Current accounts, housing, ISAs and tax avoidance

Consumers are getting better value for money from their current account and benefiting from a more competitive market, according to a new report from the Social Market Foundation published today. The report, A switch in time: The evolution of Britain’s personal current account market, supported by Bacs, has found a 17 per cent fall in bank revenue from personal current accounts over the past eight years – a sign of increased competition in the personal banking market. Most consumers are now paying less for their accounts and receiving more back from their banks through higher interest rates and other bonuses such as cashback on purchases. The savings available through switching have also increased for consumers. Whereas in 2006 the average consumer could have saved £56 a year by switching to the best value account, this figure has more than doubled to £116 in 2016.

Sophie Guibaud, VP of European Expansion at Fidor Bank, said: ‘Today’s report is to be welcomed and shows how the idea that a bank account is for the long term has been challenged by consumers in the past number of years.’

Housing

Activity in the UK housing market has ‘settled down’ after a Brexit surprise, surveyors say, with sales and prices expected to rise in the coming months.

Property sales in the aftermath of the referendum dropped sharply, but had now stabilised, the Royal Institution of Chartered Surveyors (Rics) said. Its members predict that house prices will increase by 3.3 per cent a year on average for the next five years. A shortage of homes on the market was holding up prices, Rics said. ‘There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum,’ said Simon Rubinsohn, chief economist at Rics. Savers and borrowers

Banks are facing fresh scrutiny over ruthless tactics that punish both savers and borrowers when interest rates fall, according to the Daily Mail.

The Bank of England last month cut rates from 0.5 per cent to a new low of 0.25 per cent – with Governor Mark Carney declaring that there was ‘no excuse’ for lenders not to pass on the reduction to borrowers.

But Parliament has heard that many lenders need board approval to cut popular mortgage rates – with almost half so far failing to do so. Savers have seen no such delay, however, with returns tumbling across the board almost immediately.

Small businesses The latest entrepreneurship monitor from Natwest shows that uncertainty associated with Brexit has shaken the confidence of would-be entrepreneurs. Almost four in ten wanted to start a business before the last General Election, but only one in ten say that they would like to start up now. ‘Fear of failure is a very big aspect of what will put people off,’ said Alison Rose, chief executive of commercial and private banking at NatWest. Lifetime ISA

The proposed exit charge on the new Lifetime ISA is overly punitive and should be amended before the product launches in April 2017, according to trading platform AJ Bell.

Draft legislation published this week confirmed that penalty-free withdrawals can only be made to buy a first home worth up to £450,000 if the saver becomes terminally ill or after the investor reaches age 60.

It also suggested that the exit penalty will be applied as a 25 per cent ‘Government charge applied to the amount of withdrawal’. The explanatory notes spell out that this returns the Government bonus element (including any interest or growth on that bonus) with a ‘small additional charge applied’.

However, this structure means that the Government is contributing 20 per cent of the initial investment but then charging an exit fee of 25 per cent on the entire fund including all investment growth.

Motorists

Research from Gocompare.com Car Insurance has found that almost one in seven drivers have put off essential vehicle repairs and servicing because they couldn’t afford them at the time.

The survey of 2,000 UK motorists found that replacing tyres was the repair most likely to be delayed by motorists with brake related problems, mechanical repairs and windscreen repairs also highlighted.

Tax avoidance Coutts may have to pay hundreds of thousands of pounds in compensation to wealthy clients who claim they were badly advised by the Queen’s bank about investing in loss-making film production companies to avoid tax. The Times reports that some 220 clients have filed a lawsuit against Coutts, along with UBS and other advisers, over a £100 million-plus bill they face in back taxes and interest from HM Revenue and Customs. If the lawsuit, being co-ordinated by Stewarts Law, is successful it would mean taxpayers having to foot part of the bill because Coutts is owned by Royal Bank of Scotland, which is 73 per cent owned by the government. Students As young adults across the UK head off to university, new research from money.co.uk reveals that four out of ten students can expect their landlord to keep almost a third of their deposit when they move out of their privately rented accommodation. The research reveals this will be a total loss of £32 million for the 196,766 students affected. The research also highlights a wider issue where four out of five students are not signing a photo inventory when they move in. This means they have very little evidence of the ‘before and after’ condition of the property when it comes to moving out.