OpinionNov 13 2020

Letters: 'Cliff-edge' threshold of £50,000 earnings unjustifiable

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Industry underperformance

Regarding your opinion article ‘We should be proud of our fund industry’ (Oct 7).

How can we be proud of a fund management industry that consistently achieves the distinction of failing miserably to beat various global indices?

Two-thirds (68 per cent) of fund managers have underperformed the UK benchmark and 81 per cent the US S&P 500 over the past 10 years, for which investors have been paying, in some cases, extortionate fees.

Further, it seems extraordinary that the fund management industry is very much in the sights of the regulator if we should all be so proud of it and its achievements.

Charles Lane-Petter

Charles Lane-Petter Investments

 

Holes in support terms

Regarding your article ‘Govt boosts support for self-employed during lockdown’ (Nov 3).

I run my own business as a sole director/shareholder and employee, which is considered employed in some situations and self-employed in others.  

I suspect there are many financial advisers who use the same structure.

If I were officially a self-employed individual I would now be looking to take my third grant from the government. 

Yes, I would be required to pay tax and national insurance on that, but I would not be expected to pay it back.

As a limited company I made an application for a bounce-back loan as soon as they were available and my bank was incredibly efficient. I had the funds within days.  

When I realised the lockdown was continuing for longer and my income was still being drastically affected, I applied for a second BBL, or an increase in the first to the maximum amount allowed based on my previous year’s profits. 

The bank initially said I could do that, but then on checking further advised it was not an option, as it was not allowed under the regulations.  

The bank then proceeded to provide me with an overdraft for a fee, on which they charge me interest.  

Additionally they required a personal guarantee. In other words they were willing to lend, so accepted I was a viable company.  

However, each aspect of the lending is at odds with the government requirements for coronavirus support – costs, interest and a personal guarantee are all specifically excluded.

My company is paying fees and charges on the second tranche of borrowing.  

It is my error, but I don’t think it will be an uncommon one – I claimed what I thought was sufficient.  

I didn’t expect the first lockdown to go on for so long. Now I am faced with a further lockdown and further reducing income and no access to government support.

I am certain this is an unintended consequence of the BBL terms, as the government has extended provision for everyone else.  

Indeed, the deadline for BBL applications has also been extended to January 31 2021.  

However, as I am not allowed to make a second application, that is no help to me. 

Name and address supplied

 

Left out again

Following your article ‘FCA chief: Lockdown a “tipping point” for small advisers’ (Nov 4).

I work from home as a self-employed financial adviser. I have a large mortgage, a wife and a four-year-old son who started school in September.  

I have been fortunate enough to have earnings from my business in excess of £50,000 (although not by a huge amount).  

That does not allow me to live a life of luxury – it services my mortgage, provides my wife and me with a car each, allows me to maintain the property and go to bed at night without worrying whether I can pay my bills.  

As a result of the pandemic, my income has dropped dramatically. My one member of staff has been put on furlough. But because of my level of earnings in the past, I have been completely excluded from any government support.  

The ‘cliff-edge’ threshold of £50,000 earnings is simply unjustifiable. Had I employed an adviser and paid him/her more than £50,000 a year I would have been able to place them on furlough and been supported to the tune of £2,500 a month through the Coronavirus Job Retention Scheme.  

Had my wife and I run the business as a partnership (and saved tax in the process) we would each have been entitled to a monthly payment of up to £2,500.  

It seems grotesquely unjust that having taken the risks of setting up my own business, I should then be penalised for having made a success of it and receive precisely nothing.  

I anticipate that the full effect of coronavirus this year will be a drop in income of more than £30,000.  

I have just reached 60 years of age and therefore I have savings and am immediately excluded from state support in the form of universal credit.  

I cannot, however, afford to run down my savings or investments due to the regulator requiring me to maintain a level of capital adequacy at all times in order to be able to continue to trade, nor can I run up arrears on my mortgage as I have to maintain my credit record.

I cannot claim any business grants as my local council only considers those with a business rates identification number and not home-based businesses.  

The chancellor has announced further support for the self-employed but has simply applied the old eligibility criteria, meaning all of us who were excluded from support the first time are excluded again.

I am one of the lucky ones: I still receive some income from existing clients who pay me to advise them in these uncertain times, but no one is investing money at the moment. 

There are many others in a far worse predicament than me.

Simon Walker

SG Wealth Management