The Independent Articles

Sustainable investing has to be one of the few positive trends of this pandemic.  The economic recovery – here in the UK at least – has been firmly pinned to greener industries through a series of commitments, policies and new approaches that some experts suggest would have taken another five years to achieve without Covid-19.Ethical bank Triodos reports that the pandemic is specifically motivating more than a fifth of investors to explore ethical funds.Almost nine in 10 investors are interested in the concept of environmental, social and governance (ESG) investments, according to separate research by chartered financial planner The Private Office (TPO).  With the average UK ethical fund  outperforming the average non-ethical fund and the FTSE All Share over the last 10 years, some £80bn flowed into sustainable funds in the first half of 2020 alone as retail and institutional investors placed greater emphasis on demanding a greater focus on ESG principles, including stewardship, ethics and the environment.Unsurprisingly, the number of ESG-related funds has increased by 40 per cent in the past year.But transparency is a huge issue. Barely one in 10 people is really confident that they understand where their money is invested, Triodos has found.So where do you start?  “There are broadly three ways in which people can push for a greener future without gluing themselves to the floor outside Downing Street – through who they vote for, what they consume and where they invest,” says Laith Khalaf, financial analyst at investment platform AJ Bell. “Funds take different approaches to responsible investment, which means investors do have to do a bit of extra homework to check the fund they choose matches up with their ethical goals.“Environmental goals are often married with societal concerns and governance standards to create funds which sit under the ‘responsible’, ‘ethical’ or ‘sustainable’ umbrella.”Ethical funds typically fall into one of three buckets: funds that aim to do no harm, funds that aim to do some good, and specialist funds.“Funds that aim to do no harm screen out any ESG transgressors. Typical examples of exclusions include gambling companies, arms manufacturers, fossil fuel producers and tobacco companies,” says Khalaf. “Funds that aim to do some good actively seek out companies which are making positive contributions to society and the environment, and specialist funds target specific areas of ESG like clean energy or gender diversity.” Traditional tracker funds don’t have ESG screens and simply allocate money to stocks in the index passively, but some funds do track ethical indices produced by the likes of FTSE and MSCI.  “As ESG issues rise up the priority list for company boards, we can expect an increasing number of companies to fall into the investable universe for ethical funds,” Khalaf suggests.Knowledge and powerBut that poses problems for investors keen to do the right thing but with limited knowledge to base it on.  “When you look under the bonnet, a lot of so-called ethical funds look very similar to other funds, so there is a real risk that much of the time it is simply a branding exercise,” adds Keir Ashman, pensions and investments specialist at Bancroft Wealth.”As investors – and consumers more generally – become ever more sceptical of ‘greenwashing’, fund managers are going to have to find ways to build trust with socially-conscious investors.”“ESG funds are no longer the preserve of the most moral-minded investors, and due to their performance over recent years have been attractive for anyone looking to maximise their financial growth.”  While there is a growing assumption that investors are increasingly clued up, the truth is that half have never even heard the term ESG, for example.  Dean McSloy, partner and ESG specialist at TPO, says: “We are seeing new funds launching all the time, accompanied by huge marketing campaigns, but it feels like education needs to happen at a more fundamental level.“Many of these investors have an appetite to invest in ESG funds, but they’re being missed somehow. We need to lose the jargon, explain clearly what these funds really invest in, and where the benefits lie – now and in the future.  “Huge levels of wealth could be working harder to ‘do good’ for society and the planet with just a little rethinking. The industry needs to start giving consumers the information they want, rather than the information we think they need.”
Pick your ownWhile they get around to it,  Ashman suggests: “Look for the use of independent sustainability ratings, such as Vigeo, Sustainanytics, FTSE Russell, and DowJones Sustainability.  “How are companies chosen and funds picked? What are the asset managers trying to achieve in the long-term? Do they have a strong track record? It should be clear in the literature they supply.”Watch out for portfolios that have simply been tweaked from an existing portfolio rather than built from scratch, as this indicates they have been built quickly to meet consumer demand rather than being based on genuine philosophy, Ashman adds.Think about the way asset managers report on the performance of funds too, such as whether they monitor the extent to which they have addressed sustainability challenges rather than just reporting on growth.Meanwhile, various consumer investor groups are trying to counter the risk of greenwashing by doing the kind of deep dives that few people have time for in real life, regardless of how strongly they feel about investing to do real good as well as deliver real returns.  Fine detailFor those committed to investing in ESG, for example, consumer watchdog Ethical Consumer last week produced its latest, somewhat controversial, rankings of the best- and worst-performing funds based on their ethical performance, including carbon reporting.  It named the FP WHEB Sustainability Fund and the Triodos Pioneer Impact Fund as best buys due to good financial performance, being fossil-free and demonstrating a clear commitment to carbon reduction targets in line with international agreements, and for having fossil fuel-free investments.But the watchdog pointed out that some of the most highly regarded ESG funds still didn’t have clear exclusions policies, and others were owned by companies that also managed unethical funds.  In terms of the impact on climate, Ethical Consumer criticised the LF Heartwood Growth Sustainable Multi-Asset, Legal & General Ethical, Liontrust SF European Growth, Royal London Sustainable Leaders, and SVM All Europe SRI funds for still investing in fossil fuels, either directly or indirectly.  Concerns were also raised about carbon management and reporting among some of the funds named in the report – either because they or their parent companies don’t appear to have specific emissions reduction targets, or because they don’t include some of the direct or indirect emissions from their investments in their reporting.
A spokesperson for Royal London Investment Management (RLIM) points out that: “RLIM’s sustainable range of funds excludes companies which engage in fossil fuel extraction but does invest in utility companies with a bias towards renewable energy. “We presume that the report refers to us holding SSE, which is the largest developer of renewable energy in the UK.”Benjamin Matthews and Matthew Toms, investment managers at Heartwood Investment Management, note that their fund is a multi-asset with a specific risk target, while the other funds criticised in the report are single asset class funds with market benchmarks.“We are a fund of funds, not stock-pickers, meaning we do due diligence on funds, not underlying stocks. We do not have a blanket screen on fossil fuels, but take a ‘best in class’ approach,” they say, adding that they invest less than traditional funds in fossil fuels and invest heavily in renewable energy and energy efficiency stocks.  “Divestment when it comes to the energy sector is not the only approach one can take to have a positive impact,” they add.Handelsbanken Asset Management, the asset management arm of Svenska Handelsbanken AB, which owns Heartwood also stated that it: “both measures and publicly discloses the carbon footprint of its funds. “The company also annually publishes a climate report on both asset management and asset ownership in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures. “This report  informs stakeholders about work related to climate change, exposure to climate-related risks and opportunities, as well as the company’s ongoing sustainability work.”The Independent  approached all five funds criticised in the report for a comment. 

High house prices are threatening to undermine the buying process as ambitious sellers are clipped by lenders’ valuations, a new survey suggests.A survey of 1,000 buyers whose transactions spanned the first six months of the Covid crisis, found 46 per cent have had their prospective property down valued by their chosen mortgage lender after a sale and price had been agreed with the homeowner.  While most were down valued by between £5,000 and £10,000, one in four were hit with an adjustment of up to £20,000. Some buyers reported their potential properties had come back with valuations £240,000 under the agreed price.
Homes priced between £400,000 and £500,000 are most likely to have been hit with a devaluation, the survey by mortgage comparison site Bankrate UK revealed.  Read moreAnd the younger the buyer, the more likely they were to face an undervaluation, suggesting time and experience in the housing market pays. Just a third of the over 45s have agreed to an inflated price compared with half of the under 34s.  A third of millennials discovered their dream property was deemed to be worth £20,000 to £30,000 less than the agreed sale price, while for buyers over 45, the majority of down valuations were between £5,000 and £10,000.  Meanwhile, properties in Wales had the highest percentage of down valuations at 63 per cent. In close second was the capital, where 59 per cent of properties were considered less valuable by lenders, swiftly followed by Yorkshire and the northwest.  Homes in the southwest were most likely to hold their price.A game of consequencesBut adjustments like these don’t simply mean a buyer manages to dodge an expensive bullet. It can often mean the end of the purchase road altogether.
“In August I attempted to buy a semi-detached property in Billericay, Essex, for £450,000,” says Sam, a 30-year-old software engineer from Essex.  “My offer was accepted by the seller but after a survey by my mortgage lender, the property was devalued by £50,000.  “As the seller was unwilling to reduce their asking price, I subsequently lost the mortgage offer and the property, as I was unable to increase my house deposit to cover the cost of the devaluation.”
Yet again, the impact of a value downgrade is stronger among younger generations. Eighteen- to 24-year-olds are the highest proportion of buyers who lost their mortgage offer and property all together because they couldn’t afford to cover the gap that had suddenly opened between mortgage loan amount and the property price.  By their 40s and 50s, more buyers were still able to secure their new home.  “If, like most buyers, you need a mortgage to buy a property, then the lender will want reassurance that it is worth what you want to borrow for it. Borrowers must pay for a valuation which gives the lender this peace of mind,” says Mark Harris, chief executive of mortgage broker SPF Private Clients.  “There have been instances where the valuation has not been high enough for the lender to agree to advance the mortgage requested in full. If borrowers can’t make up the difference from savings, then the transaction will fall through,” he admits.
Valuations tend to be fairly subjective.  One person’s down-valuation would be an appropriate market appraisal in someone else’s eyes. What somebody is willing to pay for a property may not be the same as what the valuer believes it to be worth. With a shortage of quality stock and a release of pent-up activity, properties being sold over asking price is not uncommon.Read moreHe argues that there are always variations, whether regional, by property type or even buyer type. “House prices (whether softening or rising) can be influenced by the availability of credit, economic factors such as unemployment and the increased desire for properties with garden/studies.” Moving onAlthough buyers can ask the seller to reduce their house price to cover the cost of down valuation, only 33 per cent of those surveyed did so.  Of those who did ask the seller to reduce the price, three quarters had their offer accepted but more than one in ten still had to increase their deposit to cover the cost. Most of these buyers are aged 18-34 and they did so either through their own savings or with help from their family.  But if the ends don’t meet thanks to a down valuation, the chances of finding something else seem slim. Among those who received a down valuation they couldn’t resolve, only 2 per cent of would-be buyers have gone on to offer on another property.  

As the unemployment figures rise and the thermometer falls, the energy regulator has announced new rules that will force gas and electricity suppliers to offer more help to customers struggling to pay their energy billsComing into force on 15 December, the policy changes will mean extra help for prepayment customers – many of whom are likely to be in what Ofgem described as “vulnerable circumstances” this winter.  The new protections mean energy companies will have to offer emergency credit to customers struggling to top up their prepayment meter. That could be because they just don’t have the cash at that point, or because they can’t get to their local shop to top up due to, for example, mobility issues or the need to self-isolate.  These customers will have a fixed amount of credit provided when their meter runs low or runs out to ensure continuity of supply.  “Friendly hours credit” is also available overnight, at weekends and public holidays, when top-up points may be closed and a customer’s meter has run low or run out.  And “additional support credit” is provided to customers in vulnerable circumstances who may have exhausted other options.  None of this is free credit, though, and customers will have to pay for their energy they use – usually when they next top up.Suppliers will also have to keep a closer eye on and offer extra prepayment credit for households in vulnerable circumstances to provide more breathing space while working out alternative arrangements to pay.
DisconnectedThe aim of all this is to reduce the number of prepayment customers who go without energy or “self-disconnect” after running out of credit on their meter.  Of the 4 million customers currently relying on prepayment meters, one in seven – around 570,000 people – felt they had to self-disconnect their supply at least once in the past 12 months.  Prepayment customers are more likely to self-disconnect if they are in debt and are more likely to be vulnerable and in fuel poverty. Others “self-ration”, deliberately severely limiting their energy use to make their credit last longer or to save money for other services.Recent research by Citizens Advice has found that almost 30 per cent of self-disconnects were the result of not having enough money; more than 10 per cent couldn’t top up because they were self-isolating; and another 10 per cent failed to top up because the top-up shop was closed.Elsewhere, suppliers will have to put customers in debt on realistic and sustainable repayment plans.
This means suppliers will need appropriate credit management policies, make proactive contact with customers, and set repayment rates based on ability to pay.  By March this year, as the initial Covid-19 crisis emerged, suppliers had voluntarily agreed to support vulnerable customers through the pandemic, including those on prepayment meters facing difficulties in topping up. The new licence rule will formalise these actions as obligatory.
“Suppliers have stepped up to the challenge of supporting their customers during the Covid-19 crisis, especially those in vulnerable situations,” says Philippa Pickford, director of retail at Ofgem.“Customers who are struggling to pay their bills should contact their supplier as soon as possible. The extra protections we have announced today will help ensure they get some breathing space this winter.
“Alongside our wider programme of support for vulnerable customers, Ofgem has also capped and reduced default tariffs so these customers always pay a fair price for their energy.”
Bigger picture perilsIn other news this week, the energy price cap has been extended until the end of 2021.“Energy is an essential service and everyone should be confident they can adequately heat their home and protect their health – especially during a global pandemic,” says Dame Gillian Guy, chief executive of Citizens Advice.“We’ve been pressing for the measures agreed between government and energy suppliers to help people through the coronavirus pandemic to be extended and widened, so we’re very pleased to see this announcement from the regulator.
“Even with this short-term support from suppliers, many people will still struggle to pay for the basics. Government needs to do more to support those who need it most, including making the temporary uplift to universal credit and working tax credit permanent.”Last week new research from Citizens Advice showed significant numbers of people risk being pushed into a position where they can’t pay their essential bills and could face spiraling debts if the uplift to universal credit and working tax credit is not extended beyond April 2021.“The government’s temporary changes to universal credit need to be extended, including maintaining fairer access to universal credit for the self-employed beyond November, and making the current temporary £20 a week uplift permanent,” warned Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline.Anyone who is struggling or may soon struggle to pay their energy bills should contact their energy supplier as soon as possible because they may be eligible for extra help, depending on their circumstances. Free advice and independent help on managing debt and budgeting is also available from Citizens Advice, the Money Advice Service, National Debtline and StepChange Debt Charity.

The nation’s 4.76m self-employed workers could find themselves with multiple tax bills that amount to more than they earn in total next year as falling income and a pile up of HMRC debt threaten to create a double whammy cash crisis.
The complicated set of circumstances and rules could mean that someone whose self-employed income suddenly falls dramatically from one tax year to the next – as many have as a result of the pandemic – may end up scrambling to cover a tax bill for more than they make in that year.  That’s partly because the self-employed have been allowed to defer paying the tax they owe in a bid to soften the economic impact of Covid on freelance workers. This year, those with tax bills for 2019/20 have the option to defer or spread their payment, with the final settlement due by January 2022.
But solo workers could also run into significant problems because the current tax system demands that the self-employed pay their tax for the coming year in advance or ‘on account’. The calculations for those up-front bills are based on previous earnings and so won’t take plummeting ‘real time’ income levels into account at a time when there is precious little extra cash around to cover such an overpayment.  In other words, many self-employed people may have to settle tax bills which bear no relation to 2020’s real earnings, numbers crunching by mutual insurer Royal London has revealed.
Wait… what?Unlike PAYE employees, the self-employed are expected to pay tax in advance. In normal circumstances, self-employed workers who file annual Self-Assessment forms must also make two ‘payments on account’ for the approaching tax year – one in January and one in July.  The payment on account that should have been due in July 2020 was based on income earned in the 2018/19 tax year, for example, and the one that would have normally been due by January 2021 is based on income earned in 2019/20.  This system of charging in advance based on the previous year’s earnings means a change in income takes a long time to be reflected in a freelancer’s tax bill.  If someone who previously earned £50,000 saw a drop in income to £15,000 during the pandemic, their total tax bill next year would probably be £16,682  to cover 2019/20 as well as their 2020/21 payments on account, despite their annual earnings having dropped to less than this amount.
Millions of self-employed people suffered a loss of income during the pandemic. More than 2.7 million people have so far claimed support from the Self-Employment Support Scheme (SEISS). Although the average drop in freelancer income was more than 30 per cent in first half of 2020, according to not-for-profit organisation the Association of Independent Professionals and the Self-Employed (IPSE), some self-employed people have reported that their regular income has been completely wiped out by the pandemic.  It is possible to ask HMRC to reduce payments on account and this year to set up a series of monthly tax bill instalments on the deferred amount instead of having to paying a large lump sum. But the onus is on the self-employed to sort this out themselves. The system is incredibly complicated and the self-employed may need extra help to understand their options.  Most don’t.
Self-employed people who may not know that they can ask for their payments on account to be reduced, or that they can spread out their payments, should contact HMRC to discuss a ‘real-world’ tax bill for 2021 based on predicted earnings rather than using those based on the 2019/20 tax year in a bid to make sure they are not over-paying tax.  Most of this is done online and falls under ‘Time to Pay’ arrangements. Those who think they have overpaid can claim a refund but this can take weeks to process.
Anyone who misses the 31 January self-assessment deadline also faces late payment penalties and interest charges. In addition, those self-employed who choose to spread out their tax payments in 2021 will be charged interest by the Revenue.
HMRC is also being urged to launch a targeted information campaign for the self-employed which draws their attention to the need to ensure tax is calculated on genuine predicted earnings.
Mona Patel, a spokesperson for Royal London, said:
“Many self-employed people may be expected to pay more in tax than they have actually earned in the past year because of the payment on account system. This lack of ‘real world’ tax bills means it’s perfectly feasible that those who have suffered the steepest drops in income could find themselves in this situation.  “While the Revenue has announced a system that enables people to pay in more manageable instalments, this still doesn’t go far enough for those who could end up overpaying tax unnecessarily because their bill is based on last year’s earnings. We urge HMRC to do the right thing and help the self-employed understand their options.”
In response, a HMRC spokesperson said:  “HMRC stands ready to support any taxpayer in financial distress as a result of COVID-19 and we would urge anyone who may struggle to pay their outstanding tax liabilities to contact us as soon as possible.  “Any business or self-employed individual can contact HMRC’s helpline for help and advice on 0800 024 1222.”
“Since 1 October, self-assessment customers can set up an online payment plan to spread the cost of their tax bill, of up to £30,000, into monthly direct debit payments, to help ease any potential financial burden they may be experiencing due to the coronavirus pandemic.”
The Revenue appears to have no plans to review the requirement for the self-employed to pay their tax bills up front.  

Almost two million young people are frightened they won’t have a safe place to stay if they lost their main source of income, according to new figures from Centrepoint that coincide with soaring unemployment figures.The number of people out of work reached 4.5 per cent in the three months to August, with redundancies reaching their highest levels since 2009, according to the Office for National Statistics (ONS).  Around 60 per cent of those newly out of work – some 300,000 of the 500,000 people who have lost their employment since the start of the pandemic – are young adults aged 16-24.That’s a “really disproportionate” number, ONS’s deputy national statistician, Jonathan Athow, warned.  The news comes just a few weeks before the end of the furlough scheme, which is still supporting some three million recipients. It will be replaced by the new job support scheme (JSS) which dials back on state support.Read moreInitially revealed last month, with chancellor Rishi Sunak announcing extra measures at the end of last week, it means that from 1 November, there will be a two-pronged deal designed to “support only viable jobs”.The original furlough scheme provided 80 per cent of an employee’s income while they could not work due to the pandemic. The government paid 60 per cent of the bill while the employer paid 20 per cent and the staff member took a 20 per cent hit on their pre-Covid salary in a bid to prevent millions of people being made redundant at the same time as the nation shut down.  Though the number of people claiming universal credit after losing their job soared in the early days of the pandemic on UK shores, independent experts broadly agree that it softened the blow significantly.But it couldn’t last forever.  For those whose roles are still largely on ice, but which still have long term viability, the employee will now be expected to work and be paid for at least a third of their contracted hours. The government will cover a third of the remaining unpaid hours up to a cap of just under £700 a month and the employer will cover another third. That should all add up to at least 77 per cent of the employee’s pre-Covid salary for the next six months.
The employee will see their income drop a little more, but the biggest shift will be in the amount businesses will have to find. It may prove an untenable position for many, particularly the smaller businesses that form the backbone of the British economy.  Influential think tank the Resolution Foundation warned this part-time JSS plan wouldn’t significantly reduce the rise in unemployment.  Then last week, in preparation for introducing new tougher measures in areas with dramatically rising Covid cases, the chancellor revealed that businesses which are asked to close as a direct result of the battle against Covid will be eligible for a lockdown version of the JSS. This would see the government pay 67 per cent of employee wages in businesses such as pubs and restaurants, to a maximum of £2,100 a month, with no obligation for bosses to top that up.  Even those that are eligible for the maximum state funding while they wait for their job to kick back in will probably receive just two-thirds of their pre-Covid salary and, crucially, that includes vast swathes of workers whose full salary had only been the minimum wage in the first place.From the start of the economic reaction to the pandemic, it was clear that some demographics would be hit harder than others, particularly women and younger adults – those more likely to be in lower paid positions in the retail and hospitality industries.  Centrepoint, working with the Co-op, has now warned that fewer than two in five young people currently furloughed think their role would be eligible for the new JSS at all. Less than a quarter of the 16-24-year-olds currently on a payroll think their job is “safe”.  This week’s official figures show they’re probably right.  With little or no financial buffers, a third of the nation’s young adults now don’t think they would have a safe place to live if they didn’t get additional support, Centrepoint has found. Many are already relying on family and friends who are themselves employed in insecure jobs.Eight in every ten councils in England have already seen an increase in homelessness in their area since the start of the pandemic and Centrepoint predicts that, eventually, two-thirds of under-24s would need to rely on support services to meet their financial obligations if they lost their main source of income.“While the uncertainty and disruption of the past six months has impacted everyone in some way, this research clearly indicates the severe effect it has had on young people,” Seyi Obakin, chief executive at Centrepoint, says.  Read more“As we move into the winter months, and as the government furlough scheme winds down, the risk of a dramatic increase in youth homelessness is very real, exacerbated by the existing financial and employment insecurity of young people.”Commenting on the expansion of the JSS for local lockdown areas, TUC general secretary Frances O’Grady said:“This scheme will protect jobs in businesses forced to close by local restrictions. But ministers still need to do more to stop the devastation of mass unemployment.
“Firms which aren’t required to close but will still be hit by stricter local restrictions need a more generous short-time working scheme. And there needs to be extra help for self-employed people in local lockdown areas too.  “Nationally, industries like the arts, hospitality, retail and aviation face a long, tough winter. These sectors need targeted help. And we need proper investment to create good new jobs in the green tech of the future.”

Last week, a free service that helps consumers who have bought goods or services in the EU – all for free – issued a mayday call. The only service of its kind available to UK consumers, the UK European Consumer Centre, is manned by 11 specialist legal advisers who help Britons when they run into problems over transactions with EU-based companies. And it’s heading for closure unless the UK government and the EU fail to agree its future role before the end of December. If it is forced to shut down permanently, it will be yet another door closed on those trying to sort out their money matters, from reclaiming for faulty goods to making the most of their savings – just when expert guidance is most crucial.As a nation, we don’t seek or receive advice over our financial affairs thanks to a perfect storm of uncertainty, disinformation and the unintended consequences of an historic bid to make fees and charges for advice clearer and more transparent.In fact, those people who need it most are usually the least likely to be bolstered by professional expertise when it comes to making the most of make things fairer and clearer, alongside their money.Research released this week shows one in five of us is now worrying about money every day as the recession begins to bite. We know financial skills and knowledge are crucial. Far more people believe financial wellbeing is about understanding how to manage and control our money than simply earning plenty in the first place. Read moreAnd yet fewer than one in four of us is confident about our money management skills. Almost one in five of the UK’s working population no clue how to manage their money or have some idea but frequently get it wrong. With a marked correlation between financial know-how and health, the consequences could be significant and wide-ranging – especially at the moment.Almost 40 per cent of those who say they lack money management skills say they are in more debt now than they were six months ago. A third are eating into their savings and 41 per cent are struggling to pay bills. Worryingly, more than two in five of this group people say they have lower life satisfaction than they did before lockdown.But those with stronger financial skills have far fewer problems, with just 9 per cent reporting problems covering their everyday costs.“This year’s events have had a huge impact on many aspects of our lives, including our finances. While plenty is out of our hands, one thing we absolutely can control is the way we manage our money – and this can help alleviate stress and make our cash go further,” says Tim Perkins, co-founder of financial wellbeing platform nudge. “But a really worrying number of people don’t feel confident in their skills and knowledge when it comes to managing their money. This knowledge is especially critical in tougher times.”“Financial literacy plays a huge part in our capacity to perform and stay well. Having the right skills and knowledge to manage our money grants us a sense of agency and allows us greater autonomy in how we live our lives,” adds Susanne Jacobs, organisational behaviour specialist and founder of workplace wellbeing consultant, The Seven.“Without these, we can be trapped by our circumstances with little ability to carve out our chosen path – and this depletes our energy, motivation and performance, to the detriment of every aspect of our lives. With the pandemic amplifying financial concerns, we need to act now to protect our financial – and general – wellbeing.”Some of our everyday issues, with budgeting or cost savings for example, can be alleviated with a dive into one of the nation’s free advice sites or services, including the Money Advice Service or Citizens Advice.For personal advice and planning over more complex money matters though, it usually pays to bring in the professionals.But we’re being held back, often by trust issues, worries about being inundated with information we don’t understand, not wanting to look foolish and even a fear that we don’t have enough money to warrant professional advice.Read moreAlmost 80 per cent of people who have used a financial adviser have savings and investments of less than £100,000.“We need to set the record straight that taking financial advice isn’t just the preserve of high earners or those who’ve already built up large amounts of savings and investments,” says Steven Cameron, pensions director at Aegon.“Triggers for advice are often key life events, whether that’s getting married, having a child or considering retirement options. And there are signs that the coronavirus crisis, the biggest public health issue in more than a century, is being added to that list. No matter what stage someone is in life, an adviser’s expertise can add real value, even for those with modest incomes or savings.“Tapping into financial advice can help improve an individual’s finances and accessing advice earlier can often have the bigger influence on an individual’s financial future. Advice doesn’t have to mean an on-going relationship either.”There are two types of financial adviser operating in the UK – independent financial advisers or IFAs who consider the full range of products to find the right fit for their clients, and advisers restricted to advising on either a specific provider or specific products. It’s always worth going fully independent, a status which should be made clear on their website or from a quick call. Financial advice is now charged as fees rather than as commission – a change made in 2012 to make the process clearer and fairer, but which inadvertently also meant those who need the most help quickly felt, or indeed were, priced out. After an initial fact-finding meeting, which is usually free, advisers will either charge on a percentage or flat fee, or hourly charge basis.A local IFA will have a reputation – for good or ill – so check for any recommendations from those you trust. Elsewhere, the most comprehensive database of both whole of market and restricted advisers is available from Unbiased.co.uk. Should any problems arise based on the advice you receive and the adviser is unwilling to make reparations, the Financial Ombudsman Service will be able to tell you if you can make a claim – something you won’t be able to do if you make a mistake or the results aren’t what you hoped when going it alone.

Perhaps one of the things it’s been hardest to cope with in 2020 is the sudden removal of control.While the country works to manage the virus, individually it has been hard not to feel powerless as we faced first the virus, then lockdown and now the job losses that just keep coming.In fact, the Bank of England has warned that there could be 2.5 million people out of work by the end of the year as the furlough scheme winds up.Amid all this uncertainty, it’s tempting to try to buy some certainty with insurance products. Income protection insurance may seem an obvious answer to the cuts to jobs we’re seeing in almost every sector.Yet it’s vital to understand the limitations of new insurance policies in a Covid world so you don’t risk buying a product that doesn’t actually provide the support you think it does.Insurers have scrambled to re-evaluate the risks they are able to manage and many immediately pulled Covid-19 cover from their newly sold policies, meaning they would not pay out if policyholders fell ill with the virus.Read moreNot to be confused with short-term, controversial PPI or payment protection insurance that covers a single bill, these policies are designed to replace an entire income if necessary – right up to the point of retirement if the policyholder is never able to work again due to illness or an accident. A lifeline for a claiming policyholder, they can be very expensive agreements to pay out on, especially if lots of people claim at once.As the scope of the economic impact began to show, many insurers simply took their unemployment protection policies off the market. It is still possible to buy some forms of income protection insurance that cover policyholders if they can’t physically work but unemployment insurance is very difficult to get hold of and policies that do cover it are likely to have extensive restrictions.Knowing the limitsIf income protection insurance was purchased before the virus became a known event and if it did include cover for redundancy then it should still pay out.However, if you are hoping to buy an insurance policy now that might provide some support and protection in the immediate future then it may be far harder to get the reassurance you need.The research agency GlobalData reports that insurers in the UK have temporarily removed unemployment cover from their policies, despite soaring demand for insurance because of fears of job losses.It also suggests that a spike in the number of purchases of income protection insurance sold without advice could mean many consumers don’t actually understand the limitations of the cover they have bought.Beatriz Benito, senior insurance analyst at GlobalData, says: “It is still possible to purchase income protection that provides long-term accident and sickness cover. “Some individuals may buy these policies being unaware that they do not provide cover against job losses – given the strong growth of the unadvised channel in recent years.”If you are currently in the market for income protection insurance then make sure you understand exactly what the limits of any policy are. Some may simply refuse to cover redundancy at this time, some may defer the time when you can make a claim, sometimes for as long as a year.And as with any insurance product, different policies give different levels of protection and cheaper is unlikely to be better. Some will agree to pay an income for a fixed period, such as a year, while more comprehensive policies will continue to pay successful claims for far longer.Future demandWhile it may not be as possible to buy income protection insurance that includes unemployment cover in the middle of an economic crisis, one likely outcome of the current uncertainty could be a spike in future demand for this kind of protection.Rod Jones, head of partnerships at the comparison site ActiveQuote, said: “Like any protection policy, maximising the cover available to you relies heavily on putting cover in place at a time in your life when you’re fit and healthy, and able to work, rather than waiting until something goes wrong and trying to seek assistance then.Read more“We saw a huge surge in the number of people looking to take out short-term income protection cover at the same time Covid-19 arrived in the UK, with overall enquiries surging by as much as 1,100%, which wasn’t entirely unexpected given conventional consumer attitudes to income protection generally. “The hope now amongst insurers is that the rapid resurgence in longer term cover which has emerged since continues its upward trajectory, and that the message around the longer term benefits income protection can bring is finally beginning to sink in on a much broader basis.”Benito agrees: “Covid-19 will trigger appetite for income protection products in the medium to longer term and raise awareness of the benefits they provide. “Individuals will become warier about unprecedented events and will rethink how best to protect themselves against them.”Perhaps that’s not solely down to the pandemic. HSBC Life UK surveyed a number of independent financial advisers and found many anticipate demand for these policies rising among self-employed people and those whose employers do not provide comprehensive benefits.Mark Hussein, CEO of HSBC Life UK, says: “It is interesting that advisers expect to experience demand from self-employed and gig economy workers. These groups rely on regular work and are unlikely to have the same level of protection offered as those individuals working for an employer offering benefits such as critical illness cover or death in service, so it’s vital that they protect their income.”The current economic and medical emergency means it may be hard to find an income protection policy that provides the cover people want. There are simply no shortcuts to certainty and safety. However, advisers and analysts anticipate significant growth in these policies in the future. 2020 has shown us how quickly things can change and how rapidly a strong financial position can be overturned by circumstances beyond an individual’s control.

Number of cashless businesses jumped from 8 per cent to 31 per cent during lockdown