Posts & Market Commentary from the experts at Mint FS

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IP vs UC, you choose

Posts & Blog 1

More certainty around the possible impact of Universal Credit for individual income protection (IIP) customers is needed according to the Association of British Insurers. The call comes following an ABI-commissioned report by the New Policy Institute published this week, to help both insurers and government better understand the potential interaction between IIP and UC to ensure that those unable to work receive the financial support they need, and practical help to return to work as soon as possible.

IIP is particularly important for those who are self-employed and are more likely to have a need for IIP as soon as they become unable to work.  While entitlement to UC does not impact on the amount of any IIP payment made to the policyholder, the report points out that it can have an important impact on the net value of the payment, as it can reduce, or in some cases dis-qualify, entitlement to UC.  The report analysed a sample of 370,000 IIP policyholders across four insurers. Of the sample, four in five were under age 45, two-thirds earned between £10,000 and £40,0000, with the majority being homeowners with mortgages or tenants.

Just under half – 46% – of IIP customers are estimated not to have an entitlement to UC if they are unable to work because of sickness or injury and have no IIP to support them and just 2 out of 5 policyholders would have their entitlement to UC removed because of their IIP policy. 1 in 6 of policyholders would continue to be entitled to UC alongside their IIP policy and just 1 in 5 policyholders entitled to UC are estimated to be no better off at the point of claim in the short term if they have IIP than if they do not.


Prevention is the cure

Posts & Blog 2

The finance industry prevented £820 million of unauthorised fraud in the first half of 2019, up 14 per cent on the previous year, according to the latest figures from UK Finance. This is equivalent to £2 in every £3 of attempted unauthorised fraud being stopped, or £4.5 million of fraud being prevented a day.

Over the same period, £408 million was stolen by criminals through unauthorised card, remote banking and cheque fraud. In addition, £208 million was lost to authorised push payment (APP) fraud, where customers are tricked into authorising a payment to an account controlled by a criminal. The compromise of personal and financial data remains a significant driver behind fraud losses. Customer details are being stolen through data breaches at third parties outside the financial sector, while sophisticated “digital skimming” attacks are being used to steal card data when consumers are shopping online. Criminals also continue to use social engineering techniques to trick customers into divulging their personal information or transferring money.

The total of £208 million lost to APP fraud was split between personal (£147 million) and business (£61 million) accounts. In total there were 57,549 APP fraud cases, split between personal (53,475 cases) and non-personal (4,074 cases) accounts and financial providers were able to return a total of £39.3 million of the losses to victims, split between personal (£25.6 million) and business (£13.6 million) accounts.

 Investment scams accounted for the largest proportion of losses amongst personal customers, with £41 million lost to this type of fraud, or over £12,200 per case. Purchase scams remained the most prevalent form of APP fraud, accounting for almost two in three (65 per cent) of all cases targeting personal customers. When a customer authorises a payment to be made to another account, even if they are tricked into doing so, current legislation means that they have no legal protection to cover them for the losses – unlike an unauthorised transaction. However, an industry voluntary code that came into effect on 28 May 2019 has introduced new consumer protections against authorised push payment fraud. Firms who have signed up to the code have committed to reimbursing the victims of this type of fraud, provided the customer has met the standards expected of them under the code.


Homes half empty

Posts & Blog 3

Action on Empty Homes and the Nationwide Building Society are calling for targeted national investment to bring homes back into circulation to help reduce the housing crisis. This follows research from Action on Empty Homes revealing the fastest rise in the number of long-term empty homes in England since the recession. The number of empty homes has increased 5.3 per cent in 2018 as an additional 10,983 homes were left empty. This is more than double the 2.6 per cent rise seen in the previous year and marks the second consecutive year with a substantial increase in numbers of long-term empty homes, reversing the previous trend of steady declines seen since 2008.

Across England, there are now more than 216,000 long-term empty homes, equivalent to 72 per cent of the government’s annual new homes target, at a time when more than a million families are on waiting lists for local authority housing. Empty homes occur in all Council Tax bands but are particularly prevalent in the highest band (Band H) and in the lowest band (Band A).

The significant increase in empty homes is being driven by the end of the Coalition Government’s Empty Homes Programme and a more recent slowdown in the housing market. The Coalition’s programme, ended in 2015, used several targeted funds to invest £216 million in bringing over 9,000 long-term empty homes back into use.


Home based

Posts & Blog 4

More than four million UK workers are ditching the daily commute in favour of working from home. This is equivalent to one in seven UK workers.  Analysis of ONS data, carried out by Aviva Insurance, has identified the regions in the UK with the highest and lowest proportion of workers who are primarily based at home.

Powys in Wales tops the table, with 25.7% of its workers being home-based, closely followed by Kensington and Chelsea (25.0%) and Brighton and Hove (24.9%).

Workers in West Dunbartonshire, Scotland are least likely to be home-based according to the study, with just 5.6% citing their home as their main work base. Scottish regions appear throughout the top 10 least common areas for home workers, with Aberdeen City and Inverclyde coming second and third on this list.

According to Aviva’s analysis, 14% of UK workers – more than 4 million people – are home-based for their main job. This includes people who work in their home (5%), in the same grounds or building as their home (1%), or in different places, using their home as a base (8%).


Deal or no Deal?

Posts & Blog 5

Price Waterhouse have been considering the impact of a no deal Brexit in the housing market.  While their forecast represents a plausible response of house prices to the shock of no-deal, the overall impact is highly uncertain. It is possible that the demand for housing is further affected by a fall in confidence, with homebuyers becoming ever more reluctant to commit to house purchases over the coming year. For this reason they have looked at past episodes of house price falls across the different regional market as a guide to what could happen if market conditions become even more severe.

 There are still good reasons to believe this time will be different to previous financial crisis for example compared to the run-up to the financial crisis of 2008, house prices are now lower in relation to earnings in most regions of the UK, having only risen substantially in London and the South East. Also, interest rates are nowhere near the levels prevailing at the time of the 1991 recession: at the start of 1991, the Bank of England base rate was 13.88%, compared to just 0.75% today. Mortgage payments are therefore substantially more affordable. 

Overall, while a no-deal Brexit could dent property values in the short term, it may make less impact on one of the fundamental factors driving the market: the stock of regional housing. Housebuilders are expected to reduce the supply of new housing in some regions in the short term as a response to a deteriorating economic outlook. So, while there will be fallout from the initial economic shock following a no-deal Brexit, the market is expected to recover most ground in the long run to the extent the economy finds a new successful path.

 Looking forward to 2020, PWC suggests that next year promises to be a delicate year for the housing market. Even if Brexit can be resolved relatively smoothly, the travails of the global economy will impact growth in the UK, making prospects for house prices relatively subdued. One upside could come from government plans to change stamp duty. Potential changes include shifting the burden of stamp duty to the seller, exempting properties below £500,000 and reversing the surcharge for additional properties. If delivered in time for the Autumn Budget, this could lead to a significant increase in demand from buyers, providing a short-term boost to the housing market. Still, the Treasury may be unwilling to part with the revenues that stamp duty brings.


Risk Increasing

Posts & Blog 6

The Office of National Statistics (ONS) saw a significant increase in the rate of deaths registered as suicide last year which has changed a trend of continuous decline since 2013. While the exact reasons for this are unknown, the latest data show that this was largely driven by an increase among men who have continued to be most at risk of dying by suicide. In recent years, there have also been increases in the rate among young adults, with females under 25 reaching the highest rate on record for their age group.

In 2018, there were 6,507 suicides registered in the UK, an age-standardised rate of 11.2 deaths per 100,000 population; the latest rate is significantly higher than that in 2017 and represents the first increase since 2013.  Three-quarters of registered deaths in 2018 were among men (4,903 deaths), which has been the case since the mid-1990s.

The UK male suicide rate of 17.2 deaths per 100,000 represents a significant increase from the rate in 2017; for females, the UK rate was 5.4 deaths per 100,000, consistent with the rates over the past 10 years.  Scotland had the highest suicide rate in GB with 16.1 deaths per 100,000 persons (784 deaths), followed by Wales with a rate of 12.8 per 100,000 (349 deaths) and England the lowest with 10.3 deaths per 100,000 (5,021 deaths); figures for Northern Ireland will be published later this year by the Northern Ireland Statistics and Research Agency.

Males aged 45 to 49 years had the highest age-specific suicide rate (27.1 deaths per 100,000 males); for females, the age group with the highest rate was also 45 to 49 years, at 9.2 deaths per 100,000.  Despite having a low number of deaths overall, rates among the under 25s have generally increased in recent years, particularly 10 to 24-year-old females where the rate has increased significantly since 2012 to its highest level with 3.3 deaths per 100,000 females in 2018.


An Hour of Your Time?

Posts & Blog 7

British workers are spending over 10 days (251 hours) travelling to and from work every year, at an annual cost of almost £800 (£795.72), according to new research by Lloyds Bank. With an average journey time of 65 minutes each day, commuters are set to spend around 70 weeks’ worth of time (492 days) travelling for their job during their working life, at a total cost of £37,399.

 Part of Lloyds Bank’s ‘How Britain Lives’ study, the UK-wide analysis conducted in partnership with YouGov, also found that despite the time and expense, almost half of workers (47%) like their commute and one in twenty (7%) go as far as to say they love their journey into work.

Commuting clearly divides opinion, with a third of workers disliking their commute (36%), one in five (21%) saying it has become less reliable over the past five years, and a third (33%) claiming it is more crowded than half a decade ago.  With an average daily commute of 84 minutes, people living in London experience the longest journey to and from work in the UK, almost double that of those living in the East Midlands (49 minutes) or Wales (52 minutes).  Those living in the South East (75 minutes) and the East of England (69 minutes) also face higher-than-average commuting times.

The car is the most used mode of transport for commuting, with 57% of British workers travelling to work in this way.  Almost a third walk to work (31%), one in five (20%) take the bus, 18% use the train, and just 6% choose to cycle.  Londoners are the most likely to travel on public transport (51%) or on foot (45%) in the UK, while those in the West Midlands are most likely to commute by car (76%).  Younger commuters aged 18-24 are the most likely to use public transport (56%) or walk to work (43%), while those aged over 55 are the most likely to drive (63%).


Keep it Locked!

Posts & Blog 8

With thousands of students starting university or college for the first time, or returning for another year, the Association of British Insurers (ABI) is urging students to make sure their valuables are insured. University can be an exciting time for many students, but with National Union of Students statistics showing that one in five students fall victim to crime, it can also be a worrying prospect.

According to the ABI, a typical student room contains possessions worth £3,259. Research also shows that 27% of students had no insurance cover for their belongings while studying, equivalent to around 632,000 UK students. Based on the value of a typical student room, this equates to uninsured items worth more than £2 billion across the UK.

The ABI is reminding students what they should be doing to keep their possessions protected for example it may be possible for an existing home insurance policy to be extended to cover possessions at university, or there may be an insurance cover already in place in student halls. Students should avoid leaving valuables like laptops unattended when they out and about, including the library, as this increases the chance of theft.  If the student is moving into halls, to minimise risk, they should remember to shut windows and lock the door when they are out of your room. For those moving into private accommodation, make sure the front and back doors are strong and secure, with good quality locks. And make sure windows are shut and locked when they go out.