ISAs, dog insurance & banking

It's been a week where I've: endured lots of chat about ISAs, been puzzled by the Government's dog insurance proposals and remembered how my bank once ripped me off..

The ISA Season

‘Tis the season of incomprehensible communications from the Inland Revenue and feverish promotion of ISAs for this tax year and next. Being ex-financial services - which I am - and spending far too much time on the golf course – which I do – I am frequently dragged into conversations about investments.

“I’ve got an ISA” says my partner or opponent. “What’s it invested in?” I reply. I then get a blank look, followed by “I told you, it’s an ISA.”

One of the golden rules of investing is never to make decisions based purely on tax grounds. It is clear to me that people have bought ISAs because it’s daft not to buy ISAs, but have given precious little thought to what they have put their money into.

My first bit of advice would be to make sure you are happy with the allocation of your assets, and then address the question of how you can best mitigate your tax liability. My second bit would be that you shouldn’t be surprised to find that the rules have changed – again.

More or less the same investment can be held directly in an Investment Bond (which is actually a single premium life policy), an ISA or a pension arrangement. Guess what: the tax rules are all different. This makes no sense at all, but don’t waste time looking for the political party that wants to simplify it all, because sadly there isn’t one.

Woof woof

The proposal to require dog owners to take out third party insurance came and went in a week. I really cannot understand why the Government ever thought it was a good idea, or why the Civil Service didn’t bury it before it saw the light of day.

I read somewhere that there are seven million dogs in the UK, though heaven alone knows where that number came from. If my premiums for Sophie are anything to go by, compulsion would have netted somewhere in the region of £17.5m insurance premium tax for that nice Mr Darling.

If only. Vast numbers of people would simply have ignored the requirement. Local Authorities would have been called on to enforce it, and given the pressures they are under right now they would have ignored it as well.

What goes around

Twenty years ago Barclays Bank made me a ‘Premier’ customer. I got a different cheque book, with an upmarket plastic cover. I also got a relationship manager, who came to see me, and introduced me to a nice man from Barclays IFA arm, BISCO. I had just come out of a wound up pension scheme, and the nice man from BISCO put all my loot into a with profits policy with GRE.

Before long the relationship manager disappeared, Barclays shut down BISCO, GRE went to pot, I went into financial services and quickly realised that I’d been sold a pup.

I drag this story up only because through the post this very morning my wife had a mailing from HSBC offering more or less what Barclays offered twenty years ago, right down to the ‘Premier’ name, but minus the plastic cover for the cheque book.

The clearing banks have never made relationship management work on a big scale. Why? Because maintaining relationships is costly, and the competition for the attention of the relatively limited number of people from whom it is possible to make a profit is intense.

Will HSBC pull it off?

Read this article at http://www.candidmoney.com/articles/article79.aspx