Diamonds are forever but bonds come and go

But guess what happened when 2013 dawned – these one size fits all investments suddenly became far less popular.

In the last quarter of last year 13,846 unit-linked bonds were sold compared with 8691 in the first quarter of this year.

With profits bonds sales also fell from 6045 to 4101. And in the other bonds category there was a precipitous drop from 13,146 to 3484.

No other category of investment saw falls of this order. In fact many others saw rises both quarter-on-quarter and year-on-year.

Sales of investment bonds were already falling but at the start of this year the numbers pitched off a cliff.

These statistics tell an equally fascinating story when we ask who was selling them with such gay abandon.

Well, of the 48,763 ‘other’ bonds sold in the financial year to the end of March this year, 40,275 were sold by banks and building societies.

But when it comes to unit-linked bonds an entirely different picture emerges with banks and building societies responsible for a mere 11,829 of the 54,000-plus sales in the last financial year.

Here ‘personal investment’ tops the list with 31,000 sales.

What is most curious about these figures is what has happened to advised sales.

For instance in the last quarter of last year there were 28,807 advised sales of bonds compared with just 12,850 in the first quarter of this year.

Banks and building societies leaving the market had some effect but there was also clearly movement in the IFA sector. Did these investments suddenly lose their lustre for investors between December and January? Or did advisers decide it would be harder to justify to their client?

These figures are powerful evidence that RDR has had an effect in pushing consumers and their advisers away from more expensive, impenetrable products towards lower-cost and simpler options. That process is still ongoing and will continue into next year as RDR 2 once more forces the industry to look closely at its charges and decide how it will explain them to those who foot the bill.

Ready for a spending spree?

Last week I wrote of how 2014 could be an important year for equity release. I based this mainly on continuing low interest rates and rising house prices. What I did not know at the time was that the Bank of England was about to release figures showing the largest fall in long-term savings for four decades.

Finally the chickens have come home to roost. With prices inflation outstripping wages inflation and savings paying next to nothing, people appear to be preparing for a spending spree. Some £23bn disappeared from long-term savings but much of this seems to have moved to short-term savings accounts, presumably waiting to be spent.

But what are they planning to spend on?

The real issue for the savings industry is to consider why this has happened and what can be done to reverse it.

For the better part of a decade chancellors have talked the talk on saving but failed to walk the walk. Incentives have been practically non-existent. Raising the annual Isa limit may allow the better-off to squirrel away a few more pounds but it does nothing to encourage lower earners to save.

So perhaps it is hardly surprising that some appear to have decided that they have had enough of austerity and the time has come to spend.

Did these investments suddenly lose their lustre for investors between December and January?

Axe looming for the Mas

Many of us have long wondered what on earth the Money Advice Service is for? It appears to bring nothing to the table that is not already there, other than a hefty bill.

It is good to see that MPs have reached a similar conclusion, two and a half years after its launch.

There are already huge amounts of free information available on the internet for consumers from both commercial and non-commercial organisations. So why do we have another operation duplicating this?

It even produces pointless surveys telling us the blatantly obvious. Did you know that some people borrow money at Christmas? Gasp.

For now it has been granted a stay of execution but with a Treasury review pending the axe could fall before the next election.

Tony Hazell writes for the Daily Mail’s Money Mail section

t.hazell@gmail.com