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Interest rates and pension freedoms: the week in news

Interest rates and pension freedoms: the week in news

After weeks of speculation, this week we finally got an outcome. But as well as finding out who won the Great British Bake Off we also got an interest rate rise. It’s time for the week in news.

1) Uninteresting rates

This week, for the first time in a decade, the Bank of England voted to increase the Base Rate.

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The decision means rates are now up to a whopping 0.5 per cent, taking them back to where they were almost a year ago – and for seven years before that.

Lenders have already begun raising their interest rates to reflect the higher cost of borrowing – a trend that began at the end of September.

But the vast majority of new borrowers are now on fixed-rate deals and will be unaffected by this week’s news.

There has also been scepticism about whether banks will pass the rate rise onto savers but bond investors have seen the potential for short-term profits.

If nothing else the announcement is likely to drive down defined benefit transfer values – so that could mean fewer people hunting out an adviser to help them squander their pension.

2) The ombudsman under the bed

The Financial Conduct Authority has plans for the Financial Ombudsman Service, plans which could make it bigger and stronger.

But advisers shouldn’t necessarily start quaking in their boots.

That’s because the sexy new powers being given to the Fos are aimed mainly at helping smaller businesses use the service.

It stems from the issues around Royal Bank of Scotland’s treatment of small businesses which has led to the bank making refund offers for complex fees of more than £115m.

FCA chief executive Andrew Bailey says that instead of having ad-hoc redress schemes, he wants to give the Fos more power to act when small businesses have an issue.

3) Sipp company proves less solid than the Rock

Alan Kentish, the chief executive of self-invested personal pension provider STM Group, found himself in a spot of bother this week.

He was arrested in Gibraltar over allegations of failure to disclose information over a tax dispute involving a client.

The financial services company said in a market notice that an identified STM client has been involved in a dispute between two countries, between 2008 to 2013, over their respective taxing rights to the taxes correctly paid by him.

Mr Kentish followed compliance procedures in filing two relevant suspicious activity reports (SARs), which were externalized to the Gibraltar Financial Intelligence Unit (GFIU), the company said.

A lack of response was understood by STM to mean to continue as normal, the firm added.

But on 19 October, Mr Kentish was arrested by the Royal Gibraltar Police on the allegation of failure to disclose under the Proceeds of Crime Act 2015.

4) Freedom isn’t fee…

…when it comes to pension freedoms it means you pay for it by having to sit through lengthy committee hearings about people’s savings.

This week the Work and Pensions Select Committee held a much anticipated hearing into the pension freedom reforms.