We are very pleased to announce that both James and Adam have passed their latest exams and have now completed the Advanced Diploma in Financial Planning meaning they are now Chartered Financial Planners!

The Advanced Diploma exceeds the minimum qualification level required by authorised advisers, building on core knowledge to develop specialist capabilities in order to provide a more sophisticated and comprehensive approach to financial planning.

Chartered status represents a very high standard of technical competence and professionalism, and we are very proud of James and Adam’s achievements which will help Eldon to continue to deliver a first class service.

Huge congratulations to our very own Paraplanner James Hunt who has stepped up to be a Financial Planner.

James started his career in Financial Services in 2015 when he left University with a degree in International Finance and Banking.

After a stint as a paraplanner at another firm, James joined the Eldon Team in May 2017 as a paraplanner.

James has developed his knowledge and experience over the years, often behind the scenes but more frequently supporting Financial Planners in client meetings. James has shown dedication to Eldon and his progression by being involved in Eldon’s Investment Committee. This has enriched his knowledge of investments and will allow James to provide an excellent service for the benefit of our clients.

Eldon could not be more proud of James and his achievements since joining the company. We have no doubt he will make a great Financial Planner and believe our clients will feel the same way.

As retirees will be aware, their State Pension increases each year. The increase is determined by the ‘Triple Lock’ which means it will increase by the higher of:

• Consumer Price Index (CPI) – measured in September
• Average Wage Increase – measured in July
• 2.5%

This means as a minimum, the State Pension should increase by 2.5% each year.

The Triple Lock has made headlines recently, as the average wage increase figure is projected by the Office for Budget Responsibility (OBR) to be around 8%. This would be a significant increase for those in receipt of their State Pension. It would also benefit future recipients of the State Pension.

This rate of increase will be a significant cost and concerns have been raised over whether the government will honour their 2019 manifesto pledge or temporarily break the Triple Lock. The concerns are that such an increase will add a further £3 billion per annum to government spending, which comes on the back of the significant support package throughout the pandemic.

Rest assured, we will be monitoring this carefully over the coming months.

Last week the Financial Conduct Authority (FCA), our regulator, announced that it has fined LBGI, the insurance division of Lloyds Banking Group, £90.7 million for failure to ensure that their home insurance renewal communications were clear, fair and not misleading.

Between 2009 and 2017, LBGI (made up of Lloyds Bank General Insurance Limited, St Andrew’s Insurance Plc, Lloyds Bank Insurance Services Limited, and Halifax General Insurance Services Limited) issued nearly 9 million renewal letters to home insurance customers, including rhetoric to the effect of offering ‘competitive prices’. However, appropriate steps were not taken to ensure such claims were accurate. In reality, renewal prices offered to existing customers were likely to have been both higher than their previous premiums, and higher than prices offered to new customers. Those customers who renewed repeatedly, without ‘shopping around’, were most likely to have been misled, possibly multiple times, by such a practice.

Separately, LBGI informed roughly half a million of its customers that they would receive a discount based on loyalty and/or their status as a ‘valued customer’. Similarly, no such discount was applied.

LBGI has made voluntary payments of around £13.5 million to affected customers and has been contacting them proactively, meaning that customers do not have to take any steps themselves to receive payment. The FCA is continuing to work with LBGI in this respect.

From 1st January 2022, under new FCA rules, insurers will be required to offer renewing customers a premium that is no higher than what they would pay as a new customer. However, the action taken against LBGI highlights the importance of comparing the whole of the market when taking out, and renewing, insurance policies, not limited solely to home insurance.

Cryptocurrency is a digital or virtual currency. Some of you may recognise the product ‘BitCoin’ as this is one of the most popular cryptocurrencies on the market. There are several other cryptocurrencies available.

Investment in cryptocurrencies is extremely high risk. Our regulators, the Financial Conduct Authority (FCA), have recently ruled the product as unsuitable for retail investors and do not allow financial advisers such as ourselves to advise on cryptocurrencies.

The reasons for this are due to:

– Extreme volatility in prices
– The nature of the product having no inherent value i.e. it cannot be used for anything and therefore future cashflows or sales cannot be predicted
– The potential of using the currency as a cover for illicit activity including market abuse or financial crime.
– The lack of understanding of the products from retail clients and ability to assess the value and risks involved

By making the product ‘unregulated’, it means that should you invest in cryptocurrencies, there is no protection provided by the FCA and you are unlikely to have access to the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS).

The FCA has warned investors to be wary of adverts promising high returns on crypto asset investments and notes that you should be prepared to lose all of your money.
Before making any decisions on investing, you should always check that the product is regulated by the FCA.

HMRC has provided a welcome update in relation to life policies and the requirement to register on the Trust Registration Service (TRS).

Placing life policies into trust can be beneficial in estate and inheritance planning and can also ensure faster distribution of funds to beneficiaries following death.

Trusts of life policies are, subject to certain conditions, excluded from having to register with the TRS. These conditions are that the policy must only pay out:

• On the death, terminal or critical illness or permanent disablement of the person assured, or
• To meet the cost of healthcare services provided to the person assured

The exclusions can apply to trusts holding multiple policies so long as each policy within the trust meets the conditions above. It is also irrelevant whether a policy is a whole of life policy or a term policy for the purposes of the exclusion.

Similarly, where a trust is holding the benefits received following the death of the person assured and less than two years have passed since the date of death, that trust will also be excluded.

Some life policies can acquire a surrender value and initial HMRC guidance did not make clear how these policies would be treated, particularly as such policies are similar to an investment product, but HMRC has now confirmed that the above exclusions also apply in this instance. This means the trustees of such policies can breathe a sigh of relief.

We expect HMRC to provide more clarification to aspects of the guidance and we will continue to monitor any future updates.

The Office for Tax Simplification (OTS) has published a document setting out the scope for a review into amending the end of the tax year date, which is 5th April at present.

The 31st March is being considered for the proposed new date, which is both the end of a calendar quarter and the nearest month end date to the current tax year, as well as being the UK financial year end date to which the UK government makes up its own accounts.

The report is to focus on the benefits, costs and wider implications of such a change.

In addition to 31st March, they will also look at how it would work running the tax year to 31st December, thereby aligning this with the calendar year, similar to the US, France and Germany.

Whilst a date for completing the review has not been published, we will certainly be keeping a keen eye on any updates for this.

It should be noted however, any review would only provide suggestions and does not necessarily mean the changes will be implemented, as we saw with the recent reports and suggestions for inheritance tax and capital gains tax.

As of 19th May, the Government has announced plans to reform the farming policy within England, due to take place between now and 2027. The focus of such reform appears, as things stand, to balance the retiring of an older generation of farmers with the welcoming of the upcoming generation and, with it, an ideal of ‘greener’ farming practices.

Over the next 12 weeks, the Government is to consult on changes to the current Basic Payment Scheme (BPS), which sees the provision of rural grants across England, centring around two key areas:

A Lump Sum Exit Scheme

This would see the payment of lump sums to those wishing to retire or leave the industry, but who have not been financially able to do so. The current proposal is that a lump sum would be provided in place of any Direct Payments being received under the Basic Payment Scheme. The consultation over the coming weeks will seek to establish who should be eligible for such payments, and how these should be calculated.

‘Delinking’ Direct Payments

Under the current system, Direct Payments (grants) are made to those who qualify, based upon the size of farming land. It is argued that this encourages existing landholders to retain their land, inflating rent, and standing in the way of new entrants to the industry. The Government’s proposal is to gradually phase out Direct Payments over a seven-year period, replacing them with payments that are separate to the amount of land farmed. Their stated aim is to simplify the payment process, meaning that recipients will no longer have to farm their land to receive payments for it, which they hope will encourage individuals to take up new environmental land management schemes.

The Secretary for Environment, Food and Rural Affairs, George Eustice, has described the new proposals as a way to “address the twin challenges of helping new entrants fulfil their dream and gain access to land, while also helping an older generation retire with dignity”. It will run alongside the Government’s existing Agricultural Transition Plan, which introduced plans to offer incentives and rewards for more sustainable farming practices, nature recovery, and landscape preservation.

The biophilia hypothesis is the belief that humans are genetically predisposed to be attracted to nature. It states that all humans inherently love the natural world. This idea that we are drawn to, and indeed need, nature was first put forward by a man named Edward O. Wilson in his book “Biophilia” published in 1984. It’s ostensibly a lasting vestige of our early days as a species when we were reliant on the outdoors.

It’s thought that being outside more often can help to promote our well-being, prevent disease, and/or speed up recovery. A growing number in the medical profession believe that this is the case, from reports that surgery patients with a view of trees out their window suffer less pain and make faster recoveries than those who only have a view of a wall. Other studies have suggested we can experience a reduction in pain through viewing nature videos and looking at pictures. Those who have exposure to natural light rather than artificial light seem to experience less pain.

Prevention is better than cure

It is becoming common for GPs to prescribe lifestyle changes ahead of medication for various ailments. Gym membership and outdoor exercise are now routinely advocated. The belief is that walking or cycling in a natural environment has a positive impact on mood and mental health. Having a companion boosts social interaction. It follows that increased movement promotes weight loss and a reduction in blood pressure and heart rate. There may also be gains in respect of the prevention of dementia and some cancers.

The daily dose

It has been an unintended consequence of the covid-19 pandemic that one of the few activities allowed has been a daily walk, meeting others when allowable, and many people have discovered the pleasures and benefits of exercise. Dog ownership has soared.

This raises new questions, including what exactly constitutes ‘nature’ (e.g., does it have to be in the countryside or just an urban park – or can we just look at a picture of a park?) Also, what is the required ‘dose’?

Every little counts

According to a 2019 article in The Journal of the American Medical Association by Thijs Eijsvogels and Paul Thompson, the answer may be “not as much as you might think.”

Drs. Eijsvogels and Thompson reviewed several published studies and concluded that as little as 15 minutes a day of moderate-intensity exercise – and only 8 minutes a day of vigorous-intensity exercise – is what they called the “lowest effective dose.” This means that even a small amount of exercise may have substantial health benefits compared to being sedentary. People who protest that they are too busy to exercise should in reality be able to find this amount of time in their schedule. And if it’s in the great outdoors, all the better!

Earth Day marked its 51st anniversary on 22nd April and this year’s theme was ‘Restore Our Earth’, which focuses on reducing our impact on the planet and finding ways to repair the world’s ecosystems. The international day of awareness had an estimated one billion people taking action for the future of the planet, with events taking place online for a second time amid the pandemic.

Boris Johnson announced that the UK would cut its emissions by 78% compared with levels in 1990, by the year 2035. President Biden also announced steep emission cuts of 50% by 2030. This is in line with the US re-joining the Paris Agreement, and Biden making the fight against climate change a top priority of his administration.

These ambitious targets will require a number of changes, such as ensuring homes are better insulated; a national electricity system that can operate without generating carbon emissions; reducing meat and dairy consumption and planting more woodland. People will be encouraged to walk and cycle more rather than driving and aviation could become expensive for frequent fliers according to the Climate Change Committee.

Given the potential for climate change to drive transformation across entire economic sectors, it often dominates conversations around ESG (Environment, Social and Governance) investing which puts companies under pressure to cut emissions in order to attract and retain capital. According to Transition Pathway Initiative (TPI), the number of companies committing to net zero targets more than doubled over the last year, but there is still a long way to go.

Data from Morningstar suggests that demand for ESG investing surged in 2020 with COVID putting corporate behaviour under the spotlight as investors look to reflect their values. This trend is set to continue in 2021 and beyond as the world recovers from the pandemic.