Hello All! Welcome to another edition of the Financial and Professional Services team’s Friday Fiver. Big thanks this week to Linzi Goldthorpe, Karen Butcher, Chris Pratt and Jonathan Henderson.
Joanna gears up again…Monday saw the Bar Council and Law Society launch their campaign against government cuts to legal aid. The lobbyist group Sound off for Justice, which is championed by actress and rights activist Joanna Lumley, aims to put pressure on the government to reconsider the cuts which were unveiled in November of last year.
Guess who's back for round two?
Currently the UK provides free legal advice for those people fighting civil cases that don’t have sufficient funds to cover legal costs. The Ministry of Justice plans to cut the £2.1bn legal aid bill by £350m within four years, reducing the number of people of people able to seek help by up to 500,000.
So far the propositions have been dubbed ‘brutal’ and ‘devasting’ by the legal community who are calling for the plans to be scrapped. Enter Joanna to weave her magic again…
Bribery is still bribery…Some of us attended the British American Business’s Law Forum UK Bribery Act event this week. Given the new date for the guidelines on the Act are yet to be confirmed the seminar focussed on what businesses need to be thinking about before implementation comes into force.
The focus was very much on laying minds at rest following the confusion around the Act’s implementation. Two messages were clearly played out through the seminar:
1. Facilitation payments always have and always will be a crime. The Bribery Act isn’t changing that.
Care is still needed when choosing a hotel for business guests
2. The reaction to the Act’s hospitality element has been blown well out of proportion. Sensible and proportionate expenditure remains lawful but flying a potential new business partner halfway around the world with their family and putting them in a deluxe hotel is not.
Confusion remains on events such as the Olympics though – the clock is ticking on this one, so watch this space.
Confused about petrol…This week we received an email from price comparison site confused.com about their partnership with The Sun for their new ‘Do Your Duty’ campaign. It seems to have won a lot of support from readers of the paper and has been well shared on Confused.com’s website. This week’s inflation figures can only have heightened support for it as well.
The campaign looks like a no-brainer for Confused.com then doesn’t it? We do wonder though if it doesn’t look somewhat self-serving for organisations if they choose an issue that isn’t well-aligned with their business. We’ve been running a successful campaign for Hymans Robertson on pension reform recently. But then being pension consultants they can lead that debate and offer well-respected opinions – the risk of falling short in the credibility stakes is low.
Well done to confused.com for showing the nerve to embrace an issue though. Not all organisations are willing to do so, but we hope they build on this position and develop their credentials as an organisation that represents consumers interests in keeping prices low, including insurance prices.
Goodbye Western investment returns…Barely a day goes past without reports of the fundamental shift in global wealth and productivity from the developed to the developing world.
This week the London Business School weighed in. Their new report indicated that the equity risk premium (the additional return generated by investing rather than taking a risk-free option such as cash) is set to fall in developed markets. They believe that investors can expect a future return of around 3 to 3.5% from equities in the developed world, the lowest rate in 110 years, down on the historic average of 4.5%.
The report comes as Barclays Capital predicted foreign investors can however expect annual returns of 10.5% from developing economies. The findings are likely to have significant repercussions for where western pension funds invest their money as younger generations search for returns further afield than the western blue chips that have traditionally been a staple of pension portfolios.
Money Saving ‘Expert’…Martin Lewis and his website have been a big success in recent years, by offering a new approach to personal finance. Lewis has binned the jargon and offers simple rules of thumb on saving and investing. Now however, there are questions being asked about his credentials following a slip-up on ITV’s Daybreak show this week.
An expert yes, but a qualified one?
The whole issue of financial advice is under the spotlight at the moment thanks to something called the ‘Retail Distribution Review’. This proposes to change the way financial advisers earn their keep – from taking commission on selling products, to billing clients (people like us) for their time. As the ever excellent Anthony Hilton pointed out recently though, this could put advisers out of the financial reach of most people.
That means the majority will have to turn to Mr Lewis and others like him for their money advice. The first test on the horizon in this brave new world? Explaining to 7m workers why their pay checks are suddenly 4% lighter following the start of auto-enrolment in 2012. Good luck guys…