Financial Reporter's biggest stories of the year: a look back at 2015

As the year draws to a close in financial services, many will be looking forward to what promises to be yet another tumultuous year in the industry. In preparation for 2016, Financial Reporter have looked back at the most significant stories from this year and how they could affect the next twelve months.

Related topics:  Special Features
Rozi Jones & Amy Loddington | Financial Reporter
30th December 2015
2015

Most recently, the Government announced that the secondary annuity market would launch in April 2017, allowing over 5 million people to sell their annuities. The move was originally announced in March in the final Coalition budget, and Baroness Altmann, Pensions Minister, said at the time:

“For the vast majority of customers, selling an annuity will not be the best decision. However, individuals may want to sell an annuity for instance to provide a lump sum for relatives or dependants; in response to a change in circumstances; or to purchase a more flexible pension income product instead.”

Since the introduction of the pension freedoms in April, industry figures show that two thirds are now choosing drawdown over guaranteed annuities

The Government made a marked contribution to the bigger stories in financial services this year - for example, its announcement in the Autumn Statement of a 3% increase in stamp duty for buy-to-let properties and second homes from April next year. The news was widely criticised by the industry, with Brad Bamfield, CEO of Joint Equity, describing the announcement as “another nail in the coffin of buy-to-let investing".

The announcement of an innovative finance isa for peer-to-peer loans was received more positively, as was the £7bn 'affordable housing' programme  which George Osborne described as "the biggest house building programme by any government since the 1970s" and will include the building of 400,000 new homes.

£2.3bn will be paid directly to developers to build “starter homes” for first-time buyers, while £4bn will be spent on 135,000 Help to Buy: Shared Ownership homes.

The biggest regulatory news centred around the introduction of MCD in April 2016. In June, the FCA published the final rules on how it plans to regulate the buy-to-let market when the Mortgage Credit Directive takes effect.  

The FCA confirmed that firms who are registered with the regulator for consumer buy-to-let, or CBTL, will no longer require Consumer Credit Act permissions, and that business buy-to-let will not be regulated.

Received less favourably was the news that the FCA plans to raise its fees by 8.4%. The FCA said that its 2015/16 funding requirement is £481.6m, up from £446.4m in 2014/15 - and it has proposed an 8.4% rise in fees to meet this increase.

Robert Sinclair, Chief Executive of AMI, said:

“This means that the small broker will see their FCA fees rise by over 50% per annum. In a zero inflation world, with government committed to reducing bureaucratic costs, this is a travesty. AMI wants FCA to clearly justify to mortgage brokers the need for such increases when they carrying on the same business they have always done.”

AMI Chief Sinclair raised the issue of inflation in relation to broker fees - but in fact, 2015 saw the economy not only suffer zero inflation, but deflation for the first time since 1960.

A Bank of England report in February admitted that “it is now more likely than not that CPI inflation will dip briefly below zero at some point in the first half of 2015”.

Also in February, the Bank of England announced that its Financial Policy Committee will gain new powers over the housing market and a leverage ratio framework for Britain's banks.

City Minister Andrea Leadsom confirmed that the FPC will be given new tools to ensure the ongoing stability of Britain’s housing market through setting limits on debt to income ratios and loan to value ratios for mortgages.

In October, George Osborne confirmed that he will extend the Bank of England and the Financial Policy Committee's powers on mortgages to the buy-to-let market, which could have a significant effect on the BTL market in 2016. AMI’s Quarterly Economic Bulletin for Q4 2015 expressed concern from the trade body, concluding:

"Introducing uncertainty into the buy-to-let market is likely to stifle innovation and cause lenders to retreat, putting further pressure on the supply of housing.... We would question whether caps on buy-to-let lending will therefore have the desired effect of cooling investment into the UK’s private rented sector."

The majority of our biggest stories this year have been ones which will continue to affect the market well beyond 2015.

Our final story is the recent news from the FCA that it is introducing a deadline by which consumers need to make their PPI complaints or else lose their right to have them assessed by firms or by the Financial Ombudsman Service.   

The deadline would fall two years from the date the proposed rule comes into force, which is expected to be spring 2016 – meaning PPI consumers would have until spring 2018 to complain.

The FCA said that it wants to bring the PPI issue to an “orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector”.

‘Reducing uncertainty’ appears to be a theme for the financial services industry in 2016. For example, longer-term effects of the 3% stamp duty for BTL will become clear - and the market will adjust accordingly - and with the MCD deadline fast approaching, it seems inevitable that any lingering ambiguity arising from its rules will be evened out.

So keep an eye on Financial Reporter in 2016 as we’ll be sticking closely with these stories as well as bringing you the latest news, expert opinion and features.

Happy New Year and see you in 2016!

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