UK News

Pru’s Asian misadventure: a cautionary tale

By Clara Ferreira-Marques

Prudential’s ill-fated Asian adventure has left the company and its management badly bruised. But it has offered at least two valuable lessons for ambitious executives tempted onto the acquisition path by post-crisis, “once-in-a-lifetime” deals.

Lesson one: It’s not 2007 any more, Toto.

Lesson two: Disregard shareholders at your peril.

On the first, bold mega-deals that once impressed the market now seem to mostly unsettle both investors and regulators.

Unease at the Financial Services Authority — and a need to tick every box — was responsible for the unprecedented and damaging last-minute delay to Pru’s offer details last month.

For that, Prudential can thank the financial crisis, but also Royal Bank of Scotland’s near-fatal role in the hubristic and record takeover of ABN Amro — despite shareholder misgivings and clear signs of an impending crisis.

Cutting back on household bills

The energy regulator has said that it is considering a ban on unjustified price differences in the energy market to address concerns that customers are being charged differing amounts according to their payment methods.

Ofgem also said that it was planning measures that will improve customer service, including simplified information about tariffs to help people decide whether they need to switch supplier.

All of which could lead to cheaper bills for energy customers. But until this happens, there are a number of simple steps you can take to reduce your household bills.

The website 0870buster.com, which has only just launched this week, will help you to cut down on your phone bill. The site is a free telephone directory that provides alternative numbers for companies at a standard rate instead of the usual premium rate numbers.

Switching your gas and electricity suppliers, meanwhile, can save you hundreds of pounds a year. Thisismoney.co.uk will help you work out how much you could save a year by switching to a cheaper supplier. The results will be more accurate if you have a bill to hand, but you can still use it if you do not.

The site, with the help of energyhelpline.com, will also help you to make the switch once you are ready.

Unravelit.com helps you to save money on household and personal bills by allowing you to compare prices on numerous products, including gas and electricity, insurance, phone bills, credit cards, broadband and loans. It also offers information about switching for business owners.

Sorry Darling, Davos is for Mandy

If there were any questions over who is number two in British Prime Minister Gordon Brown’s cabinet, Davos might have helped clear them up.

While Chancellor of the Exchequer Alistair Darling is giving the annual gathering of global big wigs a miss, business minister Lord Peter Mandelson has found the time to go.

For years Mandelson and Brown weren’t talking, now Mandelson is once again at the heart of everything the Labour Party is plotting.

Darling has been the steady rock always at Gordon’s side during the credit crunch, often taking the flak from the media for the government’s handling of the crisis.

But when it comes to talking to the world’s most powerful decision makers and hob nobbing in an exclusive ski resort, Lord Mandy gets the call.

Preparation key to riding out recession

We are living in uncertain times. House prices are falling, the economy is slowing and consumers are under the cosh from the fall-out from the credit crunch, which is sending borrowing costs higher.

Preparation is the best defence for your finances. As Karen Torson, partnerships business manager at the Cheshire Building Society, says: “An uncertain economy can cause worry for many individuals, but taking the time to ensure you are well prepared can provide peace of mind and make a big difference — whatever the future holds.” Whatever might lay ahead, our top tips should help:

* Protect yourself

There are many different insurance policies on the market offering various levels of cover, so consider what you actually need, be it mortgage protection, income protection or both.

Research cost options and check the small print. In comparison with income protection policies, mortgage payment protection insurance (MPPI) plans can be greatly inferior and might even cost you more, according to protection specialist LifeSearch. Typically, MPPI plans only pay out for one year, include a number of important exclusions and both the premiums and the conditions of the policy can be changed at short notice.

* Don’t stop the music

Read other insurance policies carefully to know what you’re covered for.

The little white lie that could spell financial ruin

A little white lie never hurt anyone, right? Wrong: it could have serious financial implications for your future. A growing number of people are getting into financial difficulty at a younger age and are then telling lies on applications forms to obtain credit, insurance and other products, according to CIFAS, the UK’s fraud prevention service.

The number of application fraud cases filed on the CIFAS database increased from 62,000 in 2004 to 77,000 in 2007, an increase of more than 24 percent. In each of these cases, people told “material falsehoods” on application forms or supplied false or altered documents to support them. The lies most frequently told included trying to conceal a poor credit history or exaggerating the length of time resident at a particular address in the belief that stability increases creditworthiness.

Verification checks often unearth such “little white lies”. But there are also more serious ramifications. At the very least, having your application refused could, in itself, work against your credit score. “Lenders look at the number of searches conducted by consumers as part of the credit assessment process and a number of searches in a short space of time would impact on a consumer’s score,” says Neil Munroe, external affairs director at credit reference agency Equifax. “But more significantly, if a lender felt the information provided could be deemed as fraud and decided to prosecute, this would show on an individual’s credit file and could seriously affect their ability to get credit in the future.”

People who have missed payments on previous credit agreements are advised to explain these to any new potential lender. A “notice of correction” service run by credit reference agencies give the facility to provide an explanation of circumstances that might adversely affect your ability to obtain credit on your credit file. There are other ways, too, to try and improve your rating:

* Make sure you are registered on the Electoral Roll — this is an essential way for lenders to verify an applicant’s identity and prevent ID fraud;

* Be aware of searches on your credit file when shopping around and how it can affect your credit rating;

* Close old credit card accounts — even if they show a zero balance lenders will look at the potential credit available when assessing applications;

Stub out and save

It’s “national no smoking day”, and stubbing out could help your wealth as well as your health. The 1.1 million Britons who quit a year ago have collectively saved more than 1 billion pounds by not feeding their nicotine habit, according to Yorkshire Bank. Meanwhile, the 13 million people who’ve carried on puffing since “no smoking day” last March have seen almost 12.5 billion pounds-worth of potential savings go up in smoke.

“It’s all too easy for long term smokers to forget just how expensive their habit actually is, but those smoking just 10 cigarettes a day could easily save almost 1,000 pounds during the course of a year,” says Gary Lumby, Yorkshire Bank’s head of retail. “By putting the money they’d normally spend on cigarettes in an ISA (individual savings account) or high interest savings account, smokers will soon see those savings adding up, particularly if there is more than one smoker in the household.”

And there are more savings to be made. Insurance companies consider ex-smokers to be ‘non-smokers’ a year after they have given up. And that could see your life and critical illness cover premiums fall by 50 percent. The monthly premium with Norwich Union for a 60-year-old male smoker wanting 100,000 pounds worth of life cover over 20 years is 181.30 pounds, while a non-smoker of the same age will pay just 84.30 pounds — 1,164 pounds per year less — according to figures from price comparison Web site Moneynet.co.uk.

In addition to the financial benefits, there’s a long list of other good reasons to kick the habit — having more energy and looking and feeling younger as the premature ageing effects of smoking are stopped in their tracks. Those who give up should also have lower stress levels, whiter teeth and an improved sense of taste and small, according to the “no smoking day” Web site.

But, as people addicted to the dreaded weed will no doubt testify, it’s a hard habit to break. And they can take some comfort in one little-known benefit to smoking. People with medical conditions and those who are likely to suffer poor health — such as smokers, the obese or those with a history of poor family health — generally achieve higher annuity rates. Their life expectancy might be shorter, but their pension pot will buy them a higher annual income in retirement.