Hond Financial

Posts Tagged ‘FSA’

The UK has recently been privy to news that the Financial Services Authority has increased it’s authoritative input, increasing awareness of our collective abuse of consumer credit systems. A continued rise in the rate of consumer credit attained has been witnessed, with the financial services regulating body now tightening controls and implementing specific restrictions on lending.

What effects are we likely to experience, particularly for those who did not abuse credit prior to the recession, and what are the ramifications for those already with a burden of debt?.

In contrast to seeming common sense, the FSA have announced a ban of the providing of self-certification mortgages which has been seen as a move countering the timidly recovering mortgage loan market. These mortgages, according to the The Telegraph, were identified as being one of the many products abused throughout the boom prior to the recession.

Justifiably, the FSA have ordained this in retaliation to individuals finding themselves incapable of maintaining their repayments of credit approved under these loans. The body’s aim is now presumably to impose analogous restrictions on the UK’s larger economic issue of being able to calculate credit card debt and effectively pay it off.

The economic situation has witnessed banks polarise in their lending behaviours which has ultimately resulted in the average consumer suffering. It would appear that as a result of a select few unable to effective manage debt, those with sensible attitudes to credit have been penalised by the new measures.

There has been a significant increase in the figures of individuals both applying for Protected Trust Deeds; and joint IVAs (Individual Voluntary Arrangements) and whilst this suggests an honourable approach to meeting debt repayments it also supports the forecasts of a larger crisis within personal finance. The FSA’s increasing control over credit cards especially may produce an increase in debt management cases though it is yet to be witnessed as to whether this will precede a change in attitude in institutions and consumer markets.

The current economic crisis has taught us to start looking ahead with our financial planning. One of the ways that UK residents can save for the future is by getting a Self-Invested Personal Pension (SIPP).

A SIPP is different than a normal pension in that you are not limited with your choice of investments. When you get a SIPP, you get complete control over your pension fund. There is also the risk that you might end up mismanging your SIPP but the higher performance possibility often outweighs this disadvantage.

A lot of people choose to seek the guidance of an experienced Independent Financial Adviser (IFA) to manage their SIPPs. Visit IFA sites that have free advice. An example of a site like this is www.financialadvice.co.uk.

An advantage of a SIPP that you can put other pension into one place. The main advantage is that you have a large range of investment options though.

The following can be invested in your SIPP: government bonds, company bonds, options, futures, Reits, cash, property funds, stock-market funds, individual shares, unquoted shares, and commerical property.

There are a number of SIPP providers in the United Kingdom including Hangreaves Lansdown, Fidelity Fund Network, Killil, James Hay, and thousands of IFAs and wealth management companies. They don’t typically charge set-up fees, however, they may have other charges so find one that suits your specific needs at the lowest cost.

The Financial Services Authority (FSA) must always authorize your SIPP Provider. For more information about the FSA’s regulations regarding SIPPs visit www.fsa.gov.uk/sipps or www.sipps.org.uk.

Some SIPP providers will make it seem like there are no disadavantges to their product but there is risk involved and that should be addressed up front. If your Self-Invested Personal Pension is managed by someone that knows what he or she is doing then it could be a very lucrative financial plan for the future.