Am I FSA protected if my IFA moves to Ireland?

Question
I have had the same IFA, a one-man band, for the last 10 years who works via a larger IFA company for reasons of compliance, etc. Over the years I have been pleased with the advice given

As a consequence of RDR the owner of the large company has purchased a S Irish IFA Company which has a Dublin office as well as a local office here. My IFA tells me that the Central Bank of Ireland will now become their regulator with very much reduced bureaucracy compared to the FSA and there is not a need for IFA's to have a Level 4 qualification. The result being that fees have not increased since RDR.

Apparently several British IFA's are seeking regulation via the Central Bank of Ireland for the reasons given above.

The bottom line: where does this leave me if I need the services/advice from the regulator? Does the central Bank of Ireland have any 'clout' here or would they work in conjunction with the FSA in the event of problems?Answer
To answer your question, in the event of any problems your dealings would be with the Irish regulator, not the FSA. This also means you won't benefit from the protection potentially afforded by the UK Financial Services Compensation Scheme (FSCS) and Financial Ombudsman Service (FOS) in respect to the advice given, although the Irish regulator might have equivalents (it's not something I've looked into).

In my opinion there's significantly more potential downside than upside to using an IFA operating in this way.

What your IFA appears to be doing is using the EU 'passporting' system to provide financial services from one EU state into another. While this can be a very sound system in the right context - for example it means a UK adviser could give Spanish expats FSA authorised advice with the protection that brings - your IFA is using it more as a loophole to try and make their lives easier by avoiding FSA regulation.

One fundamental issue is whether your IFA continues to have a UK office or advisers permanently based in the UK. If they do then my understanding is that they must adhere to the FSA's (Conduct of Business) rules in any case, so I can't see what benefit they'd get out of passporting in from Ireland.

Another is what services they gain authorisation to passport. In general they can apply under MiFID (Markets in Financial Instruments Directive) which broadly covers investments and/or IMD (Insurance Mediation Directive) which broadly covers insurance based products. If the IFA doesn't have both they'd arguably be restricted as to what they could advise on hence less than independent.

Personally I wouldn't deal with a financial adviser trying to use this loophole. Aside from the potential complications mentioned above, if they had any integrity they simply wouldn't bother doing this. Attaining Level 4 qualifications (at worst a mix of multiple choice and short written tests) is not exactly difficult for a competent adviser, so I'm very wary of any advisers looking to duck this rule.

And while it's true the FSA seems to have little grasp on cost and is hardly a pleasure to deal with, it's still possible to run a profitable IFA charging fair fees under the new FSA regime. Advisers just need to work smartly, efficiently and avoid being greedy.

Read this Q and A at http://www.candidmoney.com/askjustin/828/am-i-fsa-protected-if-my-ifa-moves-to-ireland

Best platform for funds and shares?

Question
Which platforms are suitable and least costly to use when opening an ISA which would include a mix of unit trusts/OEICs, investment trusts and ETF/ETCs?Answer
The answer really depends on the funds selected, amounts involved and how frequently you'll trade - hence I built the www.comparefundplatforms.com website to make meaningful comparison nice and straightforward. Please do give it a try.

But in very general terms Alliance Trust Savings and Interactive Investor tend to come out cheapest in your scenario for portfolios of around £40,000+. Charles Stanley Direct may well cost less on smaller amounts and possibly on larger amounts too, depending on how often you'll switch funds - unlike the other two Charles Stanley Direct doesn't charge for fund switches.

If you plan to trade very frequently, for example 40+ times a year then Clubfinance might prove competitive - their platform fee is quite high but dealing is only 50p per trade.

Bestinvest can also be competitive in some scenarios and has decent tools and research. And Sippdeal can prove cost effective provided you use the institutional versions of funds on their platform.

Read this Q and A at http://www.candidmoney.com/askjustin/827/best-platform-for-funds-and-shares

Should I swap shares for a fund?

Question
I have a number of shares in a trading account which is being transferred into interactiive Investor platform. Most of the shares are in Blue chip dividend paying companies eg Vodafone, Astra, Centrica, Tesco, I was looking at UK equity funds and noticed that a number of them have more or less the same shareholdings as I have in the trading account.

I wonder if you could give me pros and cons of having individual shares or sell them and buy a good UK equity fund?Answer
Of course. The main advantages of using funds are convenience, diversification and fund manager expertise.

It's convenient as you don't have to bother monitoring your shares and decide when and what to buy and sell. A fund manager does this for you and if they're good they might make you more money overall versus doing it yourself. Funds also typically hold around 50 or more shares, reducing the impact of any one company, and provide easy access to overseas markets which can be tricky to trade yourself.

A less obvious potential benefit is tax efficiency, provided the shares are held outside of an ISA and the sums are large. Every you time you sell shares and make a profit it's subject to capital gains tax (if total net gains over the tax year exceed your annual allowance, £10,600 for 2012/13). Share trades within a fund don't suffer this tax, it instead applies when you sell the fund itself at a profit. Obviously, this is less relevant if you seldom trade.

On the downside, you'll have to pay the fund manager, which could cost around 0.75% or more a year, and they might turn out to be not very good (many aren't) - making you less money than had you just carried on holding your shares. Plus it's rare for a fund manager to disclose all their investments, you'll usually just be shown the largest 10 holdings (updated monthly), so a fair amount of trust in their approach and abilities is required.

You could consider a lower cost tracker fund (costing around 0.3% a year) which simply tries to mirror a stock market index such as the FTSE 100. This will contain the blue chip shares you mention and avoids the risk of a fund manager's 'expertise' actually destroying value. The main thing to bear in mind is that most indices (including the FTSE) are weighted, that means the larger companies and sectors dominate the index hence your investment too - the 10 largest FTSE 100 companies usually account for around half the Index.

Read this Q and A at http://www.candidmoney.com/askjustin/826/should-i-swap-shares-for-a-fund

Was I mis-sold mortgage protection insurance?

Question
I had an endowment mortgage with Nationwide Building Society and the Mortgage Protection Insurance was with Standard Life.

I decided to change to the HSBC still using the same Mortgage Protection policy with Standard Life. Whilst I was with the financial adviser sorting out paperwork he advised me that I needed to take out a Mortgage Protection Policy with them and I am now wondering why I needed to have two Mortgage Protection Policies.

The house is now paid for but I am still wondering 'Why I needed to pay twice'?Answer

You have almost undoubtedly been mis-sold mortgage payment protection insurance (MPPI) by HSBC, if not by whoever sold you the Standard Life policy too.

MPPI is not compulsory, so the HSBC adviser who said you need to take out MPPI with them to get the mortgage was not telling the truth. This in itself counts as mis-selling, not to mention the fact you already had a policy and he/she made no effort to ascertain whether you actually needed or wanted such cover in the first place.

You should definitely complain as based on the information you've provided it seems likely HSBC should be liable to refund all the MPPI premiums you've paid them.

Whether or not the Standard Life policy was mis-sold to you depends on a number of factors - primarily whether you were made aware the policy was optional and whether it was suitable for your needs. If you were made aware it's optional and wanted to protect your mortgage payments against you suffering from accident, sickness or unemployment then chances are you probably don't have a claim - although even then if you were self-employed, unemployed or retired at the time the policy might have been unsuitable hence mis-sold.

To make your complaint and compensation claim you should first contact the company that sold you the policy. If they don't provide a satisfactory response and/or compensation you can refer your complaint to the Financial Ombudsman Service (FOS). However, rather than detail the process in full here I'd suggest taking a look at the moneysavingexpert website's thorough guide here - which includes template letters.

Good luck getting justice.

Read this Q and A at http://www.candidmoney.com/askjustin/825/was-i-mis-sold-mortgage-protection-insurance

Is the married couple's pension fair?

Question
I was entitled and received a pension in my own right of approx £30 pw. On my husband's retirement my pension was just made up to a married woman's pension. Is it right that someone who has paid in for a number of years ends up with exactly the same as someone who has not paid in at all?Answer
I suppose the answer depends on how sympathetic you are to women (or men) taking time out from work to raise their family and/or do things other than work.

At present a women who hasn't built up a sufficient National Insurance (NI) contribution record to receive a full basic state pension at retirement can instead opt to claim on their husband's (or ex husband's) NI contribution record. However, they can only do when their husband reaches state pension age and their pension will be limited to 60% of their husband's basic state pension. Based on the 2012/134 basic state pension of £107.45 per week this means a pension of £64.40 - which is why the married couple's state pension is £171.85 (these two numbers added together).

Women who reached their state pension age before 6 April 2010 will automatically have received Home Responsibilities Protection for each complete tax year since 1978 they had been receiving Child Benefit for a child under 16 (basically to compensate for staying at home to raise their family). This was changed from 6 April 2010 to credit for each year they received Child Benefit for a child under 12 years of age.

I fully support credits when raising a family instead of working (in my limited experience it's far harder than work!). The 60% entitlement is arguably a bit outdated in this day and age, but then as more women work and build full qualifying Ni records it's less relevant in any case.

Read this Q and A at http://www.candidmoney.com/askjustin/823/is-the-married-couples-pension-fair

Good cash rates for expat?

Question
I am an expat but have been gifted some money and as a NON-Resident and NON-UK taxpayers, wonder where I could invest in pounds in the UK, probably in fixed interest for the next 3 years?
Thank you for your wonderful serviceAnswer
Banks and building societies have really tightened their belts in recent years to the point I don't know of any that allow non UK residents to open accounts, aside from a handful of 'international' accounts that pay little or no interest.

However, there are offshore savings accounts (that accept Sterling despoits) offering reasonable fixed rates - Moneyfacts has a list here.

For example, at the time of writing Permanent Bank International (Isle of Man) is paying 2.15% fixed for 3 years and Nationwide International (Isle of Man) 1.8% over the same period. Both are covered by the Isle of Man Depositor's Protection Scheme (up to £50,000 per person per institution).

By comparison, 'best buy' 3 year fixed rates in UK accounts are currently around 2.5% - so the offshore accounts are not as competitive. Nevertheless it might still be a worthwhile option in your position.

Read this Q and A at http://www.candidmoney.com/askjustin/822/good-cash-rates-for-expat

Eligible for working tax credit?

Question
My daughter is a director of a limited company trading as a small coffee shop, not making a profit. She has been drawing a salary of £500 per month. An article in Sunday Telegraph indicates she may be eligible for some sort of working tax credits. Is this correct in these circumstances please?Answer
I'm afraid I'm no expert on the tax credit system - it's fiendishly complex. However, looking at the rules your daughter may well be eligible for the Working Tax Credit, potentially worth up to £1,920 a year.

Eligibility depends on the number of hours of paid work per week and amount earned, with the limits for both dependent on whether or not your daughter is single and whether she has children. And, if she has children, the minimum income level can also depend on whether your daughter is paying for approved childcare.

Rather than run through the various criteria in full here, it'd be simpler for your daughter to use the HMRC .tool here to find out which tax credits she's entitled to and, if so, how much.

Hopefully she'll be eligible for some help while she builds her bueinsess.

Read this Q and A at http://www.candidmoney.com/askjustin/820/eligible-for-working-tax-credit