Keeping an eye on things
Mick Lynch (assistant general secretary, National Union of Rail, Maritime and Transport Workers) also appears on the Radio 4 interview yesterday with John Ralfe. Starts around 20:30. There is no problem, according to Lynch.
Well it’s no surprise to me that in the New Year with a new Tory government we get an advocate of closing final salary schemes, advocating that there should be reform and verging on closing them. The scheme is not in trouble the way it’s been described [by Ralfe].
An interview on Radio 4 with our friend John Ralfe. Here at about 18 minutes through. Begins “the railway pensions scheme is about the most dysfunctional pension scheme that I’ve looked at over the course of the last 20 years”.
The BBC leasehold programme will be broadcast on Moneybox today at 12:04. The accompanying article is already available here, and has already attracted the ire of ‘property guru’ Richard Lovell on Twitter.
The ignorance of a BoE regulator is frightening … The principle of merged interests being worth more than the sum of the individual parts is well known in finance and commerce. It’s the justification for M&A! What quality regulation?
A fair bit going on in Eumaeus world right now. More later. For the moment:
A great piece here from BBC journalist Howard Mustoe, about an added cost on extending a leasehold with fewer than 80 years remaining, called marriage value.
A happy New Year to all our (many!) readers. As is customary, we look at what we achieved last year, and look forward to what we may achieve in the coming one.
Unfortunately timed article in the Eye Christmas edition, on how the rising tide of criticism of the FCA would make Bailey’s appointment as Governor “a tough sell”. Ho ho, as Kevin would say.
What can I say, except to wish Eumaeus’s readers the very best for a happy Christmas – and a merry New Year – when we will of course be back.
I just spotted a comment from ‘JKingdom3’ on our letter to the FT last month (Capital created by matching adjustment is entirely artificial, see Eumaeus “Our Reply to Rothesay“, 5 November 2019).
Kingdom wonders whether we have considered every angle, arguing that “In a world where firms seek to maximise their profit subject to the constraints they face, the “correct” assets required to meet this will be the assets corresponding to the least cost to the shareholder”. He contrasts investing
1. … $74.41 in the risk-free asset, hold no capital over ten years, and pay the policyholder $100 in ten years’ time with certainty; and
2. … $67.56 in the risky asset, and hold the minimum capital needed to meet the 99.5% requirement each year over the ten years.
He suggests that option 2 is a good deal for policyholders, and a better deal for investors. Correct or not?
In a follow-up to the article we mentioned here, Sarah Bright has revealed that the Treasury Committee may (at long last) investigate the equity release problem.
Steve Baker, who was last week re-elected as Conservative MP for Wycombe, says: ‘Close scrutiny of equity release is long overdue and I welcome the FCA’s action. In the event I am re-elected to the Treasury Select Committee I will certainly want to see an inquiry carried through.’
In This is money today.
Homeowners told to take equity release could have been given the wrong advice it has emerged, as the City watchdog confirmed it is looking at mortgage lending practices in the later life market. This is Money can reveal exclusively that the Financial Conduct Authority has been engaging with firms to help it better understand the market to reduce any potential harms.
Hard to say whether the review is connected with the issues we have raised here and elsewhere, though.