Finance Banking Insurance 2018

Page 1

1-FBI-2018.qxp_A4 Temp 02/07/2018 15:13 Page 1

JULY 2018

Supported by

Propio.qxp_A4 Temp 02/07/2018 10:42 Page 1

Up to

20% p.a. expected returns

Hassle free property investing Earn money from property without the hassle of buy-to-let investments. Our easy to use online platform allows you to access hand-picked opportunities at the touch of a button, with expected returns of up to 20% per year.

Call today for your free introduction to

020 3740 6030

Your capital is at risk. The value of your investment can go down as well as up. Investments made on this platform are highly illiquid. Projections of future performance are not a reliable indicator of future performance. Actual dividends may be lower than estimated. Investments should only be PDGH DV SDUW RI D GLYHUVLƧHG SRUWIROLR Propio is the trading name of Invest With Prop Limited, an Appointed Representative of Sapia Partners LLP, which is authorised and regulated by the Financial Conduct Authority (550103) (further information is available at The investment opportunities on this site are QRW RƦHUV WR WKH SXEOLF DQG LQYHVWPHQWV FDQ RQO\ EH PDGH E\ PHPEHUV RI ,QYHVW :LWK 3URS /LPLWHG DIWHU WKH\ KDYH VDWLVƧHG FHUWDLQ LQYHVWPHQW criteria. Poor Investment Performance is not covered by the Financial Services Compensation Scheme (FSCS).

3-CB Comment.qxp_A4 Temp 02/07/2018 14:34 Page 3


Under the Shadow of the Brexit Conundrum Kautilya's 'Arthshastra' (Treatise of Economics) was written 2500 years ago, 4500 miles away in Patliputra (present day Patna), but it wasn't until about 200 years ago when Adam Smith's 'The Wealth of Nations' defined Finance, Banking, and Insurance as the bedrock of a healthy economy and essential to the security and happiness of society. Together with the legal frameworks established in London and Edinburgh to administer and regulate them, they provided the essential fuel for the industrial revolution in England. oday, in the city of London and other places in the United Kingdom such as Edinburgh, up to half a million people are employed in the Finance, Banking or Insurance industry. Not only that, they are in well paid jobs taken by professionals with world leading skills resulting in a net gain for the British economy of around 50 billion. It's resulted in London being a truly significant global player for decades. And then came Brexit! On June 29, the EU Commission is reported to have given a sevenday ultimatum to the UK government to submit a final day proposal. Sad but true. For one reason or another, the government of Prime Minister Theresa May has not been able to develop a considered and concrete plan for dissociation from the EU. Nor does it detail the plan for the replacement trade agreements with the remaining 28 countries of the EU as well as major economies of the world that will be required. Great Britain is a small island in Northwest Europe with harsh weather conditions. Somehow it has achieved a pivotal position for itself with excellent financial and shipping services based on outstanding infrastructure, management skills and important players in Finance, Banking and Insurance. Why? There are many reasons. Most important are the traditional English


characteristics of fair play and honour - of 'My word is my bond' - , the English Legal System and it's rule of law, the freedom to bring money in and take it out, and above all, our independent judiciary. Of course there are other factors. But the main attribute is trust, confidence and mutual respect amongst the City, finance institutions and, efficacy of the British governance. It's embarrassing to admit that our traditional strength appears to have been squandered. In the referendum, people opted to 'LEAVE', even if it was with a pitiable majority. But one has to respect people's choice, no doubt. Equally, one should be humble enough to accept that the referendum campaign was largely based on claims of unrealistic promises, both by the 'leave' and 'remain' campaigners. In a way, it was as if spokesmen of both sides were under the influence of some form of idealogical intoxication. Even English law has provisions to consider the mitigating effects in criminal trials of diminished responsibility, and maybe we do need to reevaluate the vote from 2 years ago. But that is not the main issue today. The important issue to my mind is to come to terms with reality. The after effects of Brexit are not confined to economic impacts. The problems of the Irish border, a devolved Scotland, International

Relations, Defence and particularly movement of people which affect the wellness of millions of UK citizens both here and abroad urgently need to be taken into consideration. The government sadly has entered a phase of internal dissent. A more calm, cool and considerate approach is the need of the hour. In Kautilya's 'Arthshastra', there is advice for policymakers, that can be summed up in two words; 'Mulya' (values) and 'Droha' (Betrayal). Adam Smith too has written about these important attributes. Difficult decisions need holistic views, and whether in or out of the EU the country will clearly survive, but will it survive with better living standards? Certainty is a word which is not used much these days, and I feel it is of prime instinct in all matters of investment and important decisions. Investors, employees and all others give prime importance to certain values and standards and somehow that seems to be lacking today. FBI started 16 years ago. The world has changed. This special magazine is our modest effort to touch some important topics within the broad range of the Finance, Banking and Insurance activities. I am most grateful to our readers, contributors, supporters, and my team. CB Patel Publisher / Editor

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


4-Rakesh Shah 2.qxp_A4 Temp 02/07/2018 14:05 Page 4

Will rising interest rates necessarily make life easier for those seeking retirement? The economy needed saving and the world managed to pull it off by dropping interest rates to record lows for an abnormally extended period. Whilst this was clearly a victory for the governments it may not have been good for anyone seeking retirement. Such was the extent of the cuts to interest rates, all previous records were smashed and new tactics were created (quantitative easing) to support global economies. Save giving a long explanation, the net effect was to give the global economic engine a steroid injection to stimulate growth and promote borrowing for the purposes of greater investment. Rakesh Shah, Ten Point Trading

as it worked? Well if you define success as the health of many Western the economies, then we can probably say yes, but sadly in the process many millions of retirees that were heavily reliant upon interest income paid on assets, for their pensions, the nightmare had begun. The recent increases in interest rates have provided little change (both here and in the USA) to the net incomes of most retirees. There is little pleasing to say about the modest increases (many banks have not passed these increases on to consumers in the form of higher interest rates). The next few years I expect will remain challenging, with little change expected to make meaningful life changing levels of interest income for pensioners. There should be a higher cause for concern for those looking to retire. A number of surveys show that over half of all workers have underestimated the impact of this new paradigm on their savings plans for retirement. Many will be woefully underfunded in the decades to come. Please read the article I wrote for this magazine where I speak about the power of compounded interest. This may be the saving grace for many future retirees, as a small change now, can yield life changing results in later years. The reality is that the community is going to face a big challenge in years to come regardless of future interest rates, as many years have passed and future retirees have not taken sufficient action to remedy shortfalls in money that needed to be



invested to reach the desired goals. So what can be done? Firstly we need to acknowledge where we are and also revise our expectations. For a baby born today, life expectancy will average around 78 years and for someone who is just turning 70, they can probably expect to be celebrating birthdays at 84. Most people will live longer than they expect and this means that they have more time to make decisions. The pressure to make retirement decisions hastily (i.e. my personal lifetime is running out fast) should be avoided. Secondly, although rising interest rates are generally considered a negative drag on future stock market growth, the increases have been very modest and are rates are forecast to continue to rise slowly. So far, stock markets have not shown any signs of weakness due to rising rates. So equity portfolios are rising nicely helping to retirement goals to be met. Thirdly, rising interest rates will have minimised impact on any current incomes of retirees, as the sources of income will be mostly highly diversified. This means there will be little impact on current income levels. Try to look for better savings rates for your investments. Savings tables published online will compare the best deals around. Some accounts require a monthly fee to access these higher rates of interest, but they do provide users with added benefits, such as insurance policies. Each account must be considered on its own merits. Review your portfolio more frequently (bi-annually or quarterly), so that you

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

can adapt to changes faster getting advice rapidly when you feel you need it. A number of corporate bonds will begin to look more attractive as they offer higher yields when interest rates go up. This will certainly be more common with newly issued bonds. Longer term deposit rates will continue to rise, so locking into fixed rates for longer periods of time (e.g. 5 years) will need to be considered against locking in for shorter periods (1 to 2 years) as interest rates may be higher in 2 years’ time, enabling retirees to take advantage of any interest rate rises if they invest again at this time. The increased interest earned when locking money up for 5 years instead of 2 years many not justify the lost opportunity of earning a higher rate in say 2 years when the deposit matures. A more aggressive stance would be to consider stocks that are not highly rate sensitive. This could be an opportunity to adjust an equity portfolio. Specialist advice should be taken. As you make changes a long term strategy should be followed, so that you minimise the number of changes to your portfolio preventing high expenses incurred with changes. Rising interest rates will provide some limited opportunities, but some work will be required to make the most of these changes. Rakesh Shah is a keen Investor and Consultant working with HNWI’s and family offices for investment opportunities. For more information please get in touch. (

Marketing Finanace Solution.qxp_A4 Temp 29/06/2018 14:16 Page 1



Specialists in fast, flexible, bespoke bridging loans Broken chains are to blame for for a tenth t of all property deals that fall through. MFS combines speed and experience to make sure buyers have the finance they need to complete their purchase.

MFS provides bridging loans for... .

Renovation projects

Auction properties

Broken chains

Off ffshor shore SPVs

Property investors

Our terms in brief: Loans from £200,000 to £10 million Rates from just 0.75% per month, -57 57 VQ UP Free valuations on properties £500,000 to £1.5 million Simple application process and no hidden costs

+44(0)20 7060 1234


info@mf fo@mffsuk

6-Ragu.qxp_A4 Temp 02/07/2018 14:30 Page 6

Retail client status to professional status brief overview Ragu Dharmaratnam, ACMA CGMA

INTRODUCTION: The ESMA (European Securities and Markets Authority) restrictions on leverage on derivative products are coming into effect from July 2018 and that means private investors should decide whether they want to upgrade their financial spread trading account or Contract for Difference trading account (CFD) to professional status from retail client status if they want to maintain their current (lower) margin rates.

perienced, ordinary investors who may not fully understand the products and risks involved.


LEVERAGE: Both Spread financial trading and CFD’s are leveraged complex financial instruments and it allows investors to trade on price movements without actually owning the underlying asset and simply speculating which way the price might move on instruments such as shares, indices, currencies or commodities. Leverage means that you only need to deposit a small fraction of the overall value of any trade, known as margin. For example, if the margin requirement for a trade is 5% then you would need 5% of the full value of the trade in your account to open the position. If you buy 1,000 shares in Aviva plc and its share price is 500p, your total investment is £5,000. In this example you are only required to deposit £250 to open the equivalent of a £5,000 investment. This is how trading on margin leverages your position, freeing up additional funds to use on other products.

HOW NEW ESMA RULES CAN AFFECT MARGIN TRADERS? The following leverage restrictions apply to retail traders: 30:1 leverage on Major currency pairs such as USD, EUR, GBP and JPY, which equates to 3.33% compared to the existing 0.50%. 20:1 leverage on major indices namely FTSE 100, Wall street, Japan 225, S&P 500. This means retail clients now need 5% minimum margin compared to 0.5% which is currently in place

LEVERAGE MARGIN TRADING – HIGH RISK UK Financial Conduct Authority (FCA) want to crack down the leveraged products mainly because historically they were offered to financially sophisticated retail investors but in recent years these were also offered to inex-


REAL LIFE EXAMPLE: Let’s say that we want to buy the FTSE at 7000 points, with a stake of £1.The percentage of margin required is

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

based on the size of the instrument, so currently, our margin requirement of 0.5% of a 7000 point instrument would be £35.00 (7000 x 0.5%). With the new requirements, to trade the FTSE with a stake of £1, and a margin requirement of 5%, instead we’d need to have £350 in our accounts (7000 x 5%).

HOW CAN YOU APPLY FOR PROFESSIONAL CLIENT STATUS? In addition to qualitative test, you must satisfy at least two of the following three criteria. (1) You must have carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters (2) The size of your financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds Eur 500,000 (3) You work or have worked in the financial sector for at least one year in a professional position, which requires knowledge of the transaction or services envisaged.

CONCLUSION: The main benefit of professional account status is to get a reduction in margin, but on the down side professional status clients will not get negative protection from the broker so one can lose more than the balance on their account. Brokers may think that because of your professional status you have ample experience and may not explain things unless you ask. You may also say that higher margins result in better client outcomes due to the limits on leverage. All traders maintain the same level of client money protection (under Financial Services Compensation Scheme) and they can switch easily back from professional status to retail status.

7-Invest in Gold.qxp_A4 Temp 02/07/2018 14:06 Page 7

For centuries savvy investors have been aware of the importance of gold as part of a well balanced portfolio. In addition to offering wealth diversification, gold is a world renowned safe haven for investors offering the ultimate insurance and protection against turbulent economic times. History illustrates that gold is a timeless asset, not only proving to be a successful preserver of wealth, but high gold prices and record demand has ensured it has outperformed most other forms of investment.

WHERE TO BUY GOLD? n order to know if gold is a good investment, it is important to understand why people buy gold. In times of economic uncertainty and instability, buying gold makes more sense than other assets. With confidence in the banking system and worldwide economy at an all-time low, gold bullion could be the ultimate insurance and should act as an essential part of everybody’s investment portfolio. With the famous yellow metal in greater demand than ever, there are many reasons why people should buy gold. Owning gold could be the ultimate way to preserve your wealth, and possibly make a healthy return during uncertain times.


Research is everything. Your decision to buy gold online wouldn’t have been taken lightly and should be backed by your own research. Much the same, when it comes to selecting your chosen bullion dealer, again research is vital. The Internet is the best place to conduct your research. The Internet holds information about the impartial experiences, opinions and recommendations of millions of people all around the world. It sounds obvious, but why not start your research by simply typing in the bullion dealers brand name into The Internet really is the world's largest open forum in which companies have no control. It will become quickly apparent if a bullion dealer has a negative online reputation, in which case they should be avoided at all costs.


WHY BUY PHYSICAL GOLD? PHYSICAL GOLD VS ETFS As the old saying goes; if you don't hold it, you don't own it . There really are numerous benefits of physically holding your gold in your hands, as opposed to buying electronic gold (ETF) or paper gold. In these unpredictable economic times of instability, low interest rates, underperforming currency markets, volatile stocks, gold offers a welcome safeguard to the turbulence. However not any form of gold, but physical gold. Physical gold is a timeless asset which will always have a value and always lasts the test of time. Holding physical gold bars and/or gold coins provides the ultimate control against financial crisis in an underperforming wider economy.

Looking back at historical data, in hindsight it is easy to identify 2005/06 as a great time to buy gold bullion before the constant rises when the price of gold stood at just £250 T/OZ. Again in 2007/08 the UK banking crisis offered another great opportunity to jump onto the gold bandwagon with the gold price standing at around £350 T/OZ. Some of the most common questions heard now on a daily basis are; is it too late to buy gold? And; how much longer can the gold price continue to rise? Unfortunately, there's no exact science to knowing when to buy gold, but there are lots of effective and timeless techniques and indicators that most successful investors use to help them and look out for.

GOLD BARS VS GOLD COINS? Whether you’re new to bullion investment or not, deciding whether to invest in bullion bars or bullion coins should take some consideration. Before making this decision, it would be advisable that you conduct your research as

there is no definitive right or wrong answer, it will vary depending on the needs and circumstances of the individual investor. However, as when making any other investment there are several factors to consider including: the value of your investment and the product premiums, how long you plan on holding your gold, how you will store it, capital gains tax (CGT) and how you plan on realising the value of your investment.

DO I PAY CAPITAL GAINS TAX ON GOLD? Capital Gains Tax or CGT is a tax on the gain or profit you make when you sell anything, give away or otherwise dispose of something. It applies to assets that you own, such as bullion, shares or property. There's a tax-free allowance of £10,900 (2013/14) and some additional relief that may reduce your Capital Gains Tax bill. Most bullion investors will never have to pay this tax due to the size of their investment and many other investors choose to only buy tax free British gold coins which are CGT exempt such as gold sovereign coins and half sovereign coins, however, it is important that investors know where they stand.

IS BULLION SUBJECT TO VAT? The good news is investment grade gold is VAT free. This includes all the gold bullion bars and coins on our website. However, unlike gold, VAT is payable on silver at 20% making silver a more long term, speculative investment. However, due to the volatile nature of the silver price, returns are often quickly realised. If you are VAT registered and think you may be able to claim your VAT back, then the best person to speak is your accountant.s

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


8-9-Adil Siddiqui-11/2.qxp_A4 Temp 02/07/2018 14:07 Page 8

Blockchain in financial services Blockchain, distributed ledger technology and cryptocurrencies have in the last year between them received vast amounts of press coverage. With so much noise, it can be hard to find the signal: what are the real- world applications of this new suite of capabilities, and which industries are best placed to take advantage of them? Adil Siddiqui - Director of Operations, ThinkCoin

inancial services as an industry has been characteristically energetic about developing plausible and economical end use cases for blockchain. Banks and exchanges, no strangers to innovation, are unsurprisingly leading the way. The possibilities inherent in nearinstant settlement of a transaction, with money changing hands in seconds rather than days, have been particularly attractive. The blockchain could allow enormous savings in in collateral and back-end costs, with a report from management consultants Oliver Wyman estimating the savings at somewhere between $15bn and $20bn — not game changing numbers in this context, but not insignificant either. Incidentally, there is a degree of consensus on these numbers: similar research by Bain came up with an estimate of $15bn - $35bn. That said, these are consultancy figures, so you may as well put some numbers on a dartboard and take your shot: but as a nudge rather than a conclusion, this research does have some value. It’s a delicate matter, but the smart contract functionalities in some of the more recent blockchains could also facilitate the automation of many back office functions— not good news if that’s how you make your living, but an real opportunity for companies looking to permanently cut their costs. From manual processing to the time lost by a lack of standardised



practices, the blockchain holds the potential to seriously shake up many of the more archaic practices banks have been too complacent to shake up. If we move out of the back office, the markets are also ripe for the kind of disruptions clients may actually see. Complex OTC derivatives, or other relatively low-volume markets, will present fewer immediate problems in upgrading technology, but the reduction in liquidity and credit risk caused by faster settlements could potentially radically reshape market behaviour. A lot of research in this area has focused on renewable energy contracts and their derivatives. Towards the end of last year CME began offering Bitcoin derivatives, the first mainstream exchange to take the plunge. Intriguingly, the Depository Trust & Clearing Corporation (DTCC) and a combined team from IBM, Axoni and R3 have successfully tested a system using smart contracts to manage posttrade services in the $11 trillion OTC market for cleared and bilateral credit derivatives — even a qualified success in this field would make someone very, very rich. The data harvesting and verification capabilities of the blockchain could also have a significant impact. The existing survey processes used to determine benchmark interest rates such as LIBOR or commodity prices are out of

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

date in world driven by data: the issue has been trust, rather than information. Blockchain evaporates that concern, allowing for data from spot transactions to be captured and then ultimately used to create far more accurate reference prices. The benefits of this to asset managers should be pretty obvious. The immutable nature of records kept on the blockchain could make it ideal for KYC, identity management and corporate governance. Proxy shareholder voting could be made far easier — the US state of Delaware, home to many American corporations thanks to a generous tax regime, has been exploring ways of verifying proxy votes via blockchain. Similarly, blockchain allows banks to embed KYC data into the record of a transaction, which should in turn lower the cost of compliance and make compliance a viable proposition for smaller players, diversifying the marketplace while, of course, making KYC more reliable. So, beyond cutting red tape and saving institutions money — savings that will doubtless be passed onto their customers, of course — the question is who moves earliest and biggest. Will there be first mover advantage, or is it better to learn from competitors’ mistakes? As usual, it’s pretty much impossible to know. There are certainly some contexts where blockchain adoption will be smoother,

8-9-Adil Siddiqui-11/2.qxp_A4 Temp 02/07/2018 14:07 Page 9

cheaper and therefore faster. Blockchain is likely to make its first impacts in markets in Asia-Pacific and Latin America that have a centralised and integrated infrastructure run by a single exchange and a proactive regulator who can work together with their financial communities. In large, complex, but mostly domestic markets such as Japan and China, blockchain is more likely to reinforce a relatively integrated structure for cash securities. By contrast, it could have the opposite effect in large financial hubs such as the US and major European markets. In these jurisdictions, it could foster an even more unbundled and fragmented market structure, with multiple exchanges and utilities mushrooming. Smaller, domestically focused markets like Australia, Canada and Brazil could see blockchain have its earliest impact in cash securities. These markets, which are already integrated and centralised, face fewer obstacles than the other archetypes. They can evolve holistically, with participants and regulators working closely together. Meanwhile, small markets with

international connections, including Singapore and Hong Kong— are likely to remain integrated for cash securities but more subject to global market practices and links in derivatives and OTC. So, efficiency savings and the removal of intermediation costs, combined with structural changes that should make liquidity easier to combine, settlement cycles faster and transactions in general more reliable:

taken together, these are likely to have substantial impact. This won’t be without challenges, however: from regulatory uncertainty to issues around standardisation to blockchain’s consistent difficulties in achieving scale, there are significant hurdles to overcome before blockchain’s full potential is realised. As we hope we’ve made clear, however, there are many, many incentives to solve these problems.


Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


10-Currencies.qxp_A4 Temp 02/07/2018 14:07 Page 10

Where to buy Currencies at the best exchange rate If you’re going abroad, it’s a good idea to take some holiday money with you in the local currency to pay for essentials like food and drink, tips and taxis. Simple golden rules to remember whenever you're buying Currencies.

WHAT IS THE POUND EXCHANGE RATE? How many of the desired currency you get to your pound will depend on the exchange rate on international currency markets, known as the "spot" rate. The Currency rates are influenced by big investors like banks and hedge funds, determines how much each currency is worth in comparison to one another. If a currency is strong, it means it's worth a lot compared to other currencies, which in turn means you get better value when buying foreign currency. The reverse of this is a weak currency, which results in poor value exchanges when buying money to spend abroad.

WHERE IS THE BEST PLACE TO EXCHANGE POUNDS FOR THE CURRENCY YOU NEED? When you buy currency, you won't be offered rates as favourable as the spot rate, which is reserved for big investors. But how much bang you get for your buck will still be influenced largely by the underlying value of each currency. Foreign exchange companies set their own rates, and often include a commission when they sell you foreign currency. Because different sellers set different rates, and because they skim different levels of commission off the top, your value for money can vary wildly between euro sellers. To cut through the nonsense and get a true comparison, ask the currency seller how much desired currency you'll get for your pounds after all charges. The best way to save money buying euros is to compare the rates offered by sellers in advance through online - use currency exchange comparison websites or order currency in advance. Shop around for the best deal – to find the best deal. They can show you how much you’ll get for your money once the exchange rate and any charges have been taken into account.

CAN CARDS SAVE MONEY WHEN SPENDING ABROAD? One way to save money on foreign currency is with a specialist currency card offered by many providers.


FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

You top these cards up online using pounds, and they work like a normal debit card when you're abroad - but without the fees. This has the added bonus of not exchanging a penny more than you need, and you're saved the hassle of carrying loads of cash everywhere. They also lock in the rate - so you know exactly how much money you have to spend. But often it's credit cards which will save you the most money, provided it's a card with low or no fees for spending abroad. It’s worth checking how much your card provider charges before you go away on holiday. Remember not to focus on just one charge. Some providers will might have a low foreign usage charge, but charge a lot more for cash withdrawals or visa versa.

STAY SAFE WHEN USING YOUR CARD OVERSEAS Only take cards you plan to use. Leave the others in a safe place at home. Register your cards with a card protection agency, make sure you have their phone number and your policy number with you. Note down the emergency phone number for your cards – it’ll be on the back of the card. Keep the numbers separate from your cards, in case they get lost or stolen. It’s better to write down the +44 number than an 08** number, as the second type might not work from abroad. Tell your card provider or bank where you’re going and give them your contact details (including a mobile number), or they might think your overseas purchases are fraudulent and cancel your card. Only use your credit or debit card if it has low international usage fees.

IS IT WISE TO BUY HOLIDAY MONEY AT THE AIRPORT? Generally speaking, the one place you should never buy your holiday money is at the airport. Airport currency exchange kiosks know they've got you trapped, so they can charge ridiculous commissions or offer rubbish rates. If you do leave it until the last minute you can arrange to pick up your currency and secure a better rate. Even if you ignore every other tip, just make sure you get your currencies before you arrive for your flight.

Pride Management.qxp_A4 Temp 20/06/2018 14:13 Page 1

12-Bond Market.qxp_A4 Temp 02/07/2018 14:08 Page 12

Bond Market

crosscurrents can make it tricky As we understand bond is debt instrument that a government or a company issues to raise money. Basically it is a contract between a government or a company—who is acting as the borrower—and investors like you—who are acting as the lender. hen you buy a bond, you are lending money to the government or company that issued the bond, and in return, the government or company that issued the bond is agreeing to pay your money back, with interest, at some point in the future. For those who have already invested in bonds the first concern is the inflation, which is creeping higher. For the last decade, deflation or disinflation was the dominant theme. Now, as the economic recovery has spread to so many core countries, energy and metal prices are lifting again, and the numerous pools of spare skilled labour across the world are reducing in number and size. Each small increase in inflation expectation causes a bigger increase in bond yields. Buying inflation-linked bonds, whose prices can also be affected by the level of nominal yields as well as inflation and supply/demand factors might not be the answer. What one gains on predicting rising inflation might be smaller than the losses from rising conventional yields. UK government bonds (gilts) look particularly unappealing. With 10-year government bonds yielding around 1.4 per cent and consumer prices index (CPI) inflation running at 2.4 per cent, investors are making a negative real return. And although the Bank of England failed to raise rates last month as was widely expected, interest rate rises could still be on the cards. At the end of May markets were pricing in around a 40 per cent chance of a rate rise in August, and a



60 per cent chance of higher rates by the end of the year. A rising interest rate environment is generally bad news for bonds because a higher base rate causes their yields to rise. As a result, bond prices fall and investors can lose money. The longer duration a bond has, the more sensitive it is to interest rate rises. Investors in passive funds could be hardest hit if global interest rate rise.An increase in inflation is another potential worry for bond investors. Unemployment in the US, UK and many other developed markets remains low, which could lead to wage inflation. The price of oil, which has risen substantially over the past few months, is another potential inflationary factor. If the economy starts overheating, it would come down to how central bankers are able to navigate that environment. If the economy gets ahead of them and they don't tighten enough, there is the possibility they would need to raise interest rates quicker than expected. At current levels, the possibility of a more severe correction also cannot be ruled out, meaning the flexibility to tactically hedge credit risk or even adopt short positions when attractive may be an appealing way of navigating the fairly complex environment.

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

The level of yields for high quality bonds is not at all high. Many trillions worth of bonds still offer negative yields to maturity. Even with positive yields, the quantum is rarely high compared to the last five decades. There is little or no margin of safety in these assets. Given that bonds have a terminal price, holding bonds with a negative yield to maturity is a guarantee to lose money in nominal terms, to lose more if there is inflation and lose yet more if there is a default. It is believed that short duration positions in the US and the UK could be attractive ways of benefiting. Long positions in inflation-protected bond markets can benefit from rising inflation expectations, particularly in the US where inflation markets look structurally mispriced. After years of interest cuts, most central banks have reached a nadir. In the case of Europe and Japan, any change in policy could be very slow to arrive. That will disappoint some short sellers. But removing the most aggressive of emergency measures, to return short-term rates to zero or positive territory, would not be contractionary as much as eliminating distortions. 2018 could see particular weakness in fiveyear bond prices in US, UKEurope. More widely, bond markets are losing the tailwind of declining policy rates that they have enjoyed, in one country then another, for nearly 30 years.

Page 13.qxp_A4 Temp 02/07/2018 14:40 Page 13

Europe’s Leading Safe Deposit Centre



Don ’t let an unto owar d incident spoil y our happin ness Keep all y our jew weller y and personal v aluables i n our state of the ar t secur e lock kers. After all why str ess when y ou can ha v e complet e peace of mind. Call: 020 8843 9 9920 for an appointment toda y





rge of La ance n i f e & l R entia ty Resid roper p l a i c r e Comm rtfolio po


Advising Companies and Private Clients

G Corporate Finance Solutions G Commercial Mortgages G Property Finance

G Development Finance

G Bridging Finance for Auction Purchases

G Residential Buy-to-Let Mortgages for High Networth clients Mr Darshan Roy Director

M: 07961 022 448 Member of

For more information visit Email: We are Credit Brokers sourcing from whole of the market

Zoom Finance Ltd

9 Devonshire Square, 3rd Floor, London, EC2M 4YL

Zoom Finance Ltd is Authorised and Regulated by Financial Conduct Authority (Reference number: 663760) Registered office: 116A Rickmansworth Road, Watford, Hertfordshire WD18 7JG

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


14-Pension investment .qxp_A4 Temp 02/07/2018 14:08 Page 14

Pension investment options an overview When you save for a pension, you should regularly review how it’s invested. And as you get older, you should probably change your investment strategy to reduce risk as retirement draws closer. DO YOU NEED TO MAKE INVESTMENT CHOICES? PERSONAL, STAKEHOLDER AND DEFINED CONTRIBUTION SCHEMES If you have a personal or stakeholder pension or money in a workplace defined contribution scheme, you’ll normally have to decide where your pension money is invested. Pension providers often try to make your decision as simple as possible. They usually offer a range of funds, so you can choose from several broad investment strategies that are suitable for most people. If you don’t make an active choice yourself, the pension provider will invest your pension in a ‘default’ fund that’s designed to suit as broad a range of people as possible.

DEFINED BENEFIT SCHEMES If you’re a member of a defined benefit scheme in your workplace, you’re not responsible for the investment decisions. Your scheme promises your retirement income, so it’s your employer who takes the investment decisions and risks needed to reach that target. But you might still need to make pension investment decisions at some point.


For example, if you decide to boost your pension savings by making additional contributions to a defined contribution scheme.

WHAT ARE THE MAIN INVESTMENT OPTIONS? Most defined contribution pension plans offer a range of investment funds that are designed to invest your money in different ways over the years until your retirement. You need to choose a fund (or funds) that offers the broad investment strategy you want. All the details – such as the choice of the specific assets that the fund invests in – are handled by the fund’s investment experts. Investment funds usually invest in several key asset categories, including shares, bonds and cash. You’ll probably be offered a choice of funds that: l Specialise in specific assets – eg a fund focusing on shares in European companies l Invest in a mix of different assets – eg a fund investing in both global shares and government bonds Most people choose to invest their pension in the second type of fund, because spreading (‘diversifying’) your investments is a good way of managing risk.

fund’s investment experts. ‘Target date’ funds work in a similar way.

KEY THINGS TO CONSIDER WHEN CHOOSING There’s no need to over-complicate your investment decisions. Keep these things in mind and you should be off to a good start. Invest for the long-term Don’t shy away from investing in shares. You want your investments to grow, and that’s difficult to achieve if you only choose lower-risk investments such as cash or bonds. Shares have historically performed better than cash or bonds over the longer term, but be aware that there are no guarantees they’ll always do that.

DIVERSIFY Don’t put all your eggs in one basket. If you choose a basic managed fund this should be well diversified already, so you might not need to spread your money further. But if you choose highly specialised funds, you’ll probably want to pick a few different ones to spread your risk.

FEES AND CHARGES Check how much the different funds on offer charge – only choose funds that have competitive charges.


You could also diversify your investments in this way yourself, by dividing your money between a range of specialised funds. But this requires more time and financial knowledge.

LIFESTYLE FUNDS Over the long term, shares have tended to perform better than bonds or cash, which are lower-risk investments. Many pension plans offer a ‘lifestyle’ fund, which automatically shifts the balance of your investments towards less risky assets (such as bonds and cash) as you near retirement. This shift will be handled by the

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

You might not have to make any changes, but you should check your investment choices every year to make sure you’re still comfortable with the level of risk and that charges haven’t gone up. This is even more important as you get closer to retirement. At this point, you’ll want to make sure the strategy matches what you intend to do. For example: l If you want to use your pension pot to buy a guaranteed income from an annuity, you might want to move to lower-risk investments to help protect the fund you’ve built up from any shocks in stock market performance. l If you want to use your pension pot for a flexible income with income drawdown, you might want to set a strategy to meet your ongoing longterm investment needs.

15-Propio.qxp_A4 Temp 02/07/2018 14:09 Page 15

Our new investment platform, Propio, offers hassle-free property investing As an award-winning property developer, I’ve seen how complicated property finance and investing can be. I’ve seen the property market change; with increases in stamp duty and other taxes and hassle from tenants and agents, buy-to-let margins in particular are being squeezed more than ever before. That’s one of the key reasons why we launched Propio, an innovative online property investment platform offering returns of up to 20 percent. ur straight-forward platform gives investors access to unique opportunities that offer the sorts of returns previously only available to the financial elite. Now with the touch of a button you can invest in both debt and equity opportunities all linked to property development. But behind the technology, there’s expertise. Our team have been involved in over £500m of property transactions and it’s this team that rigorously evaluate every investment opportunity, so you don’t have to. We only launch those which meet our strict investment criteria and invest in every opportunity ourselves.


Our approach allows every investor to create the portfolio that is right for them: users log into our platform and allocate money either to specific projects or to a selection of diversified bonds which invest in multiple opportunities related to development. We pride ourselves on giving investors all the facts, providing in-depth information about our opportunities, complete with independent valuation information and an explanation of the project’s timeline, returns and risk profile. Investors get their

money back when loans are repaid or developments are sold, with the duration depending on the type of project and on whether investors have taken a debt or equity stake. As Propio focuses on developments that have already obtained planning permission, exit strategies are clear and defined and returns and timings are more predictable. Taking an equity stake in a project – the highest risk and reward option – could potentially earn returns up to 20 percent per year. However, equity holders are always the last to be repaid, which is one of the reasons why expected returns are higher. Our debt opportunities are structured as secured property bonds and typically return around 8 percent. This type of return is also substantially higher than those offered by traditional property funds - which typically seek an income yield around 4 percent with

Mani Khiroya

the rest made up by capital growth. We focus on residential property a deliberate response to the UK’s housing shortage and the ongoing crisis on the high street. With commercial property funds – which are heavily exposed to shopping centres – suffering the most. Given the issues buy-to-let investors now face, we’re offering opportunities in residential development with far better returns and a complete transparency. Our ISA product is due to launch in the autumn which will make investing even more tax efficient. Propio has been roadtested over the past year and we’re now excited to bring our smarter approach to property investing a wider audience.

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


16-Rakesh Shah-1.qxp_A4 Temp 02/07/2018 14:11 Page 16

Rakesh Shah, Ten Point Trading

How grandparents and parents can help children avoid facing a personal financial challenge There is no formal education about managing money for school children. Experience of basic budgeting is often learnt through managing a fixed amount of pocket money, with some advice from parents on how they should either spend it or save it. Beyond this, later on in life, any advice on managing money, investments and debt can become very personal subjects to discuss and often, when problems exist, the issues will be easily swept under the carpet and ignored, until desperate situations arise, forced by time or a lack of cash. Many of these can be prevented by some advice on personal financial management. ften unknowingly, many parents forget that we have wonderful and profound advice for managing wealth in our Vedic scriptures discussing principles on “Artha” that I suggest, all parents should educate their children with. Many of life’s problems can thus be avoided by following these time honoured and wise principles. In this article I will discuss three principles of Artha that my father avidly taught me, to ensure I built a good financial foundation from a very young age to help with any problems that may possibly come later in life. Prevention is often the best cure.


THREE PRINCIPLES THAT MAKE UP A TRIANGLE OF SUCCESS 1. Firstly Knowledge: Become an expert in at least one area of knowledge. The world pays us for the expertise that we have. The higher the level, the greater the reward. This is true across all professions, from cooking (as a chef) to medical experience as a


Doctor or Nurse. We are paid for our “value added” to any business or organisation. Every month, we should encourage our youth to learn and sharpen their tools in their chosen profession. Whether this means reading some books, attending industry events or networking with other peers, this habit will yield long term growth and ensure you are always growing your skills and therefore increasing your value. 2. Secondly Gaining Material Wealth: Once you have succeeded in acquiring some wealth, it is important to invest a part of it, into areas that allow increase the value of your assets. Young adults should begin saving as soon as they can. Set aside a fixed amount every month from your income, so that you can reach the required amount for a longer term investment as soon as is possible. With the advent of the internet, there are thousands of business opportunities open to everyone, which are both scalable and have a low cost to entry.

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

Securing a second source of income, is invaluable, as long term job security has been diminishing in recent decades and this trend looks like it will continue. It’s a good idea to look to invest in business that are scalable. Try to find a high growth business that you can invest in over the long term. 3. Thirdly, we look at financial Contentment: Once you have built up a nest egg and have some returns from investments, we should begin to plan for our retirement as soon as possible. After all, who wants to work in their retirement years (unless offcourse, you love your job more than your retirement plans). Financial contentment comes when we no longer worry about any lack of income for our future (our future being our retirement in this case). We should look to take the income and gains earned from the previous two principles and begin to invest them in areas of high interest return with low capital risk. Here we are using the power of compound interest to our advantage. Everyone should learn the ‘formula rule’ to calculate the number of years required to double money at a given interest rate. You simply “divide the interest rate into 72”. E.g. if you want to know how long it will take to double your money at six percent interest, divide 6 into 72 and you get 12 years. Teach the future generation to evaluate as many investments as possible and calculate how long it will take them to double their money. You will need to achieve an interest rate of 7.2% to double your money every 10 years. As a closing remark, revered teacher Jeffrey Armstong (Kavindra Rishi) reminds all of us that “good health is the foundation of a good life” and we should never forget that includes your spiritual, physical and financial health. Rakesh Shah is a keen Investor and Consultant. Based at Kingly Capital [], working with HNWI’s and family offices for investment opportunities. For more information please get in touch.

17-Pride Management.qxp_A4 Temp 02/07/2018 15:09 Page 17


AUCTION Update Uncertainty forcing Investors to become more Selective

: he May round of auctions Price uide 00+ G could come to be ,0 £300 ) looked back at as a (9.2% t: l turning point in the Resu 00 0 , commercial property market. £330 gross) over the last few years, buoyed % (8.3 by changes to residential property taxes, interest in commercial property has been hot, however after several high profile retail and leisure administrations (or rather cVas), it may be cooling. Well, at least for riskier, ‘secondary’ lots anyway. WELL-LOCATED SHORT LEASE STOCK: a ton of money still remains LOT 8 (ACUITUS) – SUPERDRUG, firmly in private investor hands KNARESBOROUGH, YORKSHIRE looking for a home, and more often DescRiPtion: Freehold ground floor than not this will be solid long-dated retail unit with ancillary income, well-located short-lease accommodation on 1st & 2nd floors stock or genuine value-add tenancy: Let to Superdrug Stores opportunities. PLC for 5 years from 11/09/2015 for £25,500 p.a. FR&I the top auction houses had Location: High Street location in an mixed results in May, a reflection of attractive Yorkshire town this interesting period in the market – ouR coMMent: We acted for the whilst Barnett Ross at one end seller on this sub £500k whole celebrated anothe r spectacular 100% building let to a strong covenant in the success rate, acuitus only achieved heart of a small town. With good preauction interest we expected a touch 60%. more in the room however with just the below investments are over 3 years left on the lease, many representative of each of investors may have been put off the three areas amidst all the gloom surrounding the investors are High Street. But the eventual buyer did well - he will collect a healthy yield targeting in the until lease expiry and should current market. if Superdrug decide to vacate he will be you are looking for able to negotiate a dilapidations something similar, settlement as well as explore regardless of budget, conversion of the uppers to alternative do contact me. use (e.g. residential).





£1,5M e Price: - £1,7M (6.7% 5.9%) Resul t: £


(5.6% M gross) DescRiPtion: Freehold trade counter investment measuring 5,000 sq.ft. with parking tenancy: Let to a subsidiary of Topps Tiles Plc for 20 years from 01/05/2018 for £100,000 p.a. FR&I (no breaks) Location: Retail park location in a south-east London suburb ouR coMMent: 20 years’ income is rare these days, and although Topps Tiles PLC is not on the hook, its subsidiary is still worth ca. £150m and offers covenant strength. It’s a decent chunk of Freehold property in a busy area – a nice, clean investment which would have sold well below 5% had Topps Tiles PLC been on the lease, and overall looks a good buy that went under the radar amidst all the retail uncertainty. Guide £1.55Price: M+ (6.1% g ross) Resul t: £


M (5.5% gross)

VALUE ADD OPPORTUNITY – LOT 91 (ALLSOP) – 2 SHOPS & OFFICES, WOOD GREEN, GREATER LONDON DescRiPtion: Freehold mixed investment comprising 2 shops with 1st & 2nd floor offices tenancy: 2 ground floor shops let to independent tenants for £85,000 p.a. for over 10 years and offices let for £10,000 p.a. until 2024 Location: Busy High Street trading position in one of North London’s top retail centres ouR coMMent: We also acted for the seller on this asset which has medium term residential co nversion potential for the upper parts. Thanks to its prime location in a major London suburb, the tenant’s covenant strength is not so important. The strong interest for this lot was because it provides both an attractive initial yield as a ‘hands-off’ investment as well as the option to be more ‘hands-on’ later, meaning that should the market ever turn, the value of this investment, with the correct asse t management, certainly won’t.

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


18-Insurance.qxp_A4 Temp 02/07/2018 14:11 Page 18

Things to look out for when You’re about to buy an insurance policy. Before you commit, run through this checklist to make sure you know what you’re buying. For example you might be offered: l Travel insurance when you book a holiday l Payment protection insurance with goods bought from catalogues l Warranty insurance when you buy a new washing machine or computer l Buildings and contents insurance, life assurance and critical illness cover when you take out your mortgage. If you need this insurance, you might get it cheaper with better cover elsewhere.

HAVE YOU SHOPPED AROUND? Don’t compare on price alone as the cheapest policy isn’t usually the best cover for your needs, and it’s important to compare both the price and the level of cover. Try to get at least three quotes. There are many different ways to buy insurance. Here are the main ones: l Banks and building societies l Comparison sites and online insurers l Supermarkets and department stores l An insurance broker or independent financial adviser Don’t assume that insurance bought over the internet or from a comparison site is automatically cheapest, or offers the best cover. If you’re looking for car or home insurance, then comparison sites are a good place to start. But remember that no comparison site covers all the insurance companies.

HAVE YOU COMPARED LIKE WITH LIKE? Watch out for how different charges, types and levels of cover, and your excesses are calculated when you compare policies. For example, some insurers set their voluntary excess (the amount of any claim not covered by the insurer)


buying insurance edge. If you don’t, your policy might be cancelled, or any future claim could be rejected or not fully paid out.


at a high level to make sure they come out cheapest on comparison sites. When comparing policies and prices, make sure that the features you’re comparing – such as excess amounts – are similar. If you’re buying from a comparison site, remember to check the level of cover you’re being offered – insurers often cut down on cover to make sure that they’re the cheapest.

DOES THE POLICY COVER EVERYTHING YOU NEED IT TO? Read the policy document. At least check the features that are important to you in the policy summary. Otherwise, you’re potentially wasting your money and might not be covered when you really need it. If you have already bought a policy, you have 14 days (30 days for life, income protection, payment protection and critical illness policies) to change your mind if you decide the policy isn’t suitable for you. However, for home and car insurance you might have to pay an administration charge and the cost of any days already covered.

HAVE YOU ANSWERED ALL YOUR INSURER’S QUESTIONS TRUTHFULLY AND ACCURATELY? Whether you’re applying online, by phone or by application form, make sure you take reasonable care to answer all the insurer’s questions honestly and to the best of your knowl-

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

If you have an unusual car or a house that is of a non-standard construction, using an insurance broker might get you a better deal. Few reasons why going to a broker for insurance might be the best choice: l Getting expert guidance does not cost you more: like comparison sites, they get paid commission by the insurance provider for selling their products so you don’t pay them a fee for shopping around to get you a good deal. Unlike comparison sites they have specialist expertise and can give you guidance on the products that best suit your needs. l Know your options: insurers won’t always offer you every type of cover when you go directly to them. Brokers can help point out the types of cover available for the insurers they cover and help you work out what you need. l Find the right product for you: a broker will ask you about your personal circumstances to find you the right policy. They’ll also be able to tell you if you’re already covered by your existing insurance policies so you don’t overlap, and they will often get you a good deal by comparing prices and product features. l Find a specialist provider: on comparison sites you might not find cover for things – like income protection or critical illness – that need to be tailored to suit your needs. You also won’t find special or bespoke cover on there, so if you want to insure something unique like a high-value antique or a collection, a broker will know where to go. l Your claims are taken care of: if you need to make a claim, your broker might speak to loss adjusters and claims departments and do as much as possible for you so you don’t have the hassle and worry.

19-Pivot.qxp_A4 Temp 02/07/2018 15:15 Page 19

Our roots lie deep in property With ever increasing competition in the property finance marketplace, new and established lenders are vying for market share; offering the lowest rates seen for years and increasing leverage. But is it all about the numbers? Pivot have spent the last 5+ years leveraging our wider property experience to deliver a competitive, yet customer centric proposition.

Shahil Kotecha CEO

he alternate property lending space – ‘bridging’ and development finance (short term loans secured against property) – has become a crowded place. According to a recent market study, there are over 40 lenders, and given the unregulated nature of much of the lending in this space, in reality, it is much higher. Yet data collected by industry stalwarts suggests that the loan volume in Q1 2018 is the highest recorded since 2015 – almost double the £80.47m of lending recorded during Q1 2015 - and this comes against a backdrop of reductions in traditional mortgage lending. A report by Trading Economics stated that 62,914 mortgages were approved in March 2018, compared to an average of 85,050 from 1986 until 2018. The likelihood is therefore that whilst the property market continues to soften and traditional mortgage lending declines, the alternate lending space will continue to grow. As lenders continue to grapple for market share, competitive pressures are likely to heighten, resulting in continued downward pressure on rates; increased leverage being offered, and more lenders moving into development lending.


Whilst borrowers are benefiting from the cheapest lending rates seen in years, there are significant risks that may come to pass. Some of these have already come to fruition – a recent article published by Bridging & Commercial shone light on the apparent skills shortage in the industry. There has also been talk of the lack of decision makers in the credit process, as the finite pool of experienced talent is spread across a wider number of lenders. What is even more worrying is that there are lenders moving into development lending who aren’t experienced in offering these types of facilities. We’ve seen this before and only a decade ago, similar market factors led to some lenders ending up with large land banks and SME developers left with partially completed sites. It is harder than ever for readers of the NACFB magazine to differentiate between lenders and ensure they are partnering their clients with a provider who is not only competitive but has the right expertise when times get tough. Pivot’s team of cross-industry experts have financed, built and managed more than £500 million of UK property assets across hundreds of projects. Established over 5 years ago, we have only recently launched our proposition to market, using the time to hone our customer-centric proposition. We are not just a lender but part of a wider real estate group that has been operating for almost 20 years Our group includes an awardwinning property developer (Fruition Properties), a digital fund manager ( and a construction company (Area 29). Our expertise in the property market is well established and enables us to conduct business with a clear and complete

understanding of our clients’ requirements. We have experienced the challenges of raising finance firsthand - Pivot was launched with the mission of making the borrowing process simple yet supportive. Technological innovation is at the heart of our offering Most lenders will talk about the speed and flexibility of their offering. We believe these statements should be grounded by operational capabilities, such as technology. We use technological solutions from enquiry to redemption. We integrate with third parties and generate documents from our end-to-end loan management system. Our claims of being able to offer speed are tangible and credit backed terms are typically issued within 24 hrs. We have diverse institutional and private funding arrangements We are funded by three wellknown institutions – two banks and a global asset manager – and we even issue our own bonds via our associated fund management business. What this means is that we are not hamstrung by one funder, assess every transaction on its own merits and price risk accordingly offering rates from 0.74% pm. We offer products and services that others in the market often cannot Our multi-disciplinary team have skills across Finance, Business Design, Asset Management Planning and Development. This means we can assess a wide-range of transactions and are happy to consider complex cases and uncommon assets. We even leverage our planning expertise to offer a unique product, where we can lend against the hope value associated with a site.

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


20-UK House Price.qxp_A4 Temp 02/07/2018 14:14 Page 20

ollowing what some have called an uninspiring year, homeowners and those looking to sell in the coming months have been told to expect an underwhelming and subdued 2018, with a number of leading commentators predicting UK house prices will either stay flat or perhaps rise by very low percentage. What dread apparition has rattled Britain’s favourite asset class? Could it be possible that you can go wrong with bricks’n’mortar? “Brexit” is the go-to excuse for those in the property business, much as “unseasonal weather” is the go-to excuse for troubled fashion retailers. But the reality is that the problems in the UK housing market are a lot bigger than mere Brexit… Economists predict that a range of factors will weigh on house price growth in 2018. Continuing economic and political uncertainty in the run-up to 2019, when Britain is due to leave the EU, plus the possibility of further interest rate rises following November’s base-rate hike from 0.25% to 0.5%, falling real wages, weak consumer confidence and mortgage affordability issues could all act as a brake on the market. London has been the hardest hit part of the UK housing market, for sure. At the high end, discounts on asking prices are at their highest levels since the financial crisis. However, according to the most recent survey by the Royal Institution of Chartered Surveyors (Rics), activity is slowing across the country. RICS did not come up with a figure, but said UK house price growth was “set to come to a halt” over the course of next year, adding: “Come the end of 2018, prices across the UK as a whole will have seen almost no change with a year earlier.” RICS said the “downbeat” data for inner London signalled that prices in these boroughs were likely to edge lower in the coming months, but added that “this negative outlook is no longer confined to central London”, with the wider south-east seemingly on course for “modest price



UK house price-where is it heading? House price growth looks set to wavering to a halt in 2018 or at best manage a small belowinflation rise, as the twin spectres of Brexit and rising interest rates put the brakes on the property market.

declines”. Between changes to buy-to-let taxation and higher levels of stamp duty, becoming a landlord is no longer seen as the sure route to riches it once was. And that is having a big impact on the UK property market. The additional rate of stamp duty on those buying second homes is one factor putting off would-be landlords. But more important is that the ability for higher-rate taxpayers to offset their mortgage interest payments against their tax bills is being withdrawn in stages. The squeeze began last year, and it will be entirely withdrawn by April 2020.

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

The upshot is that it’ll be far harder for landlords to make the sums add up. It’s also become harder to secure a mortgage as a buy-to-let landlord, partly as a result of this and partly as a result of generally tighter mortgage lending rules. The figures make it clear that this is already having an effect. The abolition of tax relief isn’t the only issue facing landlords. Buy-to-let mortgages are typically interest-only loans. That is great news when interest rates are this low – your monthly payments amount to buttons because you aren’t repaying any of the original capital. However, it means you feel the pain of rising interest rates much more acutely than anyone with a repayment mortgage: because your entire payment is made up of interest, your bills will go up proportionately more when rates rise. This means that boom seems less likely and a house price crash seems unlikely. As long as interest rates stay relatively low (and they could go up a bit from here and probably still not do too much damage), then the idea of a huge crash still seems unlikely. But equally, there’s little reason to expect prices to rise. Whichever government runs the country for the next ten years or so, it’s clear that increasing housing supply is a major policy goal now. Interest rates can’t get any lower, so it’s hard to see how credit conditions can get any easier. And physical property is going to remain a tempting target for taxation.

21-Darshan.qxp_A4 Temp 02/07/2018 14:15 Page 21

Why it is necessary to use a Commercial Finance Broker in today’s uncertain Business Environment by Darshan Roy

In the current financial climate, more and more businesses are seeing the importance of restructuring their finances to save on interest cost or access cheaper monies. Commercial mortgages can be tricky and have a wide range of different criteria, so it is usually best to consult an expert for advice. ommercial Finance Brokers match business owner needs with finance providers. They can save you time, energy and money. Using a broker to source finance is a bit like using an expert travel agent to book your holiday. You can do it all yourself online, but it can become quite time consuming and complex. If you simply task an experienced broker to arrange the finance, they can do all the legwork and you can carry on focusing on running the business. Advantages of using a Commercial Finance Broker: l Source the best rates from across the market - with greater access to the market means finding the lowest interest rates for clients. l Access to alternative finance providers outside of High Street Banks - there is a growing number of Alternative Finance Providers entering the market with a genuine appetite to lend money. New Banking Licences have been issued for first time in decades by Bank of England and plethora of new Peer-to-Peer lender are now available to even first time borrowers. A broker can help guide you and most importantly, be able to explain the different borrowing solutions so you understand their value. l Save time by applying with finance providers who actually match your criteria - finding the most suitable lender and best deal takes time. If you had to apply to each lender individually it would take forever to apply for finance - Let the broker do the all that legwork. Brokers can offer terms that are more flexible, introduce you to innovative alternative solutions, reduced need for security over your assets and ensure you get the most suitable product for your needs from across the market. Many small business owners believe they will get a much better deal from approaching a broker instead of their bank. Commercial mortgages, just as with any loan in the modern market, are


subject to certain criteria that a borrower must meet. Either an Individual, Sole Trader, Partnership or a Limited Company can qualify, so long as the lender is happy they are creditworthy. Commercial mortgage serviceability – The loan must be serviceable which means that the projected income from the business should be sufficient and is high enough to cover the cost of the loan and the stress test that every bank puts as lending conditions. Affordability – This is a key essence of lending. If the investment or business the loan that the lender is supporting, is not covered by the rental income or business profits, then other incomes can be taken into account to support the borrowing. This is where a Commercial Finance Broker makes the difference on a lending case that is ‘on the edge’! Credit score – The business must have a strong enough credit profile and reach the pass mark for each particular lender. Each lender has their own criteria that must be met by the borrowers. Interest Rate – This depends on the several factors like Credit Profile, Loan to Value, Quality of the Asset/ Security, Etc. The broker best matches the above factors and negotiates with the lender for the best interest rates. Security – Most commercial loans will require some sort of security. This may be a Property or other asset as valued by the valuation company for the lender or even a personal guarantee for any short fall. This should to be enough to repay the loan to the lender, should the borrower defaults. Deposit/Equity – Loan to values can be different from lender to lender and is ever changing. The Broker knows lending policies of each lenders so the amount of equity you will need will vary depending on your situation. Below is a case study A Builder cum Decorator and a “hands-on” bricklayer wanted to buy a

site in Slough. They bought the site in a Limited Company (SPV) and secured planning for 8 Flats in a Purpose built new development. The main problems were: l Although the Builder cum Decorator had been a professional for 30 years, he had no direct experience of a ground-up development. l The bricklayer had only worked on sub-contract and had never worked on a project where he was solely responsible for progress chasing and recruiting the contractors. l The partners needed 100% funding of the site and build costs. We met with the clients on site and immediately recognised that a meeting should be arranged with them & a sympathetic lender who looked into their previous & vast experience with a positive outlook. We prepared a full presentation, which included the plans, full information of the partners, pictures of the site and build schedule. The lender recognised the viability of the project and understanding that the two partners offered complementary skills. The lender agreed to lend £1.55M, representing 68% of the end value of the units and 100% of the project cost within one week including Interest rollup. Work began on the site four weeks later. We keep a watching brief on the projects and some six months later, we received a telephone call that there had been a problem with the finishing and another £100,000 was needed. This took the total loan outside the maximum loan to value (LTV) allowed by the lender. Fortunately, because of our excellent and long-standing relationship with the lender, we were able to negotiate on the clients’ behalf and the lender released further funds to complete the development. The site is now finished to a very high standard and all the 8 flats are rented & we are now refinancing the high-cost development finance into commercial mortgage at BBR + 3.25%. Note : Zoom Finance Ltd are member of National Association of Commercial Finance Broker (NACFB) and are fully authorised by Financial Conduct Authority (FCA).

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


22-Credit Rating.qxp_A4 Temp 02/07/2018 14:16 Page 22

Building a good credit score, also known as a credit rating, is crucial because it can affect your ability to borrow money or access products such as credit cards or loans. our credit score is created from information held in your credit report, also known as your credit file. The exact number of your credit score can differ between lenders or even between different products from the same lender, depending on the criteria used in assessing you as a potential customer. The information held on your credit file and your credit application form might be used to decide: l Whether to lend to you l How much to let you borrow l How much interest to charge you. The most recent information on your file will have the most impact, as lenders will be most interested in your current financial situation.


HOW DO I CHECK MY CREDIT SCORE? There are three main credit scoring agencies in the UK: Equifax, Experian, Callcredit. You can request full details of your credit file for £2 or simply get your score for free. The main difference between the £2 and free versions are that the £2 versions let you have a paper version sent to your address, while the free versions are online. Each charge to access their services, although it’s possible to access for free through their partner site. Credit scoring agency Equifax ClearScore Experian Access your score for free with MSEs Credit club Callcredit Noddle Each agency holds slightly different information about you, so it’s worth checking all three for a more accurate picture. In general, your file will include: l Name, address and date of birth


Improve your

credit score


Some search footprints on your file, such as credit applications l financial links to other people - for example, a joint loan or bank account l Any late/missed payments or defaults l How much money you owe to lenders l Any County Court Judgments (CCJs) against you that are not paid in full within one month of receiving the notice l If you’re on the electoral register at your current address l If you have been declared bankrupt or entered an IVA (Individual Voluntary Arrangement). It won’t include the following information: l Your salary l Student loans l Medical history l Criminal record l Council tax arrears l Parking or driving fines. However, you might be asked for this information when applying for a loan or contract. They might then choose to use this information alongside your credit report to assess you.

WHAT IS A GOOD CREDIT SCORE? Different lenders have their own standards for rating credit scores. However, if you have a good score with one of the main credit reporting agencies, it’s more than likely you’ll have a good credit score with your lender. A good credit score with: l Callcredit is scoring 4 out of 5 l Equifax is scoring over 420 out of 700 l Experian is scoring over 880 out of 999. But remember: your credit score doesn’t guarantee that you’ll be approved for credit or offered the lowest interest rates. This is because a lender’s decision is not made solely on score.

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

HOW LONG WILL IT TAKE TO IMPROVE MY CREDIT SCORE? In general, credit history is built up slowly over time as you increase the number of on-time payments you make. The longer the bill goes unpaid, the greater the likely impact on your credit score. Keep a close eye on your credit score to help spot issues.Most negative marks will remain on your file for at least six years.

CONSIDER GETTING A CREDITBUILDING CARD If you have a poor credit history, you might want to consider a credit-builder credit card. These are cards designed for people with little credit history, or who have a bad credit history. The credit limits are often low and the interest rates high. This reflects the level of trust your credit file gives lenders. By using these cards and paying off the bills each month, you can prove you’re creditworthy, increase your credit score, and apply for other cards and loans when your credit rating improves. Be aware that the interest rates charged are much higher than standard credit cards though.

HOW TO REPORT AND FIX ANY MISTAKES ON YOUR FILE If you do spot any mistakes, challenge them by reporting them to the credit reference agency. They have 28 days to remove the information or tell you why they don’t agree with you. During that time the ‘mistake’ will be marked as ‘disputed’ and lenders aren’t allowed to rely on it when assessing your credit ratin

Page 23.qxp_A4 Temp 02/07/2018 14:42 Page 23

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Other Banking Facilities we offer include: I I I I I I I


Current Account

Savings Account Term Deposits

Cash ISA bot Variable & Term deposit

Lockers (in Ilford, Southall & Birmingham branches only) Rupee Remittance to other Banks in India

Free Rupee remittance facility to accounts held with PNB India

For further information please contact our nearest branch SOUTHALL






Punjab National Bank (International) Limited (PNBIL) is a UK incorporated banking subsidiary of Punjab National Bank, India (PNB). PNBIL is Authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority, Financial Services Register number 459701. PNBIL is a member of the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS). Your eligible deposits with PNBIL are protected by the Financial Services Compensation Scheme (FSCS). Please visit our website for further information. Terms & Conditions Apply.


MOR RTGAGES Resiidential Buy to Let Rem mortgages

PROTECTIO ON Life Insuran nce Critical Illn ness Cover Income Pro otection

Please contact Dinesh Shonchhatra chhatra FCA re egistered Mortgage Adviser viser CALL:

O20 84 424 8686 / 07956 6 810647 77 High Stree et, Wealdstone, Harrow w, HA3 5DQ mortgage@ma ~

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


24-25 Financial mis-selling-11/2.qxp_A4 Temp 02/07/2018 14:17 Page 24

Financial misselling what to do if you're affected If your bank or another financial company sold you a product that wasn’t suitable for you, you might get compensation if you make a complaint. If you are unhappy with your firm’s response, the Financial Ombudsman Service or Pensions Ombudsman might accept and investigate your complaint for free.

WHAT COUNTS AS FINANCIAL MIS-SELLING? Mis-selling means that you were given unsuitable advice, the risks were not explained to you or you were not given the information you needed and ended up with a product that isn’t right for you. As a non-financial example, say you were looking to buy a computer. You told the shop assistant that you planned to watch DVDs on it, and they recommended a model.Then you took it home and found that it didn’t have a DVD drive.There’s nothing wrong with the computer itself – it’s not faulty, but it’s not what you needed.

The computer was mis-sold to you.It’s just the same when you’re sold a financial product. The person who advises you to buy must recommend something suitable for your needs, and explain properly what it can and can’t do.They should make sure you know the risks. If they don’t do this, you might be able


to claim compensation. Key things to remember about financial misselling: l It’s not about whether you lost money - even if you didn’t lose out, if the product isn’t right for you – perhaps it’s a riskier investment than you wanted – you can still make a complaint about financial mis-selling. l You can’t complain just because an investment performed badly - some investments are risky, and if you take a gamble you have to accept that you might lose. But you can complain if you weren’t told about the risk.

EXAMPLES OF FINANCIAL MIS-SELLING Payment protection insurance (PPI) mis-selling examples There are many ways you might have been mis-sold PPI. Here are some of the most common: l You were pressured into buying the PPI l You weren’t told about exclusions to the policy l You weren’t told that you could buy PPI from another company l You were unemployed or retired when you were sold the PPI l You were told that PPI was compulsory and that you had to take it out l Nobody fully explained the terms and conditions (small print) l You weren’t told the rules about preexisting medical conditions l You weren’t told how commission would work on the PPI l Nobody asked if you had any other insurance which could cover the loan.

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

MIS-SOLD MORTGAGE EXAMPLES (INCLUDING ENDOWMENTS) Some ways you might have been missold a mortgage: l Your mortgage end date is after your retirement date l You weren’t told about the commission the adviser would receive from the lender l You were advised to self-certify (borrow money without proving your income) or overstate your income in order to borrow more l You were advised to switch lenders and weren’t told about the fees and penalties l You were given a fixed-rate mortgage and told to remortgage to a better deal later on, then incurred penalties for leaving the fixed rate early

MIS-SOLD INVESTMENT EXAMPLES Some ways you might have been missold your investment: l You weren’t told about the risk involved l You weren’t told how your money would be invested l The product didn’t suit your needs or attitude to risk that you discussed with the adviser.

IF YOU’VE BEEN MIS-SOLD A FINANCIAL PRODUCT Act quickly There are some very limited circumstances where the Pensions Ombudsman can investigate complaints that were not brought within the three-year period. However, before going to the ombudsman services you need to complain to your provider. Read on to understand the process you need to follow. You can find out more on the The Financial Ombudsman Service website.

24-25 Financial mis-selling-11/2.qxp_A4 Temp 02/07/2018 14:17 Page 25

If you want to complain to the Pensions Ombudsman the time limit is three years from the event complained about, or three years from when you became aware (or ought to have become aware) of the event complained of.

Ombudsman Service and, in the case of the Pensions Ombudsman, three years from the event complained about or within three years of becoming aware of the event.



If you’re not happy with the firm’s response to your complaint, raise the matter with the Financial Ombudsman Service or the Pensions Ombudsman for pension-related issues. You might find it worth checking with the Pensions Advisory Service first for pension-related matters. l An ombudsman service is independent and will investigate your complaint for free. l You have to have followed the firm’s official complaints procedure before you can use an ombudsman. Usually, you’d go to the ombudsman if the firm hasn’t given you a final decision within eight weeks – but if they’re helpful and keep you informed, you might want to wait a little longer. If your complaint relates to something that happened years earlier, it could take some time to find the relevant files and speak to the

You don’t have to find concrete proof, but you do need to explain your problem. l Be clear, concise and stick to the facts. l Gather all the relevant information and any written proof.


l Ask for a copy of the firm’s internal

complaints process – all firms should have one. It’ll tell you who to contact. Often you can find this on the firm’s website. l The firm has eight weeks to respond. If they don’t get back to you, you can go straight to the ombudsman service. l If you are unhappy with the firm’s final response, you have six months to take your complaint to the Financial

right people about it. Generally, the ombudsman’s decision is where things end, but if you’re still unhappy, as a last resort you might be able to take the matter to court. Think carefully before you do. Court cases are expensive, and there’s no guarantee you’ll win.

Find out more about the ombudsman service and how to complain: l The Financial Ombudsman Service l The Pensions Ombudsman

IF THE FIRM THAT ADVISED YOU HAS GONE OUT OF BUSINESS Even if the firm has gone bust and can’t afford to pay you anything, you might be able to get compensation from the Financial Services Compensation Scheme.

DON’T PAY FOR SOMEONE TO MANAGE YOUR COMPLAINT ABOUT FINANCIAL MISSELLING Think twice before paying a complaints company to make your complaint.You can get the same help for free from the Ombudsman Service, and you’re just as likely to win.





" & "' $% % ' $% " & $%(" #&(% # $"

$(& #' $# $ $# $# ! & *

# $ $%(" #&(% # $" ) ) ) $%(" #&(% # $"

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


26-Kiran D Patel .qxp_A4 Temp 02/07/2018 14:18 Page 26

Taxes On Retirement A Simple Guide Kiran D Patel BA(Hons) FCA, Director, Albury Associates - Chartered Accountants

The decision to retire results in a number of changes in all walks of life. The two most dramatic effects are changes to your routine and everyday life, and changes in your income. A more dramatic change, and often overlooked, is that of having to pay tax both on and during retirement. However, it is likely to have an overwhelming impact as many are under the illusion that once retired, tax will not be due. This is simply not true.

A FEW POINTS THAT ARE LIKELY TO IMPACT ON YOUR RETIREMENT INCOME TAX AND NATIONAL INSURANCE CONTRIBUTIONS Unless there is a specific exemption from payment of tax for a particular type of income, you will still have to pay Income Tax on all income streams. This will apply to your pension income (including State Pension), investment income, and interest received on savings, to name a few. Many incorrectly assume that pension income (especially State Pension) will be tax-free. Some pension income will be paid without tax taken off the amount you receive. This does not mean that it is not taxable. If tax is due, you will need to account for it at the end of each tax year (which ends on 5 April each year). Generally, if tax is due, it is often collected by taking money off any company pension payments or when you take money out of a workplace or personal pension scheme. Any rental income, interest received in savings accounts (other than Individual Savings Accounts), dividends or other income received from personal investments will be subject to the same rules that applied before retirement.

INCOME TAX PERSONAL ALLOWANCES In the current tax year (2018/2019), you will be able to earn up to £11,850 from all income sources and will not have to pay any tax on this amount. This is called your Personal Allowance. If you


receive less than this amount, then you are a non-taxpayer. Any earnings over this amount will be subject to Income Tax at the appropriate rate. There are a number of other rules relating to interest received from savings, dividend income and agerelated allowances that may apply and go towards reducing the amount of tax that you have to pay, however, these will depend on personal circumstances.

HOW YOUR PENSION IS TAXED All pension contributions paid during the course of your working life are usually invested in some form of financial market to enhance their value on retirement. At retirement, this value (defined as the Market Value) is used to assess the amount that you can take out tax free. You can withdraw up to 25% of the market value of your pension pot tax free. The remaining amount in your pension pot is used to provide you with an income or a lump sum withdrawal, however, both are subject to Income Tax. This means that any money received in addition to the first 25% of the Market Value of the pension pot, over your Personal Allowance will be taxable.

TAX-FREE INTEREST ON YOUR SAVINGS The Personal Savings Allowance was introduced in April 2016 and is the amount of savings income that you can receive tax-free.

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

For 2018/2019 this remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. From April 2016, banks and building societies stopped deducting basic rate tax from the interest on your savings. Instead, if your savings income is over £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, HM Revenue & Customs now collect any tax due through an adjustment to the Personal Allowance assigned to you.

TAX-FREE DIVIDEND INCOME The Dividend Allowance was also introduced in April 2016 and this is the amount of dividends that you can receive tax-free. For 2018/2019, if you receive dividend income up to £2,000, you will not be taxed on this amount. Amounts received in excess of the Dividend Allowance will be subject to tax, dependent upon your personal income tax rate.

THE MESSAGE Please be under no illusion that income received after retirement will not be subject to tax. Changes on retirement will occur, certain benefits will become easily available, but tax will still be payable. Forward planning and reorganization of income streams will enable the mitigation of tax liabilities on retirement. There are many ways to deal with this, however, individual circumstances are different therefore professional advice must be sought.

27-Crystal Finance.qxp_A4 Temp 02/07/2018 14:18 Page 27

Inheritance Tax (IHT) Planning What you need to know By Jinit Shah, Crystal Financial Solutions Ltd

While most people are aware Inheritance Tax is paid at 40% based on the value of their estate on death, in the last tax year almost £5 billion was collected by HMRC. This shows that people are not familiar with the several measures available to reduce one’s inheritance tax bill. Inheritance Tax does for example, apply to some gifts that are made before someone dies. Indeed, a recent survey revealed that one in three people are unaware of how much they can annually gift without incurring IHT. Jinit Shah

THE BASICS AND WHAT TO CONSIDER If you are married, have a civil partner or wish to leave everything to charity, your entire estate is free of Inheritance Tax. However, if you want to leave some or all of your estate to family and friends, then it may be liable for inheritance tax. Your estate includes:

l Your house and any other properties

you own l Any savings or investments (remember, some types of pensions are excluded, but other investments, including ISAs, are taxable) l The value of any life insurance poli cies in your name that are not in trust l Other assets you own Everyone is given an allowance that is not subject to IHT called the nilrate band. Since 2009 this has remained unchanged at £325,000, however during the same period, house prices within the UK have on average risen by up to 30% and higher in London. As a result, people’s estates may have grown significantly and could now be liable for IHT on death.

The biggest change came into effect from April 2017 with the introduction of the additional allowance, the main residence nil-rate band. For the current tax year the allowance of £125,000 may be applied when assets are passed onto a direct descendant. This will gradually increase to £175,000 in the 2020/21 tax year.

CALCULATING THE VALUE OF YOUR ESTATE AND THE POTENTIAL TAX LIABILITY Start by adding up all your assets within your estate to give the “gross value” of your estate. Next, you should subtract any outstanding debts. These could include credit cards, loans and mortgages. You can also deduct the value of some gifts you make during your lifetime and charitable donations left in your will. This will give you the “net value” of your estate which is taxed at 40%. The exact calculation of the “net value” is more complex. For Example: Ravi is 70 years old, married with 3 children and has an estate worth £1.5m. Ravi can combine his personal

allowance of £325,000 and main residence nil-rate band of £125,000 with his wife to give a total allowance of £900,000. However, his estate would still face an IHT charge of 40% on the remaining £600,000, and therefore be liable to pay HMRC £240,000.

INHERITANCE TAX PLANNING – WHAT ARE YOUR OPTIONS? Some of the options available to you include: l Gifting away your assets l Using Trusts l Taking out Life Insurance – Whole of Life cover l Use of Business Property Relief, which ensures your money is free of an Inheritance Tax liability after 2 years as opposed to 7. Every individual’s circumstances are unique and not all the options are suitable for everyone. Speaking to one of our experienced advisors will allow you to effectively plan for the future.

For more information visit or alternatively contact us on 0208 901 3737.

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


28-Kim Desai.qxp_A4 Temp 02/07/2018 14:21 Page 28

Pensions as an Inheritance Tax (IHT) planning tool - Making pension contributions for others By Terence Mope

Many IHT planning strategies involve making significant capital payments with the sole objective of reducing the taxable estate. Clients are sometimes reluctant to make outright gifts as, in their opinion, the ‘recipients’ (mainly children and grandchildren) spend the money on bigger homes, expensive cars or expensive holidays! An alternative to ensure that the money is not spent but wisely invested is to make use of the tax advantages offered by contributions to registered pension schemes by making pension contribution for recipients in order to reduce your taxable estate. t a time when resources are scarcer for young adults, IHT planning strategies that will benefit recipients by relieving them of the urgent need to fund their pensions should be given great consideration. Contrary to the widely held belief that gross annual contributions to authorised pension schemes for recipients is capped at £3,600, contributions can be as high as the annual allowance depending on the circumstances. The £3,600 limit only applies where the recipient has no taxable income for the year. Where the recipient is in employment with earnings of say £40,000 or more per annum, the opportunities are substantial as highlighted below.



l The estate of the donor reduces by

the amount of the gift made in the form of contributions potentially resulting in a 40% saving on IHT provided it falls within the normal expenditure out of income rules so that it does not form part of the 7 year rule; l Basic rate relief at source from HMRC will effectively increase the gift by 25%; l Where the recipient is a higher or additional rate tax payer, they may enjoy a relief of their tax liability of between 25% and 31.25% of the gift; l Tthe recipient’s pension fund enjoys tax advantaged growth as it suffers no income tax or capital gains tax charges; l Due to the rules for drawing down pensions, the recipient usually has no access to the gift until they attain minimum pension age which is currently 55 and scheduled to rise to 57 by 2028;


l Should the recipient die before age

75, tax-free death benefits (including lump sum) may be payable from the pension pot. l If the recipient dies after 75, the drawdown from the pension fund is taxed at the marginal rate of the recipient of the drawdown. Of course, consideration has to be given to the recipient’s pension lifetime allowance and the potential tax implications if their pension fund exceeds the lifetime allowance where there is a 55% tax charge if drawn as a lump sum or 25% tax charge if drawn in any other way, such as pension income or cash withdrawal. Normally, gifts are subject to a 7 year rule so that IHT is only avoided if the donor survives 7 years after making the gift. However, what is less know is that larger regular gifts made as part of your normal expenditure out of your income without affecting your standard of living are not subject to the 7 year rule and are exempt from IHT. This exemption does not apply to

FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018

gift made out of capital but presents a considerable tax planning opportunity as illustrated below with a donor having a surplus monthly income of £1,000 over a 10 year period. See chart below So: l If no action had been taken, the recipient will have received £72,000 assuming a 40% IHT rate; l By investing in a pension fund, the effects of the tax relief is that the value of the pension fund will be between £150,000 and £218,180 depending upon the tax bracket of the recipient. It should be noted that the illustration above does not take account of the growth of the investment (both income and capital gains) which will accumulate tax free in the pension fund but of course will be subject to charges from the pension fund provider. Clearly this is one way of reducing your penitential IHT liability. There are other possibilities. However, we would suggest that you see a professional adviser to consider ways of minimising your IHT liability taking your specific circumstances into account as doing nothing is not an option.

Terence Mope (ACCA) is a tax consultant with Chown Dewhurst LLP where Kaushik Desai is a principle. Contact: Tel 020 3283 4566 or email

29-Indian property.qxp_A4 Temp 02/07/2018 14:22 Page 29

India property industry moving in the right direction Developers in India say they are starting to see signs of buyers returning to the residential property market, following what has proved to to be a tumultuous period for the industry.Developers are hopeful that the sales will pick up expects an increase in homebuyers because of the attractive prices and regulations that have provided transparency to the customer. ales volumes in major cities in India including Mumbai, Chennai and Bangalore fell sharply in recent years, dropping by 62 per cent across eight of the country’s biggest cities last year from the highs of 2011. Sales in those cities in 2017 were down 7 per cent over the previous year. India’s property market had been a major beneficiary of both legal and illegal cash transactions. Demonetisation refers to when the Indian government suddenly banned the two highest value banknotes in November 2016 in an effort to reduce the country’s heavy dependence on cash and consequently black money flows.Indians also held back from buying homes as they waited to see how new regulatory reforms in the real estate sector, under the Real Estate Regulation and Development Act, as well as a nationwide goods and services tax, or GST, launched last year, panned out. But the dust seems to have settled now. India’s new real estate laws came into full effect last year in May, aimed at protecting homebuyers, with measures including making it mandatory for projects and agents to be registered under a regulator. Before


this, the property market had been largely unregulated and rife with flyby-night players. Tighter regulations mean that buyers have more confidence to make purchases, reputable companies in the industry say. With RERA [Real Estate Regulation Act] in place, the danger of major project delays has been reduced drastically, as has the risk of developers not delivering on the promised quality. Also, the supply pipeline has moderated as developers have become cautious about launching new projects and the unified tax environment under GST provides more certainty and comfort to investors. Larger developers are welcoming this regularisation in the property sector and return of consumer confidence to both off-plan and readyto-move properties. With smaller developers consolidating, larger builders are gaining favour among end-users. India has moved up one place to claim the 35th spot on JLL's Global Real Estate Transparency Index (GRETI) aided by improvement in market fundamentals, policy reforms,

and liberalisation of FDI. Digitisation of property records and industry status accorded to affordable housing have also helped. India’s task is cut out for entering the Transparent Markets defined by ranks up to 30 by executing the reforms well and fast by the time of our next assessment in the year 2020. The index measures transparency by looking at factors including data availability, its authenticity, and accuracy. Governance- of public agencies as well as stakeholders of the realty sector, transaction processes and costs associated with those, and the regulatory and legal environment are also considered. India is one of top ten countries showing maximum improvement in transparency score. In the semitransparent market that India belongs to and in the transparent market that India aspires for, countries such as the Netherlands, Thailand, UAE, Serbia have better improvement in scores than India, while Slovakia and Thailand have the same improvement in score as India. India needs to back itself and continue its journey towards creating a transparent, accountable and respectable realty sector that the best talent aspires to make careers in. So is it a good time for NRI's to start buying / investing in properties in India? The inventory being high and with less demand its worth exploring as this is the best time. India property industry is all set to grow from here on and buying it at the right time will be a wise decision. But as always a word of precaution always do your research, do your checks before you make that final decision.

Asian Voice & Gujarat Samachar 2018 - FINANCE, BANKING & INSURANCE


30-Index & Credit box.qxp_A4 Temp 02/07/2018 15:14 Page 30

Editorial Index

Editor/Publisher: CB Patel

Chief Executive Officer: L. George

Topics ................................................................................................Page No.

Will rising interest rates necessarily make life easier for hose seeking retirement? ............................................................................................ 4

Managing Editor: Kokila Patel

Associate Editor: Rupanjana Dutta

Retail client status to professional status brief overview .......................................... 6

Deputy Editor: Urja Patel

Invest in Gold? ............................................................................................................ 7

News Editor: Kamal Rao

Blockchain in financial services ................................................................................ 8

Advertising Managers: Kishor Parmar

Where to buy currencies at the best exchange rate ................................................ 10

Head of Sales & Marketing: Rovin J George

Bond Market crosscurrents can make it tricky .......................................................... 12

Pension investment options, an overview .................................................................. 14

Head - New Projects & Business Development: Cecil Soans

Our new investment platform, Propio, offers hassle-free property investing ............ 15

Graphic Designers: Harish Dahya & Ajay Kumar

How grandparents and parents can help children avoid facing a personal financial challenge ...................................................................................... 16

Customer Service: Ragini Nayak

Commercial Auction .................................................................................................... 17

Asian Business Publications Ltd Karma Yoga Houes, 12 Hoxton Market, London N1 6HW Tel: 020 7749 4085 Fax: 020 7749 4081

Things to look out for when buying insurance .......................................................... 18

Our roots lie deep in property .................................................................................... 19

UK house price - where is it heading? ...................................................................... 20

©Asian Business Publications Ltd

Why it is necessary to use a Commercial Finance Broker in today’s ...................... 21 uncertain Business Environment


Improve your credit score .......................................................................................... 22

The ideas and conclusions expressed in the articles are the author’s own and do not necessarily reflect the views of any particular company. They are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific financial product. The publishers of Finance, Banking and Insurance (FBI) magazine are not responsible for the individual views expressed by various authors in this publication and would like to direct readers to consult professional advisers or brokers if they require further information on any topic covered in this magazine. Some of the products, offers, opinions included in the articles and advertisements carry risk and readers should consider them at their own discretion.

Financial misselling what to do if you're affected .................................................... 24

Taxes on retirement - A simple guide ........................................................................ 26

Inheritance Tax ( IHT) planning - What you need to know ........................................ 27

Pensions as an Inheritance Tax (IHT) planning tool - Making pension contributions for others .................................................................................. 28

India property industry moving in the right direction .................................................. 29


Are you a subscriber of Gujarat Samachar and Asian Voice? If not, here are a few compelling reasons why you should:

● ● ● ● ●

Asian Voice and Gujarat Samachar have been serving the community for the last 4 decades. We have some 25,000 paid subscribers and around 5000 copies are sold every week through retail outlets. Our readership exceeds 200,000. We are committed to diversity and are proud to be British. 64 pages of the most comprehensive, in-depth and unique coverage across the UK, India and the rest of the world. We take great care to cater to a wide target audience - male, female, young and old. There is something for the entire family. Our popular periodic theme-based special issues are unmatched by any other titles in the market and you will receive them free of charge! We are committed to a number of unique community events which receive wide publicity in our titles. If you are not a subscriber, chances are you will miss out on such events.


G.S. 1 Year £30.50 2 Year £55

UK A.V. £30.50 £55

Both £36.50 £66.50

G.S. £79 £147

EUROPE A.V. Both £79 £131 £147 £252

G.S. £95 £174


0!(U more £36PL.5 US many ered special

WORLD A.V. Both £95 £154.50 £174 £288

Subscriptions are non-refundable after 30 days

Please detach this form and send it with your payment or credit card instructions or by cheque to the address below


Tel: 020 7749 4080 E-mail: Website:

Karma Yoga House, Unit 2, 12 Hoxton Market, London N1 6HW










2.75 E 7 £







ABOUTI IT’S ALL GI nsi SHARINhousing optio

Please charge my VISA / ACCESS / MASTERCARD for

Card No:

017 NG 2


Asian Affordable

SSI TIMELE HOMESI onei PERtoIOD distinguish anotheri How property from period


Card Expiry date



X E TA d? TANC threshol HERI INyou for the £1m qualify Do


FINANCE, BANKING & INSURANCE - Asian Voice & Gujarat Samachar 2018



t issues

grea r& Samacha Gujarat t each of ice for jus Asian Vo K only)

9 771354




issues de


Project4_A4 Temp 29/06/2018 17:06 Page 1

020 7457 1515

PIVOT.qxp_A4 Temp 29/06/2018 17:32 Page 1

CUTTING THROUGH COMPLEXITY We’re more than just a principal lender. Combining our deep property expertise with diverse institutional and private funding arrangements means that we can consider even the most complex cases whilst remaining competitive.


At Pivot we are passionate about providing our clients with the financial independence they require to meet the business objectives they desire –providing finance to enable progress. For more information please contact +44 (0)20 3695 5511 or visit *This is an indication of the rate that can be offered for residential cases. Commercial cases considered from 0.84% pm. Development cases from 0.89% pm.