum of £300.

Meanwhile, the best one-year fixed savings account is with My Community Bank and pays 6.03%. It has a minimum deposit of £1,000.

For more on savings rates, see our Best savings accounts July 2023. 

One of the biggest shake-ups of financial regulation came into force almost a year  ago to improve how providers such as mortgage lenders and investment firms treat customers, but many consumers are struggling to see any difference.

The Financial Conduct Authority (FCA) introduced  “Consumer Duty” rules on 31 July 2023, placing a responsibility on firms to deliver fair value and good customer outcomes on products such as mortgages, current accounts, credit cards, investments and insurance.

But almost a year on, and just weeks before the scope of the rules are applied to a wider range of products, research suggests that customers are not seeing the benefits yet.

A survey of 2,000 consumers by Moneybox found only a fifth said they have already noticed improvements in how they are treated by regulated firms. 

However, when asked about improvements to customer outcomes, 13% said firms have failed to deliver good quality support and aftersales care, while 12% said firms have failed to offer communications that help make effective financial decisions. 

Another 10% felt firms failed to offer suitable products and services that meet their needs. 

So what do good outcomes and fair value mean for customers? 

As the rules approach their first anniversary, we look at how financial companies have responded to the rules so far - has anything improved for customers? - as well as what further changes may lie ahead this year.

What is the Consumer Duty?

Under the Consumer Duty rules, banks, building societies, insurers, investment firms and financial advisers have all been warned they must improve and track how they communicate with and treat customers. 

Any that ignore the rules and risk harming consumers will face swift action from the regulator, such as interventions or disciplinary sanctions.

It currently applies to newly-sold products but will cover all existing customers from 31 July 2024.

The Consumer Duty exists alongside other FCA rules and principles aimed at reducing consumer harm, as well as rules derived from general laws, such as consumer protection legislation.

The main rules apply to existing products and services, meaning those on sale to new customers, or available for renewal by existing customers. It does not have a retrospective effect and does not affect legacy products. 

The Consumer Duty applies to regulated firms that provide services to retail customers, such as investment firms marketing funds to retail clients, plus banks, building societies and insurers that serve consumers. 

The FCA said it wants to see evidence of good outcomes for financial services customers when it comes to products and services, price and value, consumer understanding and consumer support.

The regulator expects each firm to produce a report “at least annually” assessing whether it is acting to deliver good outcomes for its customers. 

It also requires firms to evidence that they are offering fair value to customers, and expects them to appoint someone as a Consumer Duty Champion, to drive through the culture change within their business.

What do “good outcomes for customers” mean?

The Consumer Duty is slightly vague in that it doesn’t dictate how financial products should be sold or, say, impose a cap on fees.

The FCA has made it clear that the rules are not a tick-box exercise; instead, it’s a holistic approach that revolves around companies giving customers value for money and making it easier for them to buy the right products - and cancel them or complain if they’re unhappy.

Good outcomes for customers could mean making it easier to cancel or switch investments, telling customers if a better mortgage rate is available, scrapping onerous fees, and having clearer terms and conditions. 

For example, if someone suffered a family bereavement and needed money from their bank account, the bank may be expected to waive exit fees. Meanwhile, a customer with a life insurance policy who subsequently has a life expectancy of less than 12 months may find it difficult to navigate the claims process when they are clearly vulnerable, so their provider would be expected to help them to avoid “foreseeable harm”.

Jenny Davidson, commercial proposition director at the wealth manager Quilter, says firms must do more to help people navigate financial choices.

“Vulnerability can be a deeply personal issue,” she says. “Customers are unlikely to shout about it or may be unwilling to discuss it, so a crucial challenge for all companies is to identify customers on this spectrum of risk.”

Have any firms made changes as a result of the Consumer Duty?

James Daley, managing director of consumer group and ratings provider Fairer Finance, calls the Consumer Duty a "significant raising of the bar in terms of financial services conduct".

He said that while it started slowly last summer, there is growing evidence of its impact across all financial services sectors.

Fairer Finance has spotted the following "positive Consumer Duty examples" in recent months:

• First Direct and Santander have axed their charges for using debit cards overseas to improve their case that they offer fair value
  
• St James’s Place has removed its exit fees
  
• Average maximum APRs for credit-builder credit cards have fallen from 44.7% to 41.3%
  
• Virgin Money has added a new line into its savings terms and conditions committing to letting customers know at least once a year if there are accounts where they could get a better interest rate
  
• Lloyds Bank has removed its fee for customers who order duplicate statements
  
• Many investment platforms have increased the interest rates for those who have cash balances in their accounts
  
• A number of firms have invested in SMS text messaging systems so they can provide more timely updates to customers at key moments like product renewal, or deal end
  
• Many banks and insurers have begun to better disclose the downsides and risks of their products
  
• Monzo and Animal Friends have launched audio versions of their terms and conditions

Daley says: “The most noticeable changes are in response to the fair value and customer understanding elements of the Duty. Firms have been forced to look at their pricing and ask whether they can justify their rates, fees and charges – and in many cases, the answer has been no."

He added that not all firms have responded to the rules, "gambling that Consumer Duty is a flash in the pan that won’t amount to much". He commented: "This is a risky strategy as the FCA has already shown that it intends to deep-dive into how firms are doing on a sector-by-sector basis – following up with Dear CEO letters where it finds shortcomings. It will be a brave CEO who shrugs their shoulders and ignores these prompts.”

Has the Consumer Duty worked a year on?

The FCA has been monitoring how regulated firms comply with the Consumer Duty since it was introduced at the end of July 2023.

A report issued by the regulator in February 2024 highlighted the progress made as well as areas that need to be improved.

For example, the FCA said it has seen firms improve customer communications and offer better interest on savings.

But it said it would like to see financial providers do better at justifying the value and service they provide in return for the fee charged.

In one example, the FCA said some investment providers are failing to consider the amounts customers invest and the value they receive for the risks they are taking. 

The regulator also highlighted that some customers may be charged for services they aren't using such as annual reviews from financial adviser.

The FCA showed how seriously it is taking the rules in May 2024 when it fined HSBC £6.2 million over how it treated customers in financial difficulty.

What other changes could we see in 2024?

Areas that Fairer Finance predicts will be a focus in 2024 include credit cards and the cost of paying for insurance in instalments. 

According to Daley, credit card business models rely on bad customer outcomes for their profitability – and it won’t be long before the regulator weighs in. "Credit cards do far too many things, are far too complex, and are far too expensive," he noted.

The high cost of paying for insurance in instalments (particularly in the car insurance market) could also come under the spotlight. This is often seen as a tax on the poor – especially as many other insurance sectors, like pet and travel, don’t charge to pay in instalments. Motor insurers could find they are banned from forcing customers to pay their annual premium upfront - and banned from charging a fee or interest to pay in instalments.

Meanwhile, terms and conditions will get clearer and easier to understand, predicts Daley. "Across 2024, we will start to see new, clearer documents published. Not everyone is stepping up to get to grips with this work – but the pressure will start to rise on the laggards as they spot their competitors upping their game."

Philip Deeks, a director at the consultancy KPMG, says having easier-to-understand communications can only be a good thing, as it will “better equip consumers to make effective decisions about financial products and services”. He adds: “A better-informed customer making better-informed choices is a very positive step in building confidence in this sector.”

A spokesperson at the trade body UK Finance agrees, saying the Consumer Duty should mean we see “clearer explanations of products and services, communications that are easier to understand, and continued improvements in customer support”.

The FCA expects that consumers should be able to buy and engage with financial products without facing unreasonable barriers. For example, firms should make it as easy for customers to leave as it was to join. So, requiring a customer to physically go into a branch to cancel their contract could be a breach of the rules. 

According to Deeks, punitive penalty charges will be replaced with costs more reflective of the work required to action a customer request. This could mean a large exit fee to switch to another product breaks the rules. 

Deeks adds: “So-called ‘sludge practices’ will be targeted by firms - essentially anything that uses behavioural economics (intentionally or otherwise) to place unreasonable barriers in a customer’s way. Customers will experience slicker processes and more timely responses when they need to contact the firm about making a withdrawal, making a claim, or cancelling a product.”

The risk of being mis-sold could drastically reduce this year, thanks to the Consumer Duty. Deeks explains: “Firms will be required to evidence how the product is designed to meet the needs of consumers, and sold to only those whose needs they meet. With firms being clearer about who the product is (and isn’t) designed for, it helps minimise the risk that customers mis-buy a product.”

Regulated firms will need to apply the rules to their legacy and closed books from the end of July 2024. That means it will apply to all products.

The FCA has already written to firms to detail what it expects, including how they  treat disengaged and vulnerable customers.

Homeowners struggling with soaring mortgage rates amid interest rate hikes will get more flexibility from today with their payments after bank bosses met the chancellor, Jeremy Hunt, in Downing Street and agreed to a series of support measures.

Borrowers will be able to make a temporary change to their mortgage for six months to give them some breathing space, while there will be a 12-month delay before repossession proceedings can start against those who have missed payments.

The chancellor said the government was particularly worried about people at risk of losing their homes because they fall behind in their mortgage payments, and homeowners “who are having to change their mortgage because their fixed rate comes to an end, and they're worried about the impact on their family finances of higher mortgage rates”.

Mortgage rates are continuing to rise after the Bank of England announced a shock hike in the base rate to 5% last month. 

According to the data provider Moneyfacts, the average two-year fixed-rate mortgage deal is 6.63%. This is up from 6.54% on the previous working day. The average five-year fix is 6.13%, up from 6.04% on the previous working day. 

Hunt said the support package agreed with mortgage lenders “should offer comfort to those who are anxious about high interest rates and support for those who do get into difficulty”.

He also reiterated that tackling high inflation was the government’s number one priority and that he was “absolutely committed to supporting the Bank of England to do what it takes”. 

What mortgage support measures have been announced?

A range of mortgage lenders – which cover over 75% of the market - have agreed to a new mortgage charter providing support to residential mortgage customers. The measures are:

• Anyone worried about their mortgage repayments can call their lender for information and support, without any impact on their credit score.
• Customers won’t be forced to have their homes repossessed within 12 months from their first missed payment.
• Customers approaching the end of a fixed-rate deal will be offered the chance to lock in a deal up to six months ahead. They will also be able to apply for a better deal right up until their new term starts, if one becomes available.
• A new agreement between lenders, the Financial Conduct Authority (FCA) and the government permitting customers to switch to an interest-only mortgage for six months, or extend their mortgage term to reduce their monthly payments and switch back to their original term within the first six months, if they choose to. Both options can be taken without a new affordability check and with no effect on their credit score.
• Support for customers who are up-to-date with payments to switch to a new mortgage deal at the end of their existing fixed-rate deal without another affordability check.
• Providing well-timed information to help customers plan ahead if their current rate is due to end.
• Offer tailored support for anyone struggling: this could mean extending their term to reduce their payments, offering a switch to interest-only payments, or other options like a temporary payment deferral or part-interest part-repayment option.

Hunt said it was important homeowners can talk to their mortgage lender without it having any impact on their credit score. 

Nikhil Rathi, chief executive of the FCA, said: “This meeting builds on the work we’ve done over the last year to ensure those who get into difficulty receive the tailored support they need. We’ll move quickly to make any changes needed to support today’s commitments."

If you‘re having trouble making your mortgage payments, the golden rule is to always make sure you speak to your lender about it. If you miss a payment or simply decide to stop paying for a period of time - known as a mortgage holiday - this could have serious consequences and will also harm your credit score.

Is there a mortgage crisis?

The government has been under pressure to step in and help mortgage customers after the surprise announcement to hike interest rates from 4.5% to 5% last month.

Opposition parties are calling on the government to do more. Shadow chancellor Rachel Reeves branded the chancellor's mortgage measures  "a weak response". The Liberal Democrats are calling for a Mortgage Protection Fund, which would offer targeted support of up to £300 a month to those families facing the steepest rise in mortgage costs and the prospect of losing their homes. It says households face a £3,600 rise in mortgage payments, equivalent to a 6p income tax hike.

Liberal Democrat leader Ed Davey said: “This is a Conservative mortgage tax on millions of families. People are seeing their monthly mortgage payments go through the roof, all because the Conservatives lost control of inflation and the economy.”

However, aside from the support measures agreed with the mortgage industry, Hunt and prime minister Rishi Sunak have both dismissed suggestions to intervene, arguing it could undermine the Bank of England's battle against inflation. The latest figures show inflation remained stuck at 8.7% in May. 

While many commentators have called the sharp rise in mortgage rates a “crisis” or a “mortgage rate crunch”, the Treasury has released data showing despite the panic among some households about mortgage payments, mortgage arrears and defaults are still incredibly low, and many homeowners are in a strong position.

In the first quarter of 2023, the FCA reported 0.86% of total residential mortgage balances in arrears - compared to a 3.32% rate in 2009.

The proportion of disposable income spent on mortgage payments is currently at 5.4%, compared to around 10% in the 1990s and prior to the financial crisis.

Meanwhile, the average homeowner remortgaging over the past 12 months had around a 50% loan-to-value ratio. The Treasury said: “This indicates homeowners have considerable equity in their homes, which makes it easier to manage repayments. Lenders have less than 10% ‘owner-occupier mortgages’ on their books with loan-to-value rates greater than 75%, compared to around 25% before the 2008 financial crisis. Taken together, this puts the market in a significantly stronger position than before.”

Cryptocurrency trading firms will be required to give first-time investors a “cooling-off period” as part of a package from the Financial Conduct Authority (FCA) to ensure crypto investors understand the risks.

The new measure will also see “refer friend” bonuses banned from 8 October as part of a broader shake-up of crypto advertising rules.

The FCA says the incoming rules mean crypto firms must ensure people have the appropriate knowledge and experience to invest in crypto assets, while those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.

The move has been painted by experts as another attempt by the regulator to curb the crypto space and bring it in line with how it regulates other corners of the financial sector.

Why is the FCA clamping down on crypto?

The FCA regulates the financial sector to ensure it is compliant with UK law and to protect consumers from nefarious activities. Businesses dealing with crypto have to register with the FCA and follow anti-money laundering rules. But there’s no way of protecting investors’ money, as there is with more conventional investments under the Financial Services Compensation Scheme, as much of the crypto market remains unregulated.

The FCA has been steadily trying to exert more influence over the crypto market by targeting crypto advertisements and offering educational resources to potential investors.

“The message to crypto firms is that if they want to play in the mass market, they’re going to have to play by the rules,” says Laith Khalaf, head of investment analysis at AJ Bell.

“This is likely to be the thin end of the wedge for crypto regulation, as financial watchdogs across the globe seek to protect consumers from fraud, sharp sales tactics and misleading information.

This week, crypto exchange Binance was charged with a number of offences by the US regulator, while the crypto world is “still reeling in the wake of the FTX scandal,” Khalad says.

“The crypto market has often been compared to the wild west, but now the sheriffs are riding into town to clean things up,” he adds.

Myron Jobson, senior personal finance analyst at interactive investor, says the FCA’s proposal could aid investors in making informed decisions around risky investments.

“Cryptocurrency markets are a cauldron of volatility, subject to wild swings and abrupt reversals. Investors require a comprehensive understanding of the volatility, technological complexities, and market uncertainties inherent in cryptocurrency bets. Failing to provide accurate and balanced information creates a distorted reality, leading unsuspecting individuals down a dangerous path of financial harm.

“As such, while it is only right that investors have the freedom to speculate, clear risk warnings are essential so that they know what they are getting themselves into,” he adds.

Can cryptomarkets to be regulated?

Calls have been made for the FCA to ramp-up the level of oversight it provides to crypto markets. Last month, the Treasury Committee said cryptocurrency trading should be regulated as a form of gambling after a report claimed cryptocurrencies have “no intrinsic value and serve no useful social purpose”.

It said around 10% of UK adults hold or have held crypto assets, which the Committee argued poses a “significant risk to consumers” due to their volatility.

“The events of 2022 have highlighted the risks posed to consumers by the crypto asset industry, large parts of which remain a wild west,” said Harriett Baldwin MP, chair of the Treasury Committee.

The committee called on the government to treat cryptocurrency trading as gambling due to its high risk nature.

It said that while it supported financial innovation that had potential benefits, these remained unclear when it came to cryptocurrency, while the risks posed to consumers, as well as the environment, were already “real and present”.

The number of people struggling to make all their bills and credit commitments on time remains concerningly high with one in five people grappling with debt in January 2023, according to the City regulator.

January usually tends to be a month when people particularly struggle with their debts, as bills from Christmas pile up. But the Financial Conduct Authority (FCA) says the number of those struggling has increased by 3.1 million since May 2022 - jumping from around 7.8 million in May last year to 10.9 million in January 2023.

And the number of UK adults who had missed bills or loan payments in at least three of the previous six months is also estimated by the regulator to have increased by 1.4 million, from 4.2 million (8%) in May 2022 to 5.6 million (11%) in January 2023.

Researchers also found that 29% of adults with a mortgage and 34% of renters had experienced payment increases in the six months to January this year.

There were also signs of some people reducing their insurance cover to save money, with 8% of people having cancelled one or more policies and 7% having reduced their level of cover – something that could leave them worse off or in difficulty if something goes wrong.

Unsurprisingly, the FCA also found that the cost of living is having an impact on people’s mental wellbeing, with around 28.4 million people in January 2023 feeling more anxious or stressed due to the rising cost of living than six months earlier.

Some 28% had lost sleep due to money worries. One woman told the survey she had used credit to pay for car repairs, home insurance and food shopping. Another said she had used all her savings to fill her oil tank and she relied on oil to heat her home.

The FCA is reminding borrowers that they can get help from their lenders if they are struggling to keep up with payments.

Laura Suter, head of personal finance at AJ Bell, says: “Anyone struggling with repayments needs to face the issue head on: they should approach their lender to at least find out their options and weigh up which might work best for them. If they want an independent opinion they could speak to a charity like Citizens Advice to get more advice.”

Consumer help

The FCA will introduce a new consumer duty in the summer. The duty will require firms to act to deliver good outcomes for consumers and make sure that they are properly supported while using a financial product or service.

Meanwhile, only 3% of people in a separate YouGov survey, commissioned by HSBC, were aware that they can contact their bank or building society to discuss their financial worries without it impacting their credit score.

The first point of call if you’re struggling with a bill is the provider.

One area of concern is mortgages. The FCA has already forecast that 356,000 people will have missed a mortgage payment by the end of June 2024

Your mortgage lender should offer a range of options if you’re struggling with your home loan. This can include:

• a temporary mortgage payment holiday (potentially for up to a year)
• extending your mortgage term
• switching from a repayment to interest-only mortgage to ease monthly bills

While all these options will cut payments in the short term, they come with a price tag: you’ll likely pay more on your mortgage in the long run.

Hundreds of people were scammed out of their retirement savings last year with around £48,000 lost every day in 2024, as fraudsters continue to prey on older people.

There were a total of 519 reports of pension fraud in 2024 with a staggering £17,567,249 taken from pension savers last year, according to new data from Action Fraud.

This represents an average loss of £33,848 per victim, though some will have lost more than others.

Gaucho Rasmussen, executive director of regulatory compliance at The Pensions Regulator, said: “These statistics are another alarming wake-up call and reveal the shocking reality of how much money is stolen from hardworking savers in just one year.

“Fraudsters are ruthless, using fake investment deals and impersonation scams to exploit vulnerabilities and get their hands on savers’ hard-earned pensions. We urge every saver to ‘stop, think and check’ to protect their pension as if their future depends on it – because it does.”

The millions of pounds lost to pension scams is just a fraction of the £1.17 billion that fraudsters stole from 3.31 million consumers in 2024.

Unfortunately, those who fall victim to these scams will have great difficulty getting their money back, so it is best to try to protect yourself and your pension from scammers.

We look at the common ways pension savers may be defrauded, and how to avoid them.

The most common pension scams

The two most prevalent ways that criminals targeted victims was through investment scam pressure tactics, as well as account takeovers through impersonation, according to Action Fraud’s analysis.

Investment Fraud

Investment fraud refers to scams where fraudsters convince people to invest in schemes or products that are either worthless or do not exist. Once the victim has sent the scammer their money, they will likely cease all communication with the victim.

This type of scam will often involve pressure tactics from the fraudster to try to rush the victim into sending over their money. They may stress that the investment opportunity is time-sensitive and try to rush the victim into “investing” on the spot.

Scammers usually get in contact with victims over the phone, but alternative methods of contact may be attempted. Some scammers also use AI ‘deepfakes’ that impersonate trusted business and financial leaders to defraud people.

Chief Superintendent Amanda Wolf, head of Action Fraud, said: “Feeling pressured into an investment opportunity on the spot is a sign of fraud – legitimate organisations will never make you feel this way. Approach any investing offer with caution and seek independent financial advice if you’re unsure.”

Account takeovers

Account takeovers refer to when a fraudster gains control of your account (bank, credit card, email, pension) and uses this access to take your money.

The scammers may claim a victim’s account needs to be taken over because their computer was infected with a virus which mined the account information, though passwords may also be obtained through impersonation or other social engineering techniques.

Wolf adds: “Avoid unsolicited phone calls about pensions, it could be a criminal trying to gather personal information to impersonate you and gain access to your pension scheme account, inevitably stealing your hard-earned cash.”

While the two methods listed above were the most common ways that pensioners were defrauded in 2024, other methods exist.

How to protect yourself and try avoid pension fraud

Make sure you have taken steps to protect yourself, to reduce the risk of losing your pension pot to fraudsters.

Action Fraud recommends pension savers secure their online pension accounts by using a unique and strong password and enabling two-factor verification for an extra level of security.

While this will help avoid account takeovers, strong passwords will do little to help stop investment scams, where criminals use social engineering to convince individuals to send over cash.

Action Fraud advises pension savers to always stop and think before they consider potential investment opportunities, as they may be fraudulent.

Pension savers should not be rushed into making an investment, and legitimate organisations will never pressure you to invest on the spot.

Action Fraud lists three telltale signs that something may be investment fraud:

• if there is pressure to invest
• downplayed risk of losing your money
• promised returns that sound too good to be true.

How to report suspected fraud

If you think you have been a victim of fraud, Action Fraud recommends you to report it to them on actionfraud.police.uk or by calling 0300 123 2040.

They add that if you have already made a payment, you should inform your bank or pension provider as soon as possible as this can help you prevent further losses.

The Financial Conduct Authority (FCA) has authorised the first Long Term Asset Fund (LTAF), a new category of open-ended fund that will allow investors access to a wider range of assets.

The FCA worked alongside the Bank of England and the Treasury to develop rules that will create “an environment where investment in longer-term, less liquid assets, by investors who understand the risks, can flourish”, it said.

LTAFs will be a new concept for most investors, but plans to authorise them have been in the works since 2021.

We explain what LTAFs and their risks are.

What is a Long Term Asset Fund?

Long Term Asset Funds (LTAFs) are a new type of open-ended fund designed to invest in long-term, illiquid assets.

Investors can invest in illiquid assets via other open-ended funds. But they can invest and withdraw money without notice, which can lead to liquidity issues.

To avoid this happening, the regulator ruled LTAFs require at least a 90-day notice period for redemptions. This will give the fund enough time to sell illiquid assets and return money to investors.

The regulator expects LTAFs to invest at least 50% of its holdings in these assets. The rest could be invested in other assets which can be sold more quickly to meet any redemptions.

What assets will LTAFs invest in?

Property is an example of an illiquid asset funds regularly invest in. Through LTAFs, investors will gain access to unlisted investments such as windfarms, artificial intelligence, and fintech that are otherwise essentially inaccessible.

The expectation is that not only will investors benefit from exposure to growing industries, but that they will also provide funding for these projects.

“The ability to invest in illiquid assets, through appropriately designed and managed investment vehicles is important for supporting economic growth and the transition to a low carbon economy,” the FCA said.

What are the risks of LTAFs?

Illiquid assets take longer to sell; if a fund is faced with too many withdrawals, or redemptions, a manager might have to freeze their fund. This means investors aren’t able to withdraw their money.

The FCA will require LTAFs to be transparent about these risks, and expects an LTAF’s manager to manage assets prudently so that they don’t have to be sold at a discount or in a rush.

But investors still need to be aware of the risks that come with investing in illiquid assets. These funds won’t be ideal for those hoping to withdraw money quickly.

They might appeal to those looking to gain exposure to investments in fast-growing industries, such as the renewable industry, that they might not otherwise be able to access. But investors must take a long-term view.

LTAFs will “help to diversify investment portfolios of savers - providing long-term security and delivering greater returns”, said Andrew Griffith, economic secretary to the Treasury.

While investment trusts also offer exposure to illiquid assets, these can “have issues of their own, as we have seen with widening discounts in the alternative assets trust space”, said Dzmitry Lipski, head of funds research at investing platform interactive investor.

“LTAFs should, in theory, shield investors where there is a ‘run’ on the fund, when large numbers of investors head for the emergency exit at the same time,” adds Lipski.

“But this is an untested model and we still struggle to see how the structure will solve the liquidity issue. So while we watch and wait, we still wish the structure the very best as it gets off the starting line, because it is investors who are the ones at risk of injury.”

If you're looking for the best savings rates, you can earn up to 5% with the top easy-access account, 4.85% with a one-year fixed bond, 8% with a top regular saver or 4.72% with a cash ISA.

While savings rates are lower than they were a few years ago, you can still find inflation-beating deals on the market and make your money work hard for you.

You shouldn’t judge a savings account solely by its top rate, but rather check whether it fulfils your needs – both short-term and in the long run. This includes looking at whether there are any restrictions on withdrawals or bonus rates, which could mean the rate quickly drops when the boost comes to an end.

The Bank of England held interest rates in April, so there's a chance that the top savings deals start to tumble. In that case, if you want a competitive rate on your cash, you may need to act quickly.

Below, we look at the top rates for notice savings, easy-access savings, fixed bonds, regular savings and cash ISAs.

Note:
All the banks we mention in this article are protected by the Financial Services Compensation Scheme, meaning up to £120,000 of your savings are protected should a bank or other financial services company go out of business.

Best notice savings rates

The best easy-access savings rates

Best regular savings accounts

The best one-year fixed rates

The best two-year fixed rates

The best three-year fixed rates

The best easy access cash ISAs

The best one-year fixed rate cash ISAs

The best two-year fixed rate cash ISAs

The best three-year fixed rate cash ISAs

Types of savings accounts

There are several different types of savings accounts to choose from.

• Easy access savings accounts: These allow you to take your money out as and when you please. However, some come with restrictions on withdrawals, which can mean you can’t immediately access all of your money in the account in an emergency. For instance, you may only make same-day withdrawals if done before a particular timeframe, or you may only be permitted a limited number of withdrawals before the rate on your account drops.
• Fixed-rate savings accounts: These come with restrictions, so you can’t access your cash until the account reaches maturity; otherwise, you may face a hefty penalty. You usually earn more interest if you are willing to lock your cash away for a fixed period, but keep in mind that this also takes away flexibility should you need the cash suddenly. Here's how much you should have in emergency savings.
• Regular savings accounts: Regular savers reward customers who are ready to commit to a consistent savings habit. These are usually the top-paying savings rates in the market, but can also come with withdrawal restrictions and are usually fixed for a certain time. We look at whether easy access or regular savings accounts give you the best return in a separate piece.
• Individual savings accounts (ISAs): These are a type of ‘tax wrapper’ into which you can put cash or investments. Currently, you have a £20,000 limit on how much you can set aside into an ISA. We look at how many ISAs you can have in a separate guide.

If you aren’t saving in this type of account, you could be forced to pay tax on interest. We look at ways to shelter your money from the savings tax trap.

If you’re looking to switch your current account, take a look at our guide to the best bank switching offers, where you can earn as much as £250.

What is the maximum amount protected by the Financial Services Compensation Scheme (FSCS) in the UK?

The Financial Services Compensation Scheme (FSCS) protects up to £120,000 of your savings and investments if a financial institution goes bust.

Previously, the limit was £85,000 for sole accounts and £170,000 for joint accounts, but it was raised to £120,000 and £240,000 respectively in December 2025.

All accounts listed above are eligible for FSCS protection. You can check if your account is protected online on the FSCS website.

What is the current Bank of England base rate?

The current Bank of England base rate is 3.75%. Interest rates were held at 3.75% in June. The next decision from the Bank of England will be announced on 30 July 2026.

The central bank’s Monetary Policy Committee meets eight times a year to set rates.

This article is updated regularly to bring you the latest on the best savings rates. Sign up for our newsletter to stay up-to-date on all the latest deals for cash savings.

A whopping £250bn is sitting in savings accounts earning zero interest, the Bank of England (BoE) has found.

The Bank has urged savers to move their money – with some fixed accounts, for example paying over 6%, and easy access accounts paying over 4%. 

The data follows a 14-point plan by the Financial Conduct Authority that will force savings providers to justify low interest rates on easy access savings accounts. 

The FCA said banks with lowest savings rates will face “robust action” as they have been too slow to pass the Bank of England’s interest rate hikes on to savers. 

The data revealed 75% of consumers with a savings account hold savings with their current account provider. But the nine biggest banks in the UK are the ones offering the worst rates. 

“The gulf between Base Rate hikes and the increase in interest on easy-access accounts is also highlighted by the Bank’s figures,” says Laura Suter, head of personal finance at AJ Bell. 

“The average easy-access account was paying just 0.09% before the Bank started its current rate hiking cycle at the end of 2021, and has only increased to 1.46% in June – despite Base Rate having risen by 4.9 percentage points since then.”

As part of its new plan, the FCA will require banks to do more to encourage savers to move their money to higher paying accounts. 

It has been smaller, challenger banks that have been upping their rates, and currently you can get rates of over 4% on easy access accounts and over 6% on fixed savings. 

But, if you’re looking to take advantage of these rates, you should act fast as deals are disappearing just as quickly as they come into the market. 

Currently no savings account beats inflation, which came in at 7.8% in June. But if your savings are languishing in a current account, or a savings account with a poor interest rate, it still makes sense to find a better place for your money. 

What are the best savings accounts on offer? 

• If you’re after an easy access account, Chip is offering 4.26% on its Instant Access Saver. You can open it with as little as £1. 
• First Direct is offering 7% on its regular saver. You can pay in between £25 to £300 a month, but you have to be a First Direct current account holder. The rate is fixed for the first 12 months, but it may drop after that. You can also get a £175 switching bonus.
• Al Rayan Bank is offering 6.01% on its one-year fixed account. 

Should you have a cash savings account?

It’s always a good idea to keep an amount of cash on hand to cover any unexpected expenses.

Easy access accounts are a good place to keep your emergency savings because, as the name suggests, you can withdraw your money at any time.

But even though rates are up they still don’t beat inflation, meaning in real terms, cash earning an interest rate below inflation is losing value. So, for long-term savings, investing is still a good option.

But the current environment means now is a good time to review your cash and look to place it somewhere where you can earn a decent rate of interest.

“We often see people hold on to cash when the markets are volatile, but remember, market volatility is normal – and as long as you are only investing money for the long term, you can potentially grow your money to beat inflation and see a greater benefit from compounding,” says Kalpana Fitzpatrick, senior digital editor of MoneyWeek and author of Invest Now.

According to the Knight Frank Luxury Investing Index, classic and luxury cars have returned 193 per cent over the past decade. In fact, certain classics have appreciated by as much as 25 per cent annually, with 10-15 per cent being quite common for vehicles from the nostalgic 90s.

Unlocking classic car market accessibility

When it comes to investing in classics, the primary issue for many investors is accessibility. Car selection is complex and there are long-term costs associated with storage, insurance and maintenance. All too often, potential investors are put off before unlocking this great diversification option. So, how can individual investors access returns in the classic car market without the hassle? Through asset-backed fractional investing with TheCarCrowd.

What is TheCarCrowd?

TheCarCrowd is an innovative investment platform that makes investing in classic cars simple and engaging. It is the UK’s first asset-backed fractional investment platform and TheCarCrowd is the trading name for TheCarCrowdAR Limited, which is an appointed representative of Infinity Asset Management LLP which is authorised and regulated by the Financial Conduct Authority (FRN464315).

David Spickett, CEO of TheCarCrowd, said: “Generally speaking, fractional investment is quite a new category,” explained Spickett. “Having seen the scepticism around things like crypto and NFTs among traditional investors, I wanted to ensure it was far more conventional and familiar. Whilst ensuring we meet the FCA’s regulation is challenging, it has also allowed us to gain far more traction among serious investors looking for viable alternatives that appeal to their interests.”

The platform has already surpassed 3,000 users and currently has 10 classics under management with a combined value of over £600,000. Of the platform’s qualified investors, the majority hold shares in one or more vehicles, allowing them to diversify within the classic car market and curate their own classic car collection. It is a new and interesting take on fractional investment – one that has already proved popular among ‘petrol heads’ and those looking to benefit from the classic car market’s substantial potential growth.

How does it work?

TheCarCrowd uses an expert panel to research and select classic cars, like a Ford Sierra Cosworth, Jaguar E-Type or Porsche GT3. It then divides the cars into 250-500 shares using an SPV (Special Purpose Vehicle) and offers them to its qualified investor members. One recent example, a Ferrari Testarossa, was fully funded in less than 27 hours across 400 registered investors. As with all investments your Capital is at risk when investing and TheCarCrowd encourage all qualifying investors to discuss the opportunity with their financial advisor prior to investing.

“Unlike other categories, like funds, that may have a minimum investment of £50,000, TheCarCrowd’s offer a far more accessible entry point, with average investment around £2500,” continues Spickett. “The investment is also into a real, tangible asset. Investors can see their chosen assets in person, giving the platform a strong sense of community and shared passion.”

Safely storing, insuring and maintaining classic cars for extended periods can be expensive. This is particularly true of the models that typically see high growth. That is part of TheCarCrowd’s unique approach – the business warehouses and maintains the vehicles, with investors able to visit their investment at any time at their facilit, near Nottingham.

Deciding when to sell the assets is also an interesting process. To ensure the procedure is straightforward and fair, TheCarCrowd pre-screens purchase offers for the assets, before forwarding them to members in a democratic vote. If the majority decides to accept the offer, the car is sold. In 2021, investors achieved gross annualised returns as high as 36%, following the vote to sell the platform’s Renault Clio V6. Note that past performance is no guarantee of future performance and the value of assets may decrease as well as increase.

How to get started?

While alternative and passion investing will never be the backbone of a portfolio, it does allow investors to diversify into unusual markets and offers an outlet for their interests. Critically, platforms like TheCarCrowd are making these asset classes far more accessible. For more information and to see if you could qualify as an investor, visit www.thecarcrowd.uk/invest. TheCarCrowd is currently taking pre-registrations for a spectacular Porsche GT3 and a rallying legend, the Lancia Delta Integrale.

A growing number of money apps are popping up to help users manage their finances, save them cash and build their financial resilience. If you have a smartphone you probably already have a few banking apps to check your current account or credit card balance, and maybe one to keep an eye on your investments. But there’s also a range of budgeting and money-saving apps that can help you manage your finances better and even cut your household bills – something we’re all looking to fo during the cost of living crisis.

Money apps can save you time and money, with some switching your household bills to a cheaper competitor, cancelling unwanted direct debits for you, helping to file a tax return, or automatically squirrelling away some of your earnings to invest or save. We round up four of our favourite money management apps.

1. Snoop: reduce your bills

If you want personalised help cutting your bills, consider Snoop. The free money management and budgeting app can help you track your spending and lower your household bills.

By using Open Banking you can connect your bank accounts and credit cards to the app and see them all in one place. This allows the app to “snoop” through your finances and look at where you already spend your money. Snoop lets you know if there are voucher codes available for when you buy something from one of your favourite stores, or cheaper competitors for you to switch your bills to, such as broadband or car insurance.

Snoop is registered and authorised by the Financial Conduct Authority (FCA), the City regulator.

2. Emma: help with direct debits

The average adult spends £39 a month on unused direct debits, standing orders and recurring card payments, according to NatWest - that’s £468 a year. The Emma app can help cut back on these money leaks. The most common unused subscription is a gym membership. But many of us are also paying for video-streaming services we don’t watch.

Get help sorting through your wasteful subscriptions with Emma. This free app is described as “your financial super app”, designed to help you avoid overdrafts, cancel wasteful subscriptions, track debt and save money. It also offers commission-free stock trading.

Using Open Banking you can connect your accounts, including investments, to the app and view them in one place. The app can find and cancel any subscriptions you may have signed up to but forgotten about, offers cashback at more than 500 retailers, and helps you save for different goals by creating “Emma pots”.  There are also three paid-for versions of the app that offer extra features, ranging from £4.99 to £14.99 a month in price, though you can do a 7-day trial for free. 

The Emma app is authorised and regulated by the FCA.

3. Plum: Help with saving and investing

Plum says it helps more than one million people invest, save and manage their spending. The app tracks your spending habits and gauges how much you can afford to save, then puts some money aside for you every few days. This auto-save feature also gives the option to round up your purchases to the nearest pound and save the difference (for example if you spent £2.60 on a coffee, it would save 40p).

The basic version app is free, but you can also upgrade for £1 a month, which means your savings will automatically be invested into shares and bonds via a Plum Isa (additional investment fees will apply). There are alternative plans ranging from £2.99 to £9.99 a month (note: you can do a 30-day trial for free) , offering extra features such as cashback of up to 11% when shopping with certain retailers, a Plum card and additional stocks to invest in.

Plum is registered and authorised by the FCA – although some of its products are not covered by the Financial Services Compensation Scheme (FSCS).

4. Untied: Help filing your tax return

Get help filing your tax return with Untied. It allows users to link the app to bank accounts, credit cards and tax accounts, upload or add data manually, and then it gives an estimate of what your tax bill is likely to be.

 Untied’s “lite” version costs £24.99 a year, while the “pro” version is priced at £49.99 a year, which gives you access to the app (the lite version works only on a desktop or mobile browser), plus you can link an unlimited number of bank accounts. The pro version also includes support for capital gains and property income.

The average accountant charges £150 to £250 to file your tax return. So if you’re comfortable using an app, this could save you a decent chunk of cash. Untied is regulated by the FCA and supervised by the Chartered Institute of Taxation.

Cold calls around financial products are to be banned under new proposals from the government aimed at cutting financial frauds, including pension scams.

It means that anyone receiving a call or message out of the blue about a financial product, such as gaining early access to your pension, will know that it is a scam.

Alongside the cold calling ban, the government has also said that it will work with Ofcom, the communications regulator, to prevent ‘spoofing’. This is where scammers are able to make it appear that they are calling from UK phone numbers, helping them impersonate legitimate businesses.

Finally, ‘SIM-farms’, which allow scammers to send texts to thousands of people at the same time, will also be outlawed.

One of the most common scams are pension related - we look at what they are and how to avoid becoming a victim to such a scam.

Growing concerns over pension scams

Pension scams have been a growing concern ever since the introduction of the pension freedoms back in 2015. Those freedoms gave savers greater say over how and where their pension money was invested, but it has also opened the door to fraudsters looking to con people into handing over that money.

A study last year by Scottish Widows suggested that around a fifth (18%) of men had been targeted at least once by pension scammers, while almost one in 10 (7%) of women had been on the receiving end of a scam attempt. Around a quarter of pension savers (28%) said they were anxious about falling victim to the fraudsters.

The general economic situation has further opened the door to potential pension scams. Research by the Financial Conduct Authority (FCA) in October pointed to a greater interest among savers in accessing their pots in order to help with the cost of living crisis, making them vulnerable to scam tactics.

So what do these scams look like in practice? Analysis by The Pensions Regulator (TPR) has picked out seven separate types of scam, variations of which are now commonly pursued by fraudsters.

Investment fraud

First off we have investment fraud.

This is where the scammer attempts to talk you into moving your pension funds into risky or even non-existent investments, with the promise of high or guaranteed returns. Examples of these sorts of investment include overseas property, parking garages, and storage units.

These assets are typically unregulated and likely to fail.

Pension-liberation schemes

Pension-liberation schemes are also common. Fraudsters will target people worried about the cost of living crisis who are looking to tap into cash they have previously saved in a pension.

Regulation makes it almost impossible for savers to access such cash until they reach age 55, unless they are prepared to hand over more than half the money in tax penalties.

Scammers claim to have identified loopholes to get around the rules. Not only are their claims false, but the scammers often take charges of 30% or more.

Fake pension schemes and pension providers

Some fraudsters go as far as setting up bogus pension schemes and pension providers. These arrangements typically promise better returns than existing pension schemes, and are often associated with high-pressure sales tactics. Fraudsters then walk away with savers’ cash.

Clone firms

These are fake companies set up with names and registration data that deliberately mimic those of legitimate businesses. The Financial Conduct Authority maintains a growing list of clone firms.

Cold calls from pension companies

If you ever receive an unsolicited call from a pension company, hang up the phone immediately. The practice of making cold calls about pensions is now illegal, so any firms trying to sell this way are breaking the law.

Employer-related scams

These may be more difficult to detect. They typically involve cases where employers divert employees’ pension contributions to invest inappropriately in their businesses. If you have any concerns about how your employer runs its occupational pension scheme – if it does not publish independently audited accounts, say – contact TPR.

Complicated business structures

Fraudsters might contact you to tell you about a complicated business structure, often with multiple layers, that ultimately result in you paying exorbitant charges.

All savers should keep a close eye on the fees they pay, but these fraudulent structures are set up to extract eye-watering amounts from you. There are even scams targeting people who have already been cheated, with fraudsters promising to go after lost cash in return for additional high charges.

Will I get my money back from a pension scam?

Feeling duped by a scammer is bad enough, but it’s made even worse by the fact that very few victims ever get anything back.

Indeed, most cases are not even investigated by the authorities. A Freedom of Information request from Quilter revealed that since 2015, an average of just 29% of pension fraud reports submitted to the central Action Fraud body were then disseminated to local police forces for investigation.

Because pension scams can be extremely complex, and require considerable resources from police units in order to be investigated properly, only cases where the authorities believe there is a chance of a successful criminal justice outcome are prioritised.

And the chances of managing that for most scam cases are extremely slim, which is why so few end up being handed to the police and why it’s so crucial that we are all on our guard against potential scammers.

How to avoid pension scams

According to The Pensions Regulator, scammers are becoming more sophisticated in catching people out, though there are certain telltale signs that you can look out for.

These include:

• Being offered a ‘free pensions review’
• Using phrases like ‘pension liberation’, ‘loophole’, or ‘savings advance’
• Guaranteeing that they can get you better returns on your pension savings
• Promising to help release cash from a pension before you are 55, without mentioning the tax bill that can be incurred
• Using high pressure sales tactics, such as pushing you to move quickly in order to qualify for a time limited deal
• Promoting unusual, high-risk investments ‒ these are often overseas, unregulated and with no protection for consumers
• Promoting complicated investment structures
• Being offered a fixed-term pension investment, meaning that you may not realise something is wrong for several years

How to report a scam

You should report a scam to the authorities if you believe a scam has already happened, if a red flag is raised while making a transfer, or if you suspect a pension scam could be taking place.

You can report fraud, cyber crime and concerns to Action Fraud online or by phone. You can also get in touch with the Financial Conduct Authority and The Pensions Regulator.

These are the UK’s ten most unpopular firms, based on the percentage of the company’s stock being shorted (also known as “short interest”).

What is short selling?

Short-sellers target struggling companies and sell their stocks short with the aim of profiting from falling prices. Short sellers borrow the shares, sell them, then hope to buy them at a lower price in the future and pocket the profit. But whether a profit is made or not, the short seller is still obliged to return the borrowed shares to the broker at some point in the future.

As a result, short selling is far riskier than “going long”, as it relies on successfully timing the market, and carries the theoretical risk of unlimited losses (a share price can’t fall below zero, but there is no ceiling on how high it can rise).

The list is worth paying attention to as it highlights which company share prices are expected to fall (which can be a red flag for potential “long” investors), and which may rise on unexpected positive news due to short-sellers being forced out of their positions in what’s known as a “short squeeze”.

Source: FCA's daily short positions report (Data as of 15 August 2022)

The top ten holdings are based on data sourced from the Financial Conduct Authority’s daily short positions report as of 15 August.

As equities have rallied over the past couple of weeks, hedge funds have pared back their bets against individual companies. For example, bets against Kingfisher, currently the most-hated stock in the UK, have declined from 9.1% of the firm’s outstanding shares to 7.7% as of 15 August. Meanwhile, bets against Curry’s have slumped from a 10-year high of 6.4% back to 4.9%.

Shopping centre owner Hammerson has been one of the most interesting single stock stories of the year. Towards the end of September 2020 the percentage of the company’s shares out on loan to short sellers hit 26.5% as the group struggled to refinance its debts in the middle of the coronavirus pandemic. Management stabilised the ship and bets against the company have dropped to less than 5% of shares outstanding.

Short-sellers have retreated as the firm’s fundamental performance has dramatically improved over the past 12 months. In the first half of 2022, Hammerson reported a 154% surge in interim earnings to £51 million. Stronger like-for-like gross and net rental income (up 16% and 48% respectively) as well as a 25% drop in net finance costs, helped the company’s bottom line.

Hammerson’s fundamental performance has recovered as customers have returned to its shopping centres. At the end of the second quarter centre footfall was 90% of 2019 levels and rent collection had returned to 94%. Retailers are also signing up for new space with £10.5m of leasing deals concluded in the period, with headline rates up 31%.

With the business back on firmer footing, management can concentrate on unlocking value from the property portfolio. The value of the portfolio grew 2.1% during the first half while Hammerson also completed £194 million of disposals to firm up the state of its balance sheet. It’s reinvesting some of this capital back into the portfolio’s development pipeline. It reduced net debt by 6% during the period.

• SEE ALSO:

Britain's most-bought stocks

Director dealings: what company insiders are buying and selling

The ten highest dividend yields in the FTSE 100

As the digital economy continues to grow exponentially, the financial technology providers with the specialist expertise to help people participate in it are moving centre-stage. These fintechs provide the infrastructure that underpins the way in which digital technologies are changing the way we work, live and play.

In the UK alone, fintech businesses attracted $11.6bn of investment last year according to the CBI – a 217% increase on 2020 – and the number of billion dollar “unicorn” businesses in the sector more than doubled. And this is a global phenomenon – because the digital economy is expanding fast all around the world, so too are the fintechs that support it.

Given the achievements already made by fintechs and the prospects for further growth, many investors are excited by the returns potentially on offer from getting in at an early stage. But investing in this aspect of the digital economy is not always straightforward, with pitfalls that could catch out the unwary. Take three areas of the market where investors’ interest is coalescing:

Managing cryptocurrency risk UK investors have become increasingly enthusiastic about cryptocurrency assets, prompting the Financial Conduct Authority, the UK’s chief City regulator, to publish a cautionary note last month. Investment in these assets is not regulated in the UK, the FCA point out, as market volatility hit the value of many investors’ holdings.

Cryptocurrencies, for the uninitiated, are digital currencies that are secured by sophisticated cryptography; the best-known example is Bitcoin, but there are many more. Many cryptocurrencies run on decentralised technologies, making use of blockchains – effectively ledgers of transactions maintained by huge networks of computers.

As recent months have shown, cryptocurrencies can rise and fall with alarming speed, but that is not to downplay the fundamental value and usefulness of digital currency. It provides a means to electronically exchange value with anyone, anywhere, and to do so instantly, with no need to use traditional intermediaries such as banks. The potential is to fundamentally reshape the global financial system.

How, then, do investors explore these ideas? One option could be to look at those companies leading the cryptocurrency charge, rather than the assets themselves. That could include, among others, companies directly involved in crypto mining, payments, finance, and infrastructure. All of them are supporting the use of digital assets and their associated networks as the foundation for a digital economy.

Profiting from payments Consumers have got used to being able to settle their bills in new ways that offer greater convenience and reduced stress. Contactless payment is one example: the total value of contactless transactions in the UK increased to £166bn last year according to UK Finance, a 46% increase on the previous year. The growth of buy-now, pay-later financing is another; harnessing new technologies, innovators in this industry are able to offer consumers personalised financing plans at the point of payment. And then there are mobile payments, with millions of people now using their phones to pay for goods and services, dispensing with bank cards and cash altogether.

All these payment capabilities require innovation and infrastructure from payments companies focused on facilitating communication, commerce and collaboration. It is easy to start taking them for granted very quickly given their mass adoption, but they wouldn’t exist were it not for the disruptive influence of fintech businesses that have developed the necessary technology.

These include businesses that have become household names, such as digital payments processor Paypal or the British challenger bank Revolut, as well as newer entrants such as Coinbase, one of the most popular cryptocurrency exchanges.

Switching to digital first Traditional businesses in the financial services space are naturally keen to play their part in innovation – and to offer their own customers new digital products and services. However, while these businesses have launched initiatives in areas ranging from online banking to mobile apps, these have to be bolted on to their legacy technologies and systems; inevitably that holds them back.

Digital-first businesses in the fintech sector, by contrast, have been able to develop their products and services from scratch. They’ve been able to build networks, protocols and other infrastructure specifically for the purpose of delivering digital economy products, rather than having to retrofit systems that were developed for an analogue age.

From an investment perspective, these digital-first businesses feel particularly alluring. The digital economy will feature a broad range of financial institutions, including incumbent providers, but newer fintechs are likely to benefit from greater agility and flexibility.

Against this backdrop, the key for investors will be to think about which companies are best-placed to power the transition to the digital economy – and the right way to secure exposure to those businesses.

“The digital economy represents a fundamental reimagining of the global financial system to a new paradigm that harnesses the speed, convenience and capabilities of modern financial technology,” says Michael Sonnenshein, CEO of Grayscale Investments, an asset manager focused in this area. “Our own Grayscale Future of Finance UCITS ETF is one product that aims to capture these themes in a single convenient fund, but there are many ways for investors to receive exposure to this global megatrend.”

• Find out more at www.hanetf.com/grayscale

The soaring cost of independent financial advice on transfers out of final salary pension schemes is causing mounting concern among pension experts, who warn that affordable advice is becoming increasingly difficult to find. Savers determined to transfer cash away from a final salary pension scheme will now face a bill running into thousands of pounds.

The problem stems from the regulators’ efforts to protect savers. The Financial Conduct Authority’s (FCA) view is that given the guaranteed (and often very generous) benefits provided by final salary pension schemes, transferring to another type of arrangement is a bad idea for most people. Amid concern about the number of people making such transfers, the FCA now insists anyone seeking to move a pension worth more than £30,000 out of a final salary scheme takes independent financial advice on the transfer.

The regulator’s aim is to stem the flow of inappropriate transfers, but for some people moving out of a final salary scheme does make sense. Transferring can be a useful part of an inheritance-tax planning strategy, for example. And in some cases, savers may be able to capture more generous benefits elsewhere; those in poor health, for instance, may have access to attractive impaired life annuities outside of a final salary plan.

The price for advice

The problem for these savers is that many firms have pulled out of this area of the financial advice market, which is fraught with regulatory controversy. Research published in March suggested the number of firms offering specialist advice on final salary pensions has fallen from around 3,000 four years ago to 1,160 today.

Fees have increased significantly over the same period. In 2020 the FCA said savers seeking transfer advice should expect to pay £3,000 to £4,000. But analysis from the actuarial consultant LCP and insurer Aviva suggests a range of £3,000 to £10,000 is more realistic; indeed, their research identified advisers charging as much as £20,000.

A costly business

More affordable advice might come with a catch. Some financial advisers are now telling savers that they will only provide transfer advice if the saver agrees to register for ongoing services from their firms. This may include investment services, with the adviser insisting that they take on the role of managing the pension once it is transferred out of the final salary scheme. For savers with the confidence and experience to manage their own money, as well as those who would prefer to shop around for the best value service, this may mean paying far more than necessary in pension charges for years.

For their part, financial advisers point out that the cost of compulsory professional indemnity insurance has risen sharply for firms still offering transfer services. The workload in advising on such transfers is also significant given the intense regulatory scrutiny of the issue.

Nevertheless, some savers may now find that the amount they will end up paying for advice completely undermines the case for transferring out. The government has said that regulators are monitoring the issue, but the desire to protect the majority of savers for whom transfers are a bad idea appears to be disadvantaging the (admitted) minority for whom the opposite is true.

I’ve long said that 5% on the consumer price index would make inflation a headline issue in the UK.

Well, the cost of living crisis is certainly filling the headlines right now.

Later today (or maybe even by the time you read this email), the energy regulator will have told us that the price cap on energy bills is going up by about 50%.

It’s all quite reminiscent of the 1970s: energy shocks, inflation – and we’re starting to see strike action picking up too.

Inflation will drive more unionisation and strike action – not the other way around

The cost of living is rising. Currently, it’s outpacing wage growth. In other words, if you are the average worker (no one is, but some of us must be close to it), you’re getting paid more than you were last year, and in fact, you’ve probably had a bigger rise than you’ve had in years – but unfortunately your living costs have gone up by more, so your standard of living has in fact declined.

In other words, you’ve taken a pay cut in “real” terms.

The thing is, right now, the labour market is extraordinarily imbalanced. There are loads of job vacancies, and just not that many people available to fill them. So workers have more power than they’ve had in a long time, plus more motivation to use it.

And that’s what we’re starting to see play out. Baggage handlers and refuelling staff at Heathrow have voted to go on strike during the February half-term holiday. Refuse collectors in Eastbourne have already won a big pay rise after striking last month.

Even the Financial Conduct Authority (FCA) – the UK’s financial regulator – is facing “unrest”, as the FT puts it, after the Unite union “secured the backing of some of the regulator’s 4,000 employees for industrial action if management refused to engage with the trade union” (note though that Unite hasn’t revealed how many FCA staff are actually members of the union).

This isn’t just a UK issue. Over in the US, companies such as Starbucks are seeing increasing attempts to unionise. This is often presented as “grass roots movements” by the socially-conscious “generation whichever one is the current one”. But I’d put it down to simple economics rather than a different type of political consciousness.

As financial historian Russell Napier pointed out in an interview with The Market last July, the direction of causality between unionisation and wage inflation is not at all clearly understood.

“People always say unionisation caused inflation. The statistical evidence suggests that it was the other way around, that inflation caused unionisation. People banded together and joined unions to protect themselves from inflation. When there is no inflation, you don’t need to be in a union. I think we will see more unionisation again.”

If this is indeed the case, then all the people who argue that we can’t have a repeat of the 1970s have got it precisely wrong.

And that’s the thing that worries central banks more than anything else.

Inflation isn’t transitory anymore

Until very recently, central banks had been saying that inflation is “transitory”. It’s a one-off bump higher, created by supply chain disruption which was caused by the big covid shutdown.

We’ve never agreed with that view here at MoneyWeek but we can see why central banks stuck to the line for a while.

That’s because the thing that really freaks central banks out is “inflation expectations”. If people think inflation will be higher in the future, then it creates a self-fulfilling prophecy. Here’s the rough outline of the theory:

“I think inflation will rise, so I ask for higher wages if I’m an employee, or I raise prices if I’m a business to compensate for said expected inflation. If everyone does this, then rising wages beget higher prices which beget higher wages which beget higher prices and so on until no one can remember which day of the week it is and the economy collapses as a result.”

This is mostly nonsense like a lot of macroeconomic theories, in that it’s not about expectations, it’s about reality. The reality right now is that there are fewer people to do jobs, those people are seeing their energy bills rocket, and quite rightly they feel empowered to ask for more to compensate. Meanwhile companies see that business is fine so they feel empowered to pass those costs on.

What can central banks do about this? The reality is that their tools are pretty blunt. If you really want to stop this kind of inflation, you basically need to punch the economy in the face with significantly higher interest rates, so that everything slows down again. However, the desirability and purpose of such actions is questionable. Why would you want to trigger a recession right now?

The ideal solution would in fact be for the state to shift the tax burden away from incomes and onto assets, particularly property (or rather, land). That way workers get a pay rise, and you make some progress towards closing the wealth gap (and more importantly, the house price gap) which is at the heart of most of the current frustration.

But that’s unlikely to happen because income tax is easy to collect and politically non-toxic as long as you can pretend the burden is mostly falling on the “rich” (whereas in reality it’s mostly falling on those in mid-to-late career).

The upshot of all this is that we probably won’t see any significant action to contain wage inflation for quite some time, and so we can expect more of it.

Ah well – so what’s it all mean for investors?

From an investment point of view, in a note a couple of weeks ago, Goldman Sachs noted that FTSE 100 companies tend to outperform small cap stocks as inflation rises.

Why? They reckon it’s down to the FTSE 100 holding more banks and commodity stocks, which are among the few industries to generally benefit from inflation; bigger companies having more pricing power (so they can pass costs along, regardless of wage hikes); and also the fact that the FTSE 100 is full of multinationals (so local inflation doesn’t matter so much).

Another good reason to buy into the FTSE 100 is probably the fact that the UK is still being shunned by investors. According to the latest data from global funds network Calastone, January saw investors suck a record £795m out of UK-focused equity funds.

That was partly driven by the general market malaise, but it’s striking to see Britain still so drastically out of favour despite being both cheap and in many ways, a better bet on a more inflationary world than pretty much any other major developed market I can think of.

So there you go: buy British (or at least, UK-listed), and if you’re an employee - ask for a pay rise.

The UK’s financial regulator, the Financial Conduct Authority (FCA), has made some important changes to its listing rules, in an attempt to reverse the long-term decline of the London Stock Exchange (LSE) as an attractive place for growing businesses to float.

First, earlier this month the FCA eased the rules on dual-class share-listings. Dual-class shares mean that some classes of shareholders get greater voting rights than others: notable examples of firms with this structure include Alphabet (Google) and Facebook, as well as many other tech firms. This is controversial in the UK because it violates the City’s long tradition of “one share, one vote”, which is seen as important for corporate governance. But they are popular with business owners looking to raise capital by floating, and are permitted by London’s international rivals.

Second, the FCA has also decreased the proportion of its shares that a firm must make available to the public in order to list in London, from 25% to 10%.

What do the changes mean?

Dual-class shares will now be allowed in the premium segment of the London market. That means that their shares can be included in the main FTSE indices – notably the FTSE 100 and FTSE 250 – which is in turn significant because it means that passive tracker funds will buy their shares, broadening their investor base and increasing liquidity.

The idea is to make it more attractive for the founders of innovative companies to bring their businesses to the market – letting them raise capital and providing an opportunity to UK investors – while also allowing them to keep more control of their businesses and giving them more protection against the threat of hostile takeovers that comes with going public.

Who stands to benefit?

Three distinct groups may gain, said The Economist. First, investors in UK shares, because firms with dual-class shares tend to generate higher returns (an analysis of North American companies between 2007 and 2017 found that dual-class stocks outperformed those with equal voting rights by 4.5% a year – although this may be because many are in the tech sector, which has done very well).

Second, firms with dual class shares that have listed on the LSE’s standard segment in recent years – such as Deliveroo, Oxford Nanopore and Wise – can now get a premium listing.

Third, the overall UK market may benefit from increased global attention if this entices more high-growth, founder-led tech companies to list in the City instead of choosing the US or other rival markets.

What’s the reaction?

Not everyone approves of this idea. For example, Richard Buxton of Jupiter Asset Management reckons it will “reduce investor protection and sow the seeds of scandal and losses”.

But the FCA (and the government, who pushed the review that led to the relaxation) is extremely keen for London to level the playing field with other exchanges that already have dual listings (Amsterdam, Singapore, Hong Kong, the US) and arrest London’s decline.

What’s the scale of that decline?

Over the past 15 years, the LSE’s share of all initial public offerings (IPOs) globally has slumped from 20% to 4%, and since a peak in 2007 the number of companies listed on it has fallen by two-fifths. The total market capitalisation of the 1,964 companies that remain adds up to less than just five US tech giants – Google, Apple, Amazon, Facebook and Microsoft.

Astonishingly, the daily trading on Wall Street in just one stock, Tesla, is worth more than three times the trades on the entire LSE, said Larry Elliott in The Guardian. That’s why the FCA’s relaxation of the rules is so welcome, he argues. It could help persuade fast-growing tech firms looking to list in Europe to choose London, rather than the increasingly favoured Amsterdam exchange. This year the Dutch capital – the world’s oldest stock exchange – overtook London in terms of the average daily value of the shares traded.

What’s a more optimistic take?

The fashionable “self-denigration” of London is being overdone, said Ben Wright in The Daily Telegraph. First, a good part of the LSE’s decline since the mid-2000s is down to the “massive tech boom (bubble?) in the US” and the rise of the Asian economies, especially China. There’s not much anyone could do about that.

Second, the high-water mark for London listings was 2007, when the market was pumped up, pre-financial crisis, with a “flood of bilge”. In truth, the LSE still “punches above its weight” – and the first half of this year saw a giant 467% surge in new IPOs. In the year as a whole (to 4 November), the value of IPOs was $20bn (according to Dealogic) – not far off the total for the previous three years combined.

Meanwhile the huge currency volatility associated with Brexit has settled down, and JPMorgan recently turned bullish on UK equities for the first time since the referendum.

What are the UK market’s prospects?

MoneyWeek has been arguing for some time that the unloved UK stockmarket is a buying opportunity – particularly when it comes to value stocks in a period of higher inflation. Few other indices are as top-heavy with leading oil and mining finance stocks as the FTSE, with six of the world’s biggest, said Jeremy Warner in The Daily Telegraph.

Environmental, social and governance (ESG) concerns have made such stocks unfashionable, but the irony is that transitioning to green energy will require vastly bigger quantities of metals, including copper, nickel, cobalt and lithium. We will need the UK-listed “ageing corporate dinosaurs” – the likes of Glencore, BHP, Anglo American and Rio Tinto – “more than ever if the energy transition required to meet net zero targets is ever to be achieved”.

So don’t write the FTSE off: it “may be about to come back into its own, dragging the wider City with it as a go-to source of green energy fina

Cryptocurrencies were dominated by news that one of the world’s largest payment processors, PayPal, will allow UK users to buy and sell cryptocurrencies on the platform.

Here are the top stories that caught our eye.

PayPal taps into the UK crypto market

PayPal – one of the worlds’ largest payment processors – is tapping into the UK crypto market by allowing its UK users to buy, hold and sell virtual currencies.

PayPal’s new service which was rolled out this week is available on both the website and the app. To begin with only four of the leading cryptocurrencies – Bitcoin, Ether, Litecoin and Bitcoin Cash – will be offered.

PayPal’s announcement marks the company’s first crypto offering outside the US. The company said the move was inspired partly by the technological acceleration driven by Covid-19 and lockdown measures.

PayPal – perhaps trying to pre-empt any critics – said there was an educational element to its offering as well. “By accessing their PayPal account via the website or the mobile app, they can view real-time crypto prices, access educational content to help answer commonly asked questions, and learn more about cryptocurrencies, including the opportunities and risks,” the firm said in a statement.

All eligible UK customers, once officially verified, can access the new crypto tab either through the website or through the app.

Customers can start by buying as little as £1 of cryptocurrency via PayPal. No fees will be levied to hold cryptocurrencies in an account, but there are transaction fees and currency conversion fees. In all, PayPal users will be able to buy or sell up to £35,000-worth of crypto a year, or £15,000 in any one transaction.

UK regulator says that Binance is incapable of being regulated

The world’s largest cryptocurrency exchange was “effectively blacklisted”, as the thisismoney website put it, in the UK on Thursday after the Financial Conduct Authority - the UK regulator – said the exchange was not “capable of supervision”.

The FCA said Binance poses a “significant risk to consumers”. However, UK users of Binance can still use the exchange’s website Binance.com as the website is not tied to Binance’s UK entity.

The FCA’s comments come as central banks and regulators are alarmed at the breakneck speed at which cryptocurrencies are growing.

It also comes after traders who were seeking compensation from Binance for an outage earlier in May secured more than $5m in funding for an international arbitration case against the cryptocurrency exchange.

The outage was related to China’s crackdown on the cryptocurrency sector in May, which wreaked havoc in crypto markets.

Crypto markets update

Here’s what happened in the crypto market in the last seven days

• Bitcoin rose 2.6% to $48,335.
• Ether rose 1.1% to $2,356.
• Dogecoin fell 10.9 % to $0.29.
• Cardano rose 16.3% to $2.85.
• Binance Coin rose 12.3% to $488.

What investors need to watch out for

• Cardano’s “Alonzo” Upgrade. The upgrade is due to launch in mid-September. The Alonzo hard fork will pave the way for much-anticipated adoption of smart contract functionality.

Cathie Wood, the veteran fund manager behind ARK Invest, is launching a bitcoin ETF – the ARK 21Shares Bitcoin ETF – in partnership with Switzerland-based 21Shares.

What is the fund and what could it mean for cryptocurrencies?

The ARK 21Shares Bitcoin ETF’s objective is to “track the performance of bitcoin, as measured by the performance of the S&P Bitcoin Index”, says a filing with the Securities and Exchange Commission (SEC), the US regulator.

Until now, ARK has been piling into companies with heavy exposure to digital currencies, including the likes of Coinbase Global and Grayscale Bitcoin Trust. But launching a crypto ETF is big news even for a prominent crypto-bull like Wood.

The ARK ETF is still pending approval from the SEC, so the fund may not launch for some time yet. But it’s not the only one in the pipeline. As Bloomberg points out, 14 cryptocurrency ETFs are currently awaiting approval from the SEC.

News of ARK’s ETF comes just days after the SEC postponed a decision on whether to scrap or accept a bitcoin ETF application from asset manager VanEck and from Valkyrie Digital Assets.

So what is the US stance on crypto ETFs?

As with the UK’s Financial Conduct Authority, the SEC is worried about the risks surrounding cryptocurrencies (cryptocurrency exchanges in the US are regulated by a variety of agencies at both state and federal level).

Last month, the SEC issued a scathing notice to investors last month warning them about the risks of bitcoin futures held in mutual funds (which are the only investment vehicles that are allowed to hold bitcoin futures). It urged investors to consider “the risk disclosure of the fund, the investor’s own risk tolerance, and the possibility, as with all investing, of investor loss”.

The SEC’s warning has led analysts to speculate that it may become more difficult for US ETFs to get the green light.

So could Wood’s bitcoin ETF persuade the FCA to lift its ban on ETFs?

In the UK, the Financial Conduct Authority does not regulate cryptocurrencies, but it has banned the sale, marketing and distribution of all crypto derivatives, including contracts for difference, options, futures and exchange-traded notes that reference unregulated transferable crypto assets by firms acting in or from the UK.

The ban which came into effect in January was prompted by extreme “volatility of underlying assets,” the FCA said. This effectively closes the door –for now – for any UK-listed bitcoin ETFs.

Any change in its stance depends on whether the backlog of ETFs is approved by the SEC or not. If they are not approved, it could ultimately seal the fate of crypto ETFs both in the US and the UK. But of course if the US does start approving more crypto ETFs, it theoretically raises the chance of crypto ETFs becoming accepted here in the UK

Until regulators don’t change course, cryptocurrencies remain a highly speculative investment.

While UK investors can’t buy crypto ETFs, they can still speculate on the currencies themselves. So educate yourselves on the subject, but treat them with extreme caution –cryptocurrencies remain a highly speculative and volatile investment.

Binance, the world’s largest cryptocurrency exchange came under fire from the UK’s Financial Conduct Authority last week when it said the company is not authorised to carry out any regulated activity in the UK.

The move is the latest measure by a regulator aimed at suppressing digital currencies, which have been growing at breakneck speed.

So what may this mean for you and your money?

The FCA said Binance’s UK subsidiary – Binance Markets Limited – is not currently permitted to “undertake any regulated activities without the prior written consent of the FCA”.

Binance was hoping to launch its digital asset market place in the UK but withdrew its application to register with the FCA in mid-May after it fell short of meeting all of the necessary anti-money laundering requirements.

The FCA’s latest action against Binance will force it to display a warning on its website – effective from 30 June – telling investors that it doesn’t have permission to operate in the UK.

Separately, Binance customers suffered a long outage which saw many of them unable to cash out their cryptocurrency gains following a move by Binance to suspend bank cards.They found themselves locked out of the Faster Payments network – a UK payments system that speeds up transfers between the banks of various countries – due to what Binance says were “maintenance issues”. Binance also suspended bank card deposits and withdrawals.

While Binance says that Faster Payments were back online on Tuesday afternoon, the Financial Times reported that they were still unavailable. Issues relating to debit card withdrawals persisted.

But aren’t crypto derivatives banned in the UK anyway?

Buying and selling cryptocurrencies is not a regulated activity in the UK, so most firms that promote selling and investing in cryptoassets are not backed by the FCA. Investors who buy cryptocurrencies will not have access to the Financial Ombudsman Service, nor the Financial Services Compensation Scheme if things go haywire.

But, while the FCA doesn’t regulate cryptocurrencies themselves, it does regulate derivatives (eg, futures contracts, contracts for difference and options), as well as crypto assets that it considers to be securities.

The extreme volatility of the underlying assets, says the FCA, means that any derivatives have “no reliable basis for valuation”, so trading such derivative assets would place retail consumers “at a high risk of suffering losses”.

And so, in October last year, the FCA said that it would ban “the sale, marketing and distribution to all retail consumers of any derivatives (ie contract for difference – CFDs, options and futures) and ETNs that reference unregulated transferable crypto assets by firms acting in, or from, the UK”.

That ban came into effect in January this year.

So the FCA’s latest move isn’t entirely significant in this context. It is, in effect, merely enforcing an existing ban. But while Binance Markets Limited is banned from offering regulated services in Britain, non-registered firms can still engage with UK consumers to provide unregulated services – such as buying and selling cryptocurrencies. In order words, Binance can still offer UK-based investors crypto trading via its website.

That is exactly what the FCA said in its statement when it announced Binance isn’t fit to carry out regulated activity in the UK: “The Binance Group appear to be offering UK customers a range of products and services via its website, Binance.com.

So given this isn’t exactly a “ban”, will this have any impact on investors at all?

Investors may think twice about investing in cryptocurrencies not necessarily because of the FCA’s measures, but more because this signals how regulators are simply not able to digest digital currencies and are making it harder for them to operate and investors to engage with them.

Binance also faced the wrath of Japan’s Financial Services Agency, which warned last week the crypto exchange was operating in the country without permission.

And last month China banned crypto “mining” in the country, which up until now was a major producer and as such more than 65% of cryptocurrency mining comes from China.

While the FCA’s recent warning about Binance is more symbolic, it is likely a catalyst for further regulatory action to come in the space.

Governments are rushing to build central bank digital currencies (CBDCs) and they are unlikely to want competition.

As the FCA recommends, investors should do extensive research on the firm they are considering investing with. Often taking simple steps such as checking if the company is registered with the Companies House or searching online for the firm’s name or director’s name can help flag any concerns early on.

And, as the FCA warns: “be wary of adverts online and on social media promising high returns on investments in crypto asset or crypto asset-related products.”

“Any firm offering these services to retail consumers is likely to be a scam.”

So, while it is definitely worth paying attention to crypto, you should expect a lot of volatility ahead. And the Faster Payments and bank card suspensions may lead investors to question just how useful bitcoin is in the first place, and how a blip can result in them being locked out of funds for days or even longer. Even if regulators don’t officially ban crypto, if financial institutions make it difficult to deposit and withdraw funds, retail investors are going to find it increasingly difficult to play.

Tens of thousands of savers with large pensions are making withdrawals at such rapid rates that they risk running out of cash in retirement, new data from the Financial Conduct Authority (FCA), the City regulator, reveals.

The statistics suggest that while people with larger pension funds are less likely to be making substantial withdrawals, a significant number of savers are still taking out more than 6% of their money each year – and many are taking out 8% or more. But the data on withdrawals from pension funds, which became far easier to make following the 2015 pension freedom reforms, has long been a source of dispute.

Critics of the reforms point out that many people are taking far more than is sustainable out of their pensions early in retirement and so are at risk of financial hardship later in life.

However, the FCA’s data does not provide a consolidated view of savers’ finances: the assumption has always been that a significant proportion of those making substantial withdrawals from small portfolios of pension money also have larger plans to fall back on – and that they are being more restrained with these. The regulator’s latest figures, however, suggest this assumption may be optimistic. The figures show that while large withdrawals are more common with smaller pensions, many large ones are also being depleted rapidly.

Of pension portfolios where savers are applying an 8% withdrawal rate or higher, 67% were valued below £100,000; but in 24% of cases, the overall pension was larger. This equates to more than 30,000 savers who are taking 8% of their pension money out each year.

Always take advice

Pension experts describe withdrawals of this size as highly unlikely to be sustainable. While the amount that savers can take out of their pensions each year without running out of money later in life will depend on a variety of factors – including investment returns and charges – most experts think a withdrawal rate of no more than 3% a year is more realistic. To add to the mounting concern over the issue, the FCA’s data also reveals an increase in the number of people who do not take financial advice before entering into income drawdown contracts that allow them to make this sort of withdrawal. More than a third of savers are starting drawdown plans without getting professional financial advice, the regulator’s statistics reveals.

Another worry to keep in mind is that watchdogs have begun to notice a marked increase in the number of scammers targeting pension savers with drawdown plans since the beginning of the Covid-19 pandemic.

Action Fraud has warned that with more people now conducting all their financial affairs online or by phone, the potential for fraud has increased substantially.

With average interest rates on savings accounts falling to under 1% for the first time, promises of 8% returns are bound to attract attention. But don’t be fooled into placing your cash in high-risk mini-bonds. A mini-bond is a high-risk form of corporate debt.

You lend your money to a company in return for a fixed interest-rate and the promise you’ll get your money back at the end of the term. The interest rates are attractive – typically around 8% – but you are taking a big risk with your cash. If the business goes bust, you are unlikely to get your money back.

This is something investors in restaurant group Chilango are just discovering. More than 1,000 people bought £5.8m of its mini-bonds. The investments were dubbed “burrito bonds” because if you invested more than £10,000 you could claim one free burrito a week. In November 2018 MoneyWeek warned readers to “think long and hard before you sink your money into the burrito bond”.

Now the vast majority of those bond holders stand to lose their money after Chilango announced it is entering administration. They “will be reliant on returns from the sale of its assets, which the company warned last year could lead to them losing 99% of their investment”, says Sarah Butler in The Guardian.

This is only the latest example of the significant risk mini-bonds present. In 2015 Secured Energy Bonds collapsed, losing investors more than £7m. In January 2019 London Capital & Finance (LCF) went bust, leaving 12,000 investors facing a £236m loss. “Mini-bonds are examples of high-risk investment products that should come with a health warning,” Myron Jobson, a personal finance campaigner at Interactive Investor, told The Times. “If something seems too good to be true, it usually is.”

Mini-bonds are an unregulated product

The problem with mini-bonds is that while the marketing is regulated, the product isn’t. This means that, unlike cash savings, money invested in mini-bonds is not protected by the Financial Services Compensation Scheme, which will compensate you with up to £85,000 if your bank or building society goes bust.

There is also confusion because firms authorised by the Financial Conduct Authority (FCA), the City regulator, sell mini-bonds. This prompted a surge of investments in LCF’s mini-bonds as “the firm was able to boast of authorisation from the FCA, despite the fact that the risky ‘mini-bonds’ it sold were unregulated,” says Adam Williams in The Telegraph.The Treasury has said it intends “to tighten industry rules following concerns that there was not a ‘strong enough safeguard’ against unregulated financial firms whose adverts are misleading and unclear”, says Williams. The FCA brought in a temporary ban on marketing mini-bonds to ordinary savers in January and will now make it permanent.

“We aim to prevent people investing in complex, high-risk products which are often designed to be hard to understand,” Sheldon Mills, interim executive director of strategy and competition at the FCA, told the Financial Times.

As with any investment, make sure you understand it before you buy it. Remember, a higher interest rate usually means higher risk. Finally, don’t choose your investments based on the free food that comes with them.

The transfer values paid to savers switching out of their employers’ final-salary pension schemes have hit an all-time high, stoking fears that people may be encouraged to give up valuable guaranteed retirement benefits. Specialist consultant XPS Pensions Group says a 64-year-old entitled to a £10,000 annual pension for life could currently expect to receive £260,800 if they transferred their benefits to a defined-contribution scheme such as a personal pension plan. That represents an increase of more than 15% since March. The higher transfer values reflect changing actuarial assumptions, notably expectations of higher long-term inflation.

But many savers may be tempted to make the wrong decision. In June, says XPS, the annualised equivalent of 1.05% of all members eligible for a transfer left their final-salary scheme – the highest figure since March 2019. The Financial Conduct Authority (FCA), the City regulator, has repeatedly said that for the vast majority of members of final-salary pension schemes, staying is a better option than taking a transfer. Moving to a different type of pension means giving up the guaranteed benefits that final-salary plans offer and exposing yourself to stockmarket risk. For some savers, there may be advantages in transferring, particularly where their final-salary pension is not likely to be their main source of retirement income. Other types of pension offer greater flexibility on withdrawals and can also offer inheritance-tax planning advantages.

However, even with a higher transfer value at the outset, it is likely that many members opting to transfer will end up receiving less pension income from alternative types of arrangement. They must also take responsibility for managing the money and may miss out on valuable dependents’ benefits.

Struggling employers unnerve savers

Regulators have warned that the pandemic could give rise to an increase in pension scams, with many people in dire financial straits owing to the virus. Members of final-salary pension schemes may also now be more likely to transfer out because they are concerned about the financial viability of employers standing behind their plans. But a generous compensation fund is available in these circumstances and the FCA insists this consideration should not be a factor in the decision about whether to transfer.

Some protections are in place, with anyone now considering transferring benefits worth more than £30,000 required to take independent financial advice before proceeding. Many schemes warn members about the perils of transferring. From October the FCA is also banning contingent advice on pension transfers, where advisers only charge a fee if their guidance is that savers would be better off going ahead with a transfer. The regulator is concerned that this model results in savers being wrongly advised to transfer.

The FCA now offers an online “advice checker” service for people concerned they may have received poor transfer advice, with the Financial Ombudsman Service ready to investigate cases of potential wrongdoing.

Loan and credit card repayments are to be frozen for three months as the Financial Conduct Authority (FCA) urges banks to provide consumers with financial relief in the face of an unprecedented crisis. The regulator has also proposed that banks offer a £500 interest-free overdraft, with anyone financially affected by the coronavirus pandemic eligible to apply.

The stopgap measures aim to support users of consumer credit products that might be facing financial difficulties because of the “exceptional circumstances” arising from the virus.

Previously announced changes to overdrafts meant that from 6 April financial institutions would only be able to charge a single annual interest rate for both arranged and unarranged overdrafts. Many providers had pegged their interest rates at around 40%, meaning the £500 interest-free overdraft would provide relief for many.

“Given these measures would span a wide variety of firms the FCA is conducting a brief consultation on our measures,” the FCA said. “However, given the national emergency and the significant impact on consumers' finances right now, we have asked all stakeholders to respond within a much shorter timeframe than normal.”

The FCA proposals for overdrafts and loan repayments will go out for consultation on Monday and if approved by banks could provide significant financial relief for hundreds of thousands of people.

If confirmed, measures would come into force by 9 April.

The three-month payment freeze applies to credit cards, store cards, and catalogue credit. If the measures are put into place, customers would be able to ask lenders for a payment freeze or for a reduction in monthly payments during this period.

Customers with personal loans would also be able to ask for a three-month freeze if needed.

However with the exception of the £500 overdraft proposal, banks and lenders would be allowed to charge a “reasonable” interest rate if a customer requests a temporary payment freeze.

The FCA’s proposals comes after it was revealed 950,000 applied for Universal Credit in the last two weeks.

“The proposed changes to the FCA’s rules should enable lenders to deliver further support to their customers and we will continue to work with the regulator as part of the industry’s commitment to get the country through these difficult times,” said Stephen Jones, Chief Executive of UK Finance.

Vim Maru, Retail Director at Lloyds Banking Group, said the bank welcomed the FCA’s guidance and announced that “customers can apply for payment holidays on mortgages and loans using a new online application that provides a decision in days, this will also be available for credit cards this week”. Missed payment fees on mortgages, credit card, and loans will be waived for three months.

From 6 April, “Lloyds Bank, Halifax and Bank of Scotland customers will also be able to access a £300 interest-free overdraft and we will introduce a new overdraft charging structure which means all of our customers will pay less interest than they do today.”

On 29 March last year the UK’s financial watchdog, the Financial Conduct Authority (FCA), banned the sale, marketing and distribution of binary options to all retail customers. It’s a step in the right direction. But unfortunately the binary-options bubble continues to brew. Unless more decisive action is taken, more and more people are going to be cleaned out of their savings by unscrupulous operators.

A binary option is similar to a normal (“vanilla”) option, where you pay a premium for the option to buy or sell an instrument at a fixed price (the exercise price – see box below for a detailed explanation). Profits or losses on vanilla options can be small or large, depending on the difference between the “exercise” price and the price of the underlying asset.

Unlike normal options, however, binary options do not fluctuate in value. Either the option is “in the money” on expiry – in which case it pays out – or it isn’t, in which case it expires worthless. Because of this binary nature, many shysters see an opportunity in selling binary options that are highly unlikely to end up in the money. They get to collect the hefty premiums, but never have to pay out.

Don’t be suckered by wild success stories

The media is part of the problem. Journalists, particularly those working at online content mills, are so desperate for content that might “go viral” and garner lots of hits that they’re quite willing to run a story with a click-bait headline without doing much (if any) background research. Take the recent tale of a 16-year-old “self-taught currency trader”, who apparently turned £150 into £60,000 in less than a year. This dubious success story was widely shared on social media without many questions being asked. Yet if we take those returns and calculate them on an annual basis, this 16-year-old’s return for the year would be 39,900%. That would literally make him the best trader of all time. So how did a 16-year-old school kid learn how to outsmart the best minds and machines on the planet, just by watching YouTube videos? As nobody asked him, sadly we’ll never know.

There was also the very recent example of Gurvin Singh, a 20-year-old medical student in Plymouth who claimed to be making six figures a month from foreign exchange trading. One major newspaper reported this month that more than 1,000 investors were sucked in by Singh’s Instagram account, which showed him posing in designer clothes with expensive cars at plush holiday resorts. Those who signed up for his services found that their trading accounts were emptied on Christmas Eve and the FCA has added him to its warning list of unauthorised traders (after the fact, unfortunately). But what the paper doesn’t mention in this particular piece is that Singh’s “success” was first reported on its own website in breathless, no-questions-asked fashion, in November, just a month before it all went horribly wrong.

This aggravates me because, as a genuine trader, I work hard to make profits and I know what it takes. I also don’t like to see people being conned. So I want to unpack this story for you, so that you don’t end up falling for one of these scams or something similar.

How does the binary-options scam work?

There is a reason why so many gentlemen (it’s usually men) in their early 20s now apparently own private jets, luxury cars and slick watches. It just may not be because they’ve cracked the financial markets as they claim. As Charlie Munger, Warren Buffett’s business partner, puts it: “Show me the incentive and I will show you the outcome”. There are many reputable financial-trading firms and brokerages out there. However, many – ones that I would describe as “bucket shops” – are not so reputable. Spread-betting firms typically make their money on the spread (the gap between the buying price and the selling price) and the commission paid by their clients. So their business model does not benefit from losing traders.

However, many brokers know that a losing trader can be very profitable – for them. If you know that 90% of traders will lose all of their money within six months, what do you do? Simply take the other side of the trade. When Johnny Punter buys, the broker sells. And when Johnny Punter wishes to cover his losses, the broker buys and collects the profit.

Unprofitable traders are so profitable for many a bucket shop that they will pay handsome introduction fees for new traders. Therein lies the incentive.

It doesn’t matter if you’re actually making any money from your trading – if you can get even a £20 incentive for every trader who signs up with the minimum deposit of a few hundred pounds, then you only need to sign up 1,000 people a month to make £20,000. And the reality is that these brokers aren’t offering just £20 for new clients – they’re offering hundreds. I know they do, because I’ve been offered it.

The Pied Pipers of foreign exchange

If you’re not a successful trader, the next best thing is to fake it. A quick Google search reveals that you can rent a Lamborghini Huracan for four days at a price of £2,500. This is fairly steep – but you can rent a Lamborghini Gallardo for two days for £1,590. Two days is more than enough for a wannabe forex guru to take hundreds of snaps in different outfits, parking in fancy residential estates that they don’t live in and overall giving the impression over several months that they really do own a six-figure supercar. And of course, there are plenty of places to hunt down a cheap, out-of-season stay at a luxurious five-star hotel, where they can do exactly the same. Then they just pop it all on social media and wait for eager punters to line up to sign up with their “exclusive broker”.

Many brokers offer demo accounts, in which case the “guru” can just repeatedly put on ten trades in a row, come out with winners, then screenshot it and post it on Instagram. If even that is too difficult a task, then it’s a simple matter to fake the picture instead using image manipulation software and post that. With “evidence” of their success sorted out, the trader then promotes their wares with promises of “signals” that have 90% success rates, alongside key phrases such as “no risk” and “guaranteed profit”. Most informed investors realise that if a magic money-making machine did exist it would be owned by a private hedge fund, never to see the light of day. So anyone who actually believes that a 20-year-old student could pull this off is ideal bait – inexperienced, naive and potentially desperate.

The scam also succeeds because of how victims feel when they finally realise they’ve been suckered. Most don’t tell anyone because they feel foolish and want to save face. But also, they know (or rapidly learn) that there is very little the police can do. The banning of the sale of binary options was a step in the right direction. But now the traders of Instagram simply give away their “signals” to trade these options for free. And many bucket-shop brokers are overseas – often they’re not even doing anything illegal in the country in which they operate (although equally often the traders in question will imply that the bucket shop is a reputable UK-based and regulated institution, or lie flat out).

There are even operators who will manipulate the punter’s account in order to make them believe they are winning and then call on them to deposit more money. Then, when the client finally wishes to withdraw, the company goes cold and refers them to the small print, in which it says that the client must trade through an impossible amount of money just to be allowed to withdraw. Other brokers allow the affiliate to widen the spread to maximise their own commission and increase losses for their clients. We look at ways to avoid being scammed in the box below, but in short, as always – if it looks too good to be true, it is.

For more from Michael, see shiftingshares.com.

How to avoid being scammed

Stick with the UK: ensure any broker you use is UK regulated. And stick to well-known names – online reviews can be faked.

Avoid “signals”: magic money-making machines do not exist. Watch for fakes: many of these firms have a name that sounds vaguely like a City institution. Check out fca.org.uk/scamsmart for warnings and check with Companies House to see if a company exists. But even if it passes both tests, don’t assume it’s legitimate.

Hang up on cold callers: assume that all cold calls are scams.

What’s in it for them? Very often people don’t disclose huge conflicts of interest.

Traders aren’t fashion models: Beware people who post more pictures of their lifestyle than of their actual trading.

What is an option?

A put option gives the holder the right (but not the obligation) to sell an asset – that is, a share – for an agreed price on or before a given date. When you buy a put option, you pay a fee (premium) to the seller (“writer”) of the option. You can use put options to bet on the price of an asset falling. Your potential loss is limited to the premium paid.

Say Acme Widgets is trading at 100p a share and a put option to sell at 90p costs 5p. You buy a block of 1,000 options at a cost of £50 (5p x 1,000). If the shares fall to 70p, you would make a profit of £150 ((90p – 70p – 5p) x 1,000). However, if the shares go up – to 120p, say – you would just let the option expire. In that case, you lose your premium of £50 but nothing more. A “call” option is similar, but gives the right to buy an asset at an agreed price.

The price of an option is determined by a number of factors, including the volatility of the price of the underlying asset (options on more volatile assets will be pricier). So option prices tend to rise during market turmoil. The length of time before an option expires is also important – options that expire further out into the future are more expensive.

Are pension savers heading for disaster by taking too much cash out of income drawdown plans early in retirement? Research from personal finance analyst Moneyfacts suggests that 70% of savers opting for a regular income from an income drawdown plan are taking 4% or more of their fund out each year. That includes 30% who are taking an income of 8% or more. Moneyfacts also reckons that 13% of savers have already burned through their entire pension fund.

A crisis is brewing

We may be heading for a crisis with income drawdown plans, which have soared in popularity since the pension freedom reforms of 2015. While the vast majority of savers used to convert pension fund savings into income via an annuity guaranteed for life, income drawdown plans allow you to withdraw cash directly from your pension fund. Crucially, there are no limits on withdrawals and nothing to stop you withdrawing your entire pension fund early in retirement, or even in one go.

Moneyfacts' data echoes recent warnings from the Financial Conduct Authority (FCA), the financial watchdog, which has repeatedly suggested that savers may be withdrawing too much from their pension funds. The FCA estimates that 40% of income drawdown plan holders are withdrawing at least 8% of their pension fund each year.

There is no clear limit on how much you can take out of your pension each year if it is to last for your whole retirement. That will depend on how long you live, but the way in which you invest your remaining pension fund will also be important, since this provides opportunities to replenish your savings. However, financial experts suggest that a withdrawal rate of 3% to 4% a year is at the top end of a safe drawdown programme, particularly for savers who have invested their pension fund in low-risk assets likely to generate lower levels of return. In that case, many savers will run out of pension fund well before their deaths.

So far, however, regulators have been reluctant to intervene. One major problem is that their data is incomplete: it measures people's withdrawal rates from each pension fund they hold rather than from their entire pension savings. In many cases, regulators suspect, savers withdrawing significant levels of income from one fund have other pension plans to fall back on.

Still, the data shows that people taking out income drawdown plans without first consulting an independent financial adviser are more likely to be withdrawing larger amounts. That suggests some may not understand the risks they are taking. Many in the pension industry now believe that the spread of income drawdown plans may prove to be a time bomb.

Thousands of small businesses in dispute with financial-services companies will soon have access to a statutory complaints service. The Financial Conduct Authority, the chief City regulator, is to extend significantly the remit of the Financial Ombudsman Service (FOS) so that it covers more than 200,000 small and medium-sized enterprises (SMEs) not currently entitled to use the system.

The FOS, best known for providing a free dispute resolution service for consumers with a complaint about firms such as banks, insurers and investment managers, already accepts complaints from "micro enterprises". But for now any firm with more than ten employees or assets of more than €2m falls outside the scheme's remit.

From next April, however, the FCA will change the rules to allow much larger businesses to complain to the FOS. Any firm with an annual turnover of less than £6.5m, fewer than 50 employees, or assets of less than £5m will be entitled to bring a complaint to the service. The changes will give an additional 210,000 SMEs access to the scheme, estimates the regulator.

Breakthrough for SMEs

The announcement marks a significant breakthrough for SMEs. Although the FOS's remit only extends to regulated financial services, many smaller businesses have found it very difficult to make a successful complaint about such companies. The banking sector, in particular, has been involved in a series of high-profile scandals where SMEs have lost out.

Moreover, while small businesses do already have the option of taking legal action against financial-services companies, the cost of doing so is very high. Even where UK SMEs are successful in such cases, the cost of bringing a claim accounts, on average, for 44% of its value, according to research from the World Bank.

The FCA's plans are in line with recommendations made last week by Simon Walker, the former head of the Institute of Directors, who was commissioned by the banking industry to investigate possible means for providing SMEs with simpler access to redress. Walker's review rejected calls for a tribunal system to intervene in disputes between small businesses and their banks, arguing in favour of an increased role for the FOS. A second recommendation from the review, a voluntary ombudsman scheme for SMEs with an annual turnover of between £6.5m and £10m, has yet to be adopted by the banks.

Meanwhile, SMEs are also beginning to exercise new rights to complain about late payments. The Small Business Commissioner, set up by the government last year, has begun to intervene in late-payment cases. The service accepts complaints from SMEs with fewer than 50 employees about delayed payments from large businesses based in the UK. Roughly 5.7 million SMEs are entitled to complain to the commissioner, estimates the government.

Phoenix Life, the pensions company that specialises in taking on other insurers' historic savings plans, has dropped exit fees for 150,000 customers who have benefits worth less than £5,000. The move will make it easier for such savers to transfer savings to another pension provider moving their money into a larger pension fund held elsewhere, for example.

Phoenix Life's decision is significant because it looks after thousands of savers who have ended up with it after their plans were transferred from other companies. In recent years it has taken on policies from large insurers including Standard Life, AXA, Abbey Life and Sun Life.

Some savers have money invested with other providers in plans opened more recently, and would benefit from being able to consolidate their savings. The move also follows pressure from regulators on exit fees. The Financial Conduct Authority has banned pension providers from charging exit fees of more than 1%.

Some customers of bust broker Beaufort Securities could suffer unexpected losses, says John Stepek.

When you invest with a stockbroker, your assets are ring-fenced from the broker's own. This means that if the broker goes bust, your assets remain intact, and the company's creditors don't have a claim on them. There may well be a delay in getting your money back, and the value of your assets may fluctuate during that time. But in principle, your assets should still be there. And if it turns out that this ring-fencing wasn't being observed by the broker, and that money has been lost or stolen, then the Financial Services Compensation Scheme (FSCS) covers up to £50,000 of any shortfall.

However, the latest stockbroker collapse has flagged up a risk that many investors may not have been aware of. Broker Beaufort Securities was shut down by the UK financial regulator, the Financial Conduct Authority (FCA), in early March, after the US authorities charged the company with being involved in fraud and money laundering. PricewaterhouseCoopers, the administrator, reckons that in a worst-case scenario it could take up to four years, and cost up to £100m, to return the £550m in cash and assets held by clients of Beaufort. The obvious question is: who foots the bill?

And the answer, at least in part, is Beaufort's private-investor clients. While creditors have no claim on these assets, the FCA's special administration scheme means that administrators can cover their costs out of clients' money. To be specific, around 700 customers (out of 15,000) with portfolios worth more than £150,000 could endure haircuts of as much as 40%.

This is unfortunate for investors with the defunct Beaumont, but it's also worrying for anyone with a reasonable-sized pension pot. John Lee, a Liberal Democrat peer, notes that the idea of funds being up for grabs to pay an administrator hardly inspires confidence in dealing with smaller brokers. He is using his position in the House of Lords to pressure the government to fix this. Big brokers must also realise that any sort of uncertainty as to the security of their clients' assets is a major potential business risk they should be equally keen to see this issue tackled.

But what can you do meanwhile? Ultimately, Lee is right you have to consider the solvency of your broker. You could go to Companies House and check their accounts, but in practice, it's more likely to mean that more people will use the big brokers for the lion's share of their funds, and keep holdings with smaller specialists below the FSCS limit is hardly the way to encourage a competitive, healthy market.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Incoming European rules will crack down on spread betting.

In December 2016, the City regulator, the Financial Conduct Authority (FCA), proposed sweeping changes to the rules on spread betting, with a particular focus on reducing the amount of leverage (borrowed money) that individuals could use to trade markets. This generated a furious response from both punters and firms, as well as threats to relocate to friendlier parts of Europe. However, before anything could be acted on, the European regulator the European Securities and Markets Authority (Esma) launched an inquiry too. In response, the FCA suspended its own, while reserving the right to take it up again if it felt that Esma hadn't gone far enough.

Having published draft proposals in December, Esma has now published the actual regulations, and it's safe to say that the FCA is unlikely to object. Some of the rules make a lot of sense. We've often argued that binary options (bets on whether a currency pair or index will close above or below a certain level) are poor value, and have attracted scammers. So, it's good that Esma wants to ban the sale, marketing or distribution of binaries to ordinary investors. It also makes sense for them to ban special incentives, introduce a special risk warning, and to ban accounts with negative balances, limiting losses.

Esma has also backed away from earlier proposals to impose a margin close-out rule (whereby a trade is closed automatically once it has lost a certain amount) on a position-by-position basis. This could have left investors in the bizarre situation where they would have had to close losing trades, even if their overall accounts were in profit, thus rendering perfectly valid strategies (such as long/short equity positions and paired currency trades) impossible. This has been replaced with a 50% margin close-out rule on a per-account basis.

The proposals on leverage are fairly draconian however. Esma has essentially taken the FCA's proposals for inexperienced investors and applied them to everyone. The limit of 30:1 (3.33%) leverage for major foreign currency pairs is more liberal than the FCA's 25:1 (4%), but in all other respects they are near-identical. So those who want to bet on individual shares will be limited to 5:1 (20%). And if you want to trade bitcoin, you will have to put up 50% as margin.

The rules kick in later this year. In all, they will limit losses but also gains for most spread betters, especially those with smaller amounts of capital. While it makes sense for the high-risk nature of spread betting to be highlighted forcefully by regulators, recognition of varying experience levels could have been more proportionate.

Trading techniques: what use is analysis?

As well as looking at price movements, and following short-sellers, one way to judge sentiment is to look at the research put out by banks and brokers. Generally "sell-side" research has a poor reputation. This is because, up until the start of this year when new reforms came in, clients hadn't paid for it directly, but received it in exchange for using a particular broker to buy and sell shares. However, some traders argue that, even if the analysts aren't very good, enough people take notice of the research for it to become a self-fulfilling prophecy.

A 2007 study by Valentyn Panchenko of the University of Amsterdam, looking at large-cap US stocks between 1997 and 2003, found that broker upgrades significantly lifted prices on the day the upgrades took place. Conversely broker downgrades immediately hit returns. The effect was stronger when stocks were upgraded and downgraded by several brokers at the same time. However, most of the effects (positive or negative) disappeared in subsequent days so unless you had prior knowledge of what the brokers planned to do, it wasn't of much practical use.

In the longer run, however, analyst recommendations seem to be good contrarian indicators. J Randall Woolridge of Pennsylvania State University found that between 1993 and 2002 the average stock tipped by the largest 15 brokers in the US lagged the S&P 500. A similar study by Cornell's Susan Krische and Charles Lee in 2000 agreed that analysts' tips subsequently underperform, though Krische says that this is mainly due to their preference for recommending stocks with high price/earnings ratios.

How my tipsare doing

It's been a pretty good fortnight for this column's tips. Up until recently, shopping centre operator Hammerson was one of the laggards of our portfolio. Indeed, we were seriously tempted to close our position in it. However, a takeover bid from French company Klpierre has seen its share price soar to 534p. This means the position is now £172 in the black. Indeed, all five of our long positions are now making profits, with oil giant Petrobras, spread-betting company IG Group and car maker Renault making profits of £730, £477 and £505 respectively. Semiconductor group Micron has fallen back a little, but the position is still £177 in profit.

Our short positions are also doing well. After appearing to rally a bit, cryptocurrency bitcoin is now at $7,886, its lowest level for several weeks, and far below the $11,225 it was when we first suggested you start shorting it. At £0.25 per $1 this works out at a profit of £834. Trump's decision to launch a trade war has hit the S&P 500, pushing it below the level at which we suggested you start shorting it, meaning that our S&P 500 short is making a tidy profit of £375.

So in all, our long positions are £1,784 in profit while our short positions are making £1,209 that works out at a total of £3,170. If you then deduct the £1,014 in losses from closed trades so far, this gives us a profit of £2,156 in just over a year (not counting dividends or interest charges).

So what should we do with our trades now? I'm going to stick with them all for the time being and I won't add any new ones yet, but I am going to adjust some of the stop-losses, in order to lock in some of our profits. So, I'm going to increase the stop on Hammerson to 510p, and the stop on Micron to $38; while reducing the stop-losses on bitcoin to 11,000 and the S&P 500 to 2,800.

Getting the right help for your money problems can be as tricky as finding a good plumber. Sarah Moore explains how to find advice on a sensible budget.

If you're looking for help in managing your money, it can be difficult to know where to start. The financial sections of the newspapers regularly carry warnings about those who realise too late that they've paid astronomical fees to advisers or, worse still, that they have been conned by unscrupulous predators. Others resist asking for advice at all, preferring to do it all themselves. We have a lot of sympathy with that view ideally we should all strive for a level of familiarity with investing and personal finance that enables us to manage our own money with confidence. However, even if the relationship proves only to be a short one, consulting a financial adviser can be a good way of learning about options you may not have considered, sense-checking your own views, and putting a financial plan together. And if organisation and paperwork are not your strong point, an adviser can also help you to make sure that you stick to your plan.

But how do you find an adviser? It's not quite as straightforward as finding a good plumber or builder (if you can even call that straightforward). And in many cases, you won't know if they've done a good job or not until they've been managing your affairs for some time. So you need a good grasp of what you are looking for, and of how the world of financial advice works, before you start your hunt.

What kind of advice do you need?

Depending on the type of service that they provide a financial adviser might be known as a pension adviser, financial planner, or if they sell products such as mortgages or investments a broker. But to act in this capacity, they must all be regulated by the Financial Conduct Authority (FCA). Before you pick an adviser, you need to know what you're looking for, so that you go to the person most qualified to help you, and only pay for the advice you need. If you are looking for assistance with a specific financial product, then a broker might be your first port of call. Advisers who sell the likes of mortgages, or life, critical-illness and income-protection insurance policies, are generally paid on commission by the product provider.

Anyone advising on mortgages or equity release requires specific qualifications. There are essentially three types of mortgage adviser: those who are restricted to one lender; those who offer mortgages from a limited list of providers; and those who can advise by looking at the whole market. Be aware that even "whole-of-market" advisers can't sell you every product on the market, as some mortgages can only be sold directly by the lender to the customer (although they can and should tell you that these products exist). Of course, it is entirely possible to do your own research and pick your own mortgage product this is called an execution-only application. Doing so means taking full responsibility for your decision, notes the Money Advice Service, which means you have fewer options if the product ends up being unsuitable for you but you would also hope that an adviser wouldn't recommend the wrong product for you.

If you are looking for life insurance, critical-illness insurance (which pays out should you contract various serious illnesses) or income protection (which pays out a regular income if you are unable to work through accident, sickness or unemployment), and your situation is fairly straightforward, you should be able to pick your own policy without having to pay for advice. However, if your family situation is complicated, or you have long-term health problems, it can be a good idea to speak to someone who can help you to find the best cover to meet your needs.

If you need help to pick a general insurance product, such as home or travel insurance, an insurance broker can help you to find the best option, as well as dealing with any claims and making sure you get the best deal when it comes to renew. Again, these are straightforward products to find for most people, but it can help to speak to a broker if your circumstances are unusual perhaps you have health problems and need to find a travel insurance policy that will cover you, for example. Check to see which providers the broker is able to work with, to ensure you're getting the most choice. The British Insurance Brokers' Association offers a "find a broker" service at Biba.org.uk.

How to pick a financial adviser

If you're looking for advice on investing or pensions in particular, and especially if you're looking to transfer a sizeable pension fund, then you'll need what most of us traditionally think of when we think of a financial adviser a specialist who can help you to flesh out your long-term financial goals and to implement your plans in the most tax-efficient way. These advisers will generally be able to help you with many of the individual products noted above as part of the planning process such as changes in your life cover needs at various milestones. Be sure to speak to a few different advisers before choosing one don't just take the first personal recommendation you get from friends or family.

The most important distinction to make is between an independent financial adviser (IFA) and a "restricted" adviser. An IFA can give advice and sell products from any provider. Restricted advisers are limited in the type of product or provider that they can recommend to you. It's almost always best to go with an IFA, so that you have access to the full range of services and providers available.

There are various online adviser directories, such as those published by the Personal Finance Association (a trade body for IFAs), or the Institute of Financial Planning. You might also want to look at websites such as Find an Adviser, Unbiased, and VouchedFor. The Money Advice Service also has a directory of advisers who specialise in retirement-related advice, or you can look at the Society of Later Life Advisers (whose specialities might include equity release and paying for care).

Whatever kind of advice you're looking for, be sure to check that any adviser you are considering is regulated by the FCA, and that they're qualified to advise you on the subject you need help with. Since 2013, advisers have been required to hold a "Level 4 Diploma" qualification, which is deemed equivalent to the first year of a degree-level course. Examples might include the Diploma in Financial Planning (or DipFP). However, many IFAs have higher-level qualifications that allow them to claim Certified Financial Planner status (awarded by the Chartered Institute for Securities and Investment) or Chartered Financial Planner status (awarded by the Chartered Insurance Institute). Each requires that the IFA has several years of practical experience on top of passing a challenging series of exams. The adviser should also have an annual Statement of Professional Standing (SPS), issued by an FCA-accredited body. This shows that they have signed up to a code of ethics, completed a minimum amount of training each year (known as "continuing professional development") and hold the required qualifications for the business that they undertake.

How much should you be paying?

For many years, a majority of IFAs were paid via commission payments on the products they sold. This, of course, hid the true cost of advice from clients and led to serious potential conflicts of interest. This all changed in January 2013 as a result of the FCA's Retail Distribution Review commission payments were banned and now IFAs have to charge directly for the advice they give.

Hourly rates can vary widely from £75 per hour to £350, but the UK average is about £150, according to the Money Advice Service. For a fixed fee for a specified task expect to pay several hundred or even a few thousand pounds, depending on what services you require. A fixed fee should be agreed in advance, and you should ask for and receive written confirmation of what services will be included in the fee.

If you're looking for ongoing advice, the most common arrangement is to pay an annual percentage of the money under management. If you do this, then it's crucial to be aware of the importance of getting good value. For example, if you start with £500,000 and pay 1.82% in fees, then after 20 years of growth at 5.3% a year you will have £972,743, according to data from online wealth manager Netwealth (MoneyWeek's editor-in-chief, Merryn Somerset Webb, sits on the advisory committee here). This looks a decent enough return. But if you had incurred a lower annual fee of 0.6%, you would be left with more than £1.2m after 20 years. This demonstrates just how huge the effect of apparently small fees on your investment fund can be. So be sure to shop around and get a detailed quote (including details of service provided) to enable you to compare IFAs before you make your choice.

Worrywarts are concerned about household debt. They're fretting about the wrong thing. Despite austerity, the welfare bill continues to soar, says James Ferguson of the Macrostrategy Partnership.

A year ago the Financial Conduct Authority (FCA) conducted its first Financial Lives survey, a large-scale (13,000 respondents) examination of Britain's personal finances. The regulator found that almost eight million (15%) people might be over-indebted and that a similar number (17%) would struggle if their monthly rent or mortgage payment rose by £50. Half of all adults displayed at least one characteristic of potential financial vulnerability, although almost all of these were young in the 25-34 age range, 13% said they were "in difficulty", compared with just 1% of the over-65s.

With interest rates at 5,000-year lows (as Andy Haldane, the Bank of England's chief economist, puts it) and unemployment at 4.3% (the lowest since 1975), this suggests that the economy could be very vulnerable to rising interest rates. Historically, quarterly consumer credit write-offs (bad debts) tend to come in at 2%-3%, but when unemployment rises these can grow to 4%-5%. During the financial crisis, when unemployment rose by 1-2 percentage points a year, write-offs reached 6%-7%.

So perhaps it's no surprise that in July the Bank of England warned that the double-digit rise in personal loans looked "dangerous". It then, in September, warned the banks that in the event of another recession they risked losing up to £30bn on the £200bn of consumer debt they have lent out, due to default. The Bank demanded that they add a further £10bn to their precautionary capital buffers.

Meanwhile, a more recent survey of 2,000 people, carried out on behalf of CompareTheMarket.com, revealed that the average owed in the UK by those who have debt is £8,000 (excluding any mortgage). Of the respondents, 62% said they were worried about their personal debts, and 22% claimed to be struggling to make ends meet. Even so, a third plan to take on more debt over the next year. The average respondent didn't expect to be debt-free until the age of 57, while 12% think they will never be debt-free.

We are less indebted than we think

At first glance, this all looks very worrying. But are these survey results and dire official warnings really a fair reflection of the UK's debt burden? Let's start with the CompareTheMarket.com survey. Official statistics show that total UK household consumer credit comes to £206bn. We also know how many adults there are in the country 51 million. So, if we average across all adults (rather than only those with debt) to get a better idea of how systemic the problem is, then consumer credit per adult is less than £4,000. If we add in the £100bn of student debt, we still only get an average of around £5,900.

Student debt doesn't have to be repaid by the poorest graduates. The government's Student Loans Company assumes that 40% of outstanding debt will never be recovered and that two-thirds of students will not repay their entire debt (which makes you wonder what a university education is worth these days).

No repayments are required until earnings exceed £21,000 (set to rise to £25,000 next year) and all debts are written off after 30 years. So a student loan is not a loan per se, but rather a higher tax rate imposed only on those graduates productive enough to earn more than the threshold. (Incidentally, forgiving the debts of the least productive students is no way to help with the UK's appalling productivity growth.)

Our credit-card habit isn't that bad

Aside from the £100bn of student loans, a large chunk of the remaining £200bn of consumer credit is the £55bn of credit-card debt outstanding at any given time. Yet most credit-card debt (sometimes as much as 95%) is paid off each month so it's not really debt at all. An FCA report on problem credit-card debt estimated that borrowers in arrears (6.8%) and others who persistently carried over debt balances (11.8%) made up 18.6% of borrowers by number, but significantly less in terms of the value of the debt.

As a result, net credit-card debt probably amounts to less than £10bn. Banks earn a lot of interest on credit-card debt, and so make at least £2.5bn off this £10bn. Now, the current level of credit-card write-offs is 3.2%, which would deduct £1.7bn from the gross profit. At the height of the crisis, the write-off rate rose to 9.5%. This suggests a worst-case loss scenario for banks of around £3.5bn maybe double that across all consumer credit.

Credit cards were the worst-hit loan segment during the crisis, so the £30bn in consumer credit losses that the Bank of England claims banks should brace for seems overly pessimistic. The more prosaic truth is that the Bank needed a narrative to justify raising the banks' minimum capital buffers by £10bn. You see, the Bank's mandate is to raise such buffers counter-cyclically (in other words, when things are good, to prevent overly risky lending). But of course capital buffers constitute a "rainy day" fund for absorbing loan losses, which made the explanation sound quite negative.

Even the "dangerous" recent double-digit growth in non-credit-card consumer debt has yet to bring the total back up to early 2006 levels, after which such debt collapsed by a third over the five years from 2008 to 2013. Nominal GDP has risen by 40% since then, meaning consumer credit has fallen from 13% of GDP pre-crisis to just 9.4% now. Take out the over-counting of credit-card debt and total consumer debt is no more than 7.5% of GDP.

It's a similar story with outstanding mortgage debt, which differs from consumer credit because it is more than fully backed by housing assets. Mortgage debt reached 74% of GDP on the eve of the banking crisis, but has slipped to 63% since 2009. So while banks have doubled their capital, they have also substantially ratcheted back on lending, at least relative to the size of the economy.

Britain's real debt problem

In case I sound complacent about debt, I'm not. It's just that our attention is being misdirected towards household debt, where there's no discernible systemic problem. Instead, it should be focused on government debt, where there certainly is a problem.Before the crisis, UK government debt (the national debt) only amounted to a third of annual GDP. Then-chancellor Gordon Brown had run it up from 27% of GDP.

He had kept the annual deficit (the government overspend) running at around 3% of GDP in order to fund a raft of public-sector giveaways. This was mainly in the form of welfare benefits to the (mostly part-time) working poor. It's true that the £1.6trn bank bailout sent government debt surging to 144% of GDP in 2009. Yet most of those financial interventions resulted in profits for the taxpayer.

Today the remaining bailout debts (mainly guarantees to the Bank) amount to only around £235bn (11.8%) of GDP, if you exclude the government's 72% stake in RBS. That's an overall decline of 85%. But even excluding financial interventions, the deficit ballooned to 9% in 2009-2010. While it has made steady progress lower since then, it remained above 2% of GDP in the second quarter of 2017. At this rate, tax revenues won't cover government spending until well into the 2020s, according to current chancellor Philip Hammond's latest budget.

The trouble is this is as good as it gets

A great unasked question hangs over this state of affairs. If GDP is now almost 10% higher than at its pre-crisis peak; tax revenues are higher as a proportion of GDP (37% compared with 36% in 2007); unemployment is at a four-decade low; and students now pay £9,000 extra for tuition then why has austerity affected everything from the NHS to our schools, defence spending, and the police? How can we still be running deficits if taxes are up, yet spending is down across the board?

The answer is depressingly simple. One area of government spending has risen remorselessly since Brown's chancellorship: welfare benefits. Contrary to what most of the press would have you believe, benefits have little to do with the unemployed. Job Seeker's Allowance and the associated Housing Benefit account for just £3.5bn (1.6%) of the £218bn welfare budget. The largest items by far are the state pension at £100bn (45% of the welfare budget) and the £112bn in social security and tax credits, which, despite the name, are nothing more than welfare payments, most of which go to working claimants (effectively subsidising corporations' wage bills in the process).

With less than half of the population now paying income tax and few of these transfers to the working poor being discretionary, there appears no way to rein back this spending. Until now, departmental austerity and increased government borrowing have absorbed the slack, but with government debt now at 95% of GDP (81% if we exclude the remaining bailout debts) and growing by 2% a year, there's little scope to absorb a recession, let alone another crisis. In short, it's not household debt we need to be worried about it's government debt.