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  • 23/06/2019 | Investments News

    How long will it take to double your money? Use this nifty trick to find out

    We explore Albert Einstein's thinking of the Rule of 72 and apply it to the effects of compounding interest.

    Have you ever asked yourself how long it would take to double your money if you left it invested, untouched, somewhere? There’s a clever, and easy way to find out.

    Of course, it depends on the rate of return you would be getting. If you were earning 10% a year, would it take approximately ten years?  No, actually it would only take seven because of the compound return – you’d be making gains on returns from previous years. If you wanted to see your money double in ten years, you’d only need a steady return of 7%.

    Once you know the rate of return you’ll receive (or can make a reasonable assumption), there is actually a simple way of working out how long it would take to double your money – it’s called the ‘Rule of 72’. You take the number 72, divide it by your annual estimated (or desired) rate of return, and voila! You have the approximate number of years it will take to double your money.

    So, let’s use a more realistic rate of growth as an example. Let’s say you want to put your £20,000 annual ISA allowance away, and think that you will always be able to find an interest rate of 3% in a fixed term account or bond. 72 divided by 3 equals 24; that’s 24 years to double your money. If you invested in a managed fund and reasonably expected a 5% rate of return, that’s 72 divided by 5 equals 14.4; just over 14 years to double your money.

    This helps demonstrate that the earlier you start to save, the more you’ll benefit from compounded growth on your returns. Using the above example with a rate of return of 5%, if you put £20,000 into a stocks and shares ISA at the age of 30 it would double before your 45th birthday, and would double again before you turn 60. That would be £80,000 from an original £20,000 investment.

    But always remember – for most investments the value can go down as well as up, and you may get back less than you invested. Financial advice is always recommended when investing.

    For more information on how compound interest works, we’ve covered Albert Einstein’s thinking of The Compounding Effect previously.

    Read more
  • 21/06/2019 | Investments News

    How to avoid falling victim to bank transfer fraud

    With banks being asked to do more to protect customers from bank transfer scams, we take a look at some common tactics fraudsters use and how to avoid them.

    A bank transfer scam, also known as an authorised push payment (APP) scam, is when money is transferred from your bank account to a fraudster. It could be due to a payment that you sent in good faith or money that was taken without your knowledge. There were over 84,000 cases of bank transfer fraud last year in the UK, with around £228m stolen from individuals.

    What are banks doing to protect their customers?
    Until now banks were not always able to reimburse customers if they had fallen victim to an APP scam, but from 28 May 2019 a new voluntary scheme came into force. More victims of fraud will be reimbursed, but both banks and customers have to take certain steps to stop fraud happening in the first place. For example, your bank must give you information to help you keep your money safe, and you have to do all you can to be sure the person or organisation you are paying is genuine.

    Most UK banks have signed up to the scheme, but not all of them.

    Find out if your bank has signed up

    How you can protect yourself against bank transfer fraud
    Most people assume they would never fall for an APP scam, but scammers are becoming more and more sophisticated. Techniques they use include:

    • Telling you you’ve been a victim of fraud to make you panic and gain your trust.
    • Knowing some personal information about you, such as your date of birth or mother’s maiden name.
    • Giving a time limit or a deadline within which you need to take action.

    Can you spot fraud? Try the Take Five test

    5 tips for avoiding falling victim to bank transfer fraud:
    1. Never call a number you don’t recognise
    Your bank will never ask you to call a number you don’t recognise. If you receive an email or text supposedly from your bank, call them from the number on their website or on the back of your debit or credit card.

    The same goes for answering calls from numbers you don’t recognise. However, criminals can now disguise their numbers to look like genuine phone numbers, so be aware of that tactic too.

    2. Don’t give out any personal details
    Your bank will never contact you to ask for any personal information such as your password or your PIN.

    3. Don’t click on any unknown links
    Avoid clicking on unknown links or opening unknown files. The same goes for pop-up windows in your internet browser.

    4. Check if a website is genuine
    To check if a website is real, look for a padlock sign next to the website address. If the site weblink starts with “https” this means the site is secure and protects customer details using encryption.

    5. Don’t be rushed into transferring money
    If someone tries to rush or panic you, alarm bells should ring immediately – a genuine organisation would never rush you to make a decision. Do not transfer any money at this stage. If need be, make an excuse such as your doorbell ringing and use this time to gather your thoughts.

    What to do if you think you may have been scammed
    If you think you may have been scammed, let your bank know immediately so they can try to stop the transfer. Criminals rely on you feeling too embarrassed to tell anyone you were duped, but that’s better than losing money to bank transfer fraud.

    More information from Which? on what to do if you’re a victim of a bank transfer (APP) scam

    Read more
  • 17/05/2019 | Investments News

    7 tips to cut the cost of holiday cash

    With the promise of sunnier climates on the horizon, we look at the best ways you can make the most of your holiday money this summer.

    According to The Telegraph, UK travellers spend a whopping £1.3bn a year on fees when taking out money abroad. With some careful planning, you could make your holiday cash stretch a little bit further. Here's how:

    1. Check the cost of using your cards abroad
    Be careful of using the same cards as you would do at home. They may be ideal for day-to-day in the UK, but they may have costly fees attached to them when used abroad. Check before you travel and if they do, you may wish to look into alternative cards that are more travel-friendly when it comes to fees.

    2. Be mindful of using your credit card to take out cash abroad
    You may want to be careful of doing this in the UK too, unless there’s an emergency. You’ll be charged interest straight away, on top of all the other fees. Keep an eye out for:

    • ‘Foreign exchange commission’ or 'foreign loading fee' of up to 2.99% of the sum spent, which is applied every time the card is used abroad
    • A cash withdrawal fee of approximately 3% (or minimum £3) when you take money out of a cash machine, as well as the foreign exchange and interest charges
    • Interest charges from the moment cash is withdrawn on the card, often at rates of up to 30% APR – even if the card balance is paid off in full before the end of the month.

    3. Be careful about taking out more than you need
    It may be worth budgeting for what you’ll need and trying to stick to that amount. According to YourMoney.com, the average UK holidaymaker comes home with £70-worth of foreign currency. Often this money is left in a drawer and inevitably forgotten about until it becomes unusable. 

    4. Think about getting currency before you leave – or use a card that doesn’t charge for using it abroad
    Most debit cards will charge you for using a cash machine overseas. They typically deduct up to 3% of what you take out or charge a minimum fee of £2 . Some cards also bolt on an extra flat fee, which can be up to £1.50 for every transaction. 

    All of these small costs seem minimal on their own but will swiftly add up. The best way to get around this is to find a card that doesn’t charge you for using it abroad.

    5. Don’t leave it until the last minute
    Unfortunately, convenience often comes at a price and this is usually the case with airport currency exchanges. Shopping around for the best deal before you go can broaden your options for getting the best rate for your currency. However, if you enjoy the ease of picking up your cash before you fly, you could look to order your cash in advance and then pick it up at the terminal. This may help you mitigate poor rates while still enjoying the convenience.

    All major sellers offer the option of pre-booking your currency for collection at the terminal, in return for a much more favourable exchange. But it’s always worth shopping around for the best rates, and that often isn’t at the airport.

    6. Tell your bank and credit card companies that you’re going away
    Once you’ve decided on which cards you’re using, make sure you’ll be able to use them while abroad. Let your debit or credit card provider know where you’ll be and for how long. That not only means they shouldn’t block your card while you’re away, but they’ll also know to quickly flag its use elsewhere if it’s cloned or otherwise.

    7. Consider paying in local currency – not pounds
    By paying in pounds, you’re converting from the local currency into pounds using the vendor’s exchange rate – which is often more favourable to them, rather than you. We’ve covered this in more detail in a previous article you can read here.

    Read more
  • 07/05/2019 | Investments News

    ISAs explained - Q&A Guide for the 2019/20 tax year

    Our Q&A guide aims to answer your questions about ISAs, to help you make the most of your tax efficient savings allowances.
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    What is an ISA?
    ISA stands for Individual Savings Account. An ISA is a way of holding savings or investments without paying personal tax on interest received, or on the growth of your investment.

    What kinds of ISA are there?

    • Cash ISA
    • A type of savings account, where any interest received is tax-free
    • Stocks & Shares ISA
    • A ‘wrapper’ for investments, where any investment growth is tax-free
    • Innovative Finance ISA
    • A ‘wrapper’ specifically for peer-to-peer investments, where any interest received is tax-free
    • Help to Buy ISA
    • A regular savings Cash ISA, where the government will add up to £3,000 if you have
      contributed £12,000 yourself
    • Lifetime ISA
    • A type of Cash or Stocks & Shares ISA available to the under 40s from 06 April 2017, designed to help people save for their first home, or for their retirement. Any interest received or investment growth is tax-free. Savings of up to £4,000 per year
      will be matched by a contribution of up to £1,000 from the government; any savings above that amount will not receive any additional bonus
    • Junior ISA
    • A type of cash ISA where parents can save up to £4,368 per year tax-free for the child. The child gains access to the money at the age of 16, and the account becomes a standard cash ISA at the age of 18
    • Inheritance ISA
    • A cash ISA specifically for widows, widowers or bereaved civil partners, where the deceased’s ISA can be transferred across into the surviving partner’s name, in addition to their own annual allowance.

    How much can I save into a Cash or Stocks & Shares ISA?
    There is a limit for how much new money you can place into these ISAs each year. For the 2019-2020 tax year, that amount is £20,000.

    What are the tax year dates?
    The tax year starts on 06 April each year, and runs to the following 05 April.

    Do I have to use the same ISA provider each year?
    No. Your options start afresh each tax year. If you contributed to an ISA with a company in any particular year, you’re not committed to using them again in the future – you could choose a new company for each year’s ISA contributions if you wanted to.

    Can I save into more than one ISA during the same tax year?
    You can contribute to one Cash ISA, one Stocks & Shares ISA, and/or one Innovative Finance ISA per tax year (so you could contribute to one, two or three types during the same tax year if you wanted to). Whilst you could choose a different company for each one of these ISAs, you can’t contribute to the same type of ISA with two different companies during the same tax year – for example, if you make a contribution to your existing Cash ISA provider during a tax year, you can’t then also make a contribution with a different Cash ISA provider in the same tax year. Your total contributions during the tax year can’t exceed the annual ISA contribution allowance.

    Can I transfer any existing ISA savings to a new ISA provider?
    Subject to each ISA provider’s terms, you can transfer existing ISA savings to a different ISA provider – and as the value being transferred relates to contributions made in a previous tax year, any transfer is in addition to your current annual contribution allowance. A transfer of contributions made in the current tax year must be made in full; ISAs built up in previous years can be transferred partially or in full, but this again may be subject to the terms of the provider that currently holds the ISA.

    If you are considering transferring an existing ISA, you should contact the provider to whom you wish to make the transfer first; they will then arrange for the transfer value to be requested from your existing provider. If you withdraw the existing ISA value and send it to the new provider, this would make the existing value lose its ISA status, which would then mean it would be classed as a new contribution again – which might mean that you exceed the current year’s annual contribution allowance.

    Can I transfer one type of ISA into another type of ISA?
    Yes. For example, you could transfer an existing Cash ISA into a Stocks & Shares ISA with a different provider.

    Can I withdraw money from an ISA?
    Subject to the ISA provider’s terms allowing withdrawals to be made, you can make withdrawals from your ISA. An example of when you might not be able to make a withdrawal is if you put money into a fixed-term savings account, but not yet have reached the end of the term.

    If a withdrawal is made, that money loses its ISA status; if it is then put into a new ISA, it will count towards the current year’s annual contribution allowance. The exception to this is if you make a withdrawal from a Cash ISA that you are contributing to in the current tax year; if that’s the case, you can replace the money you have withdrawn without it counting towards your annual ISA contribution allowance, providing that you do this during the current tax year.

    What happens to my ISA if I die?
    If you die, a surviving spouse or civil partner is eligible for a one-off additional ISA contribution allowance that is equivalent to the value of the deceased person’s ISA at their time of death; this is referred to as an ‘additional permitted subscription’, or APS allowance. This additional allowance is available even if the actual ISA value is bequeathed to someone else in your will (the benefits themselves will lose their ISA status). To allow time for the administration of more complex estates to be completed, ISAs can retain their tax-free status for up to 3 years the date of death.

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    You can download this information in our ISAs Explained Q&A Guide.

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    If you’re interested in finding out more about Castle Trust’s Fortress Bond ISAs, there’s more information on our Investments Information page

    This material is provided for informational purposes only and does not represent investment advice or recommendation to invest in any financial instrument or security.
    Please note: the information in this article was correct at the time of publication, but is subject to change in the future.

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  • 10/04/2019 | Group News

    The FSCS cover limit for investments has been increased to £85,000

    The maximum FSCS claim limit per person for investments is now the same as deposits, but other differences between the two products still remain…
    With effect from 1 April 2019, the Financial Services Compensation Scheme (FSCS) has increased the maximum level of protection available to individuals on investments to £85,000 (£170,000 on jointly-held investments), which is the same limit already provided on deposits.

    Whilst the maximum level of cover per individual is now the same, it should be noted that any other differences in the cover provided by the scheme for deposits and investments remain, and that claims will continue to be subject to eligibility. More information about the FSCS and eligibility criteria can be found on their website here www.fscs.org.uk.
    Read more
  • 10/04/2019 | Investments News

    Financial year 2019/20: 7 changes you should know about

    With Brexit looming and uncertainty rife, we take a look at the changes we can be sure of this new financial year.

    With Brexit looming and uncertainty rife, we take a look at the changes we can be sure of this new financial year.

    1. State Pension increases
    Thanks to the Government’s ‘triple-lock’ guarantee, the State Pension has risen by 2.6% on 6 April 2019, to £168.60. That’s an increase of £4.25 a week or £221 a year.

    The ‘triple lock’ means the state pension will rise each year by whatever is highest from: 

    • annual CPI inflation (announced in September every year)
    • average earnings growth
    • or 2.5%.

    This year, the state pension has increased by average earnings growth, which came in highest at 2.6%.

    2. Your tax-free Personal Allowance increases
    This is the amount you can earn before paying income tax. It increased from £11,850 to £12,500 in April. The higher-rate tax band has also increased, from £46,350 to £50,000.

    However, if you earn more than £46,350 your National Insurance contributions will have risen to 12% on what you earn between £46,350 and £50,000. This negates most of what you may save from the Personal Allowance increase.

    3. Pension contributions rise
    If you’re currently auto-enrolled in a company pension scheme, you’ll see your paycheque decrease slightly, as monthly pension contributions rise from 3% to 5%.

    Plus, your employer must pay at least 3% into your pension pot too – taking your combined total to 8%. This would mean more money in your pension pot in the long run, but in the short term will mean your take-home pay is slightly less.

    4. Buy to Let (BtL) tax relief reduced
    Landlords continue to feel the crackdown on their mortgage-interest tax relief, which is being gradually phased out.

    The 2019/20 tax year sees landlords only able to claim 25% of mortgage tax relief when filing their taxes – down from 50% in 2018/19.

    From April 2020, landlords will no longer be able to deduct mortgage costs from their rental income at all.

    All rental income earned will be taxable, and you’ll instead receive a 20% tax credit, which will can be applied to 75% of your mortgage interest.

    Read more about the BtL market tax changes.

    5. Pension Lifetime Allowance increases
    From April 2019, the pensions lifetime allowance increases from £1,030,000 to £1,055,000. This is the maximum amount that you can put into your retirement savings tax-free.

    Your lifetime allowance increases by the rate of Consumer Price Index (CPI) inflation which is currently 2.4%.

    6. NS&I interest rate to fall
    If you hold a National Savings and Investments (NS&I) Index-linked Savings Certificate, the interest rate will drop by about 1% next year.

    This is because the Government is changing the index NS&I uses from Retail Price Index (RPI) to CPI.

    Because of this change, you have the right to cancel your investment. So if your Certificate automatically renews, you’ll be able to cancel it within 30 days. NS&I will then refund the full value of your new Certificate with any interest due.

    However, if you choose to renew your Certificate for a different term, you won’t have the right to cancel. Instead, you can cash it in at any time, but the usual penalty will apply.

    Find out more about NS&I Index-linked Saving Certificates.

    7. Inheritance Tax (IHT) threshold rises
    From April 2019, the amount you and your spouse or civil partner can leave to your children and grandchildren without paying tax is rising to £950,000.

    As part of the threshold, the 'residence nil-rate band' – an extra allowance for those passing on their main homes to children or grandchildren after they die – is being raised from £125,000 to £150,000 for the new tax year, 2019/20.

    This brings the total amount that an individual can leave tax-free to £475,000, or £950,000 for married couples and civil partners.

    By 2020, the total tax-free allowance for those leaving their main residence to a child or grandchild is expected to rise to £500,000 for an individual, or £1 million for a couple.

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  • 19/03/2019 | Group News

    New Managing Director for Omni Capital Retail Finance

    On 18th March 2019, Castle Trust announced a new appointment within Omni Capital Retail Finance.

    Castle Trust Capital plc is pleased to announce the appointment of Ronnie Denholm as Managing Director of Omni Capital Retail Finance, its point of sale finance division.

    Following the acquisition of Omni Capital Retail Finance in 2016, Castle Trust has restructured the operations of the business and has ambitious plans for progress.

    Ronnie is an experienced financial services leader and joins the business from Barclays Bank Plc, where he held various Managing Director roles across the business, including most recently Barclays Partner Finance, one of the UK’s largest point of sale finance companies.  Prior to joining Barclays, Ronnie held several senior leadership roles across the American Express group, with a strong growth record across each of the business areas he led.

    Martin Bischoff, Chief Executive Officer of the Castle Trust Group said: “Opportunities to work with someone of Ronnie’s calibre are rare, so we are privileged to have him on board.  As he’s demonstrated in the past, he is a very capable pair of hands to lead the business as it looks to grow.   We have big ambitions for Omni Capital Retail Finance, which Ronnie is integral to helping us achieve.”

    Speaking of his appointment, Ronnie said: “I am delighted to join Omni Capital Retail Finance.  The company has undergone a lot of changes recently and the prospect of leading the next phase of the company’s growth is an exciting challenge.  I look forward to working together with the team to consolidate the business’ position within the market and expand its operations further. “

    Read more
  • 18/03/2019 | Investments News

    Buy-to-let purchases at 9-year low

    Landlords are buying fewer homes than any time in the past nine years. Are there still opportunities or has the buy-to-let bubble burst?

    New research from estate agents Hamptons International shows that landlords are buying fewer homes than at any time in the past nine years.

    In the first half of 2018, landlords across the UK bought 64,260 properties – 13% less than the same period in 2017, and a third less than in 2015.

    Why is Buy-to-Let no longer as popular?
    The tide began to turn against buy-to-let investors after a series of tax reforms and regulatory changes knocked investor confidence.

    What were the changes?
    Tax reforms to buy-to-let properties included tax relief on full mortgage interest being phased out. Instead it will be replaced with a 20% tax credit by 2020.

    The loss of full mortgage interest tax relief has eaten heavily into returns for many landlords. Higher-rate and additional rate-payers are likely to end up with a larger tax bill as a result.

    A new stamp duty surcharge was also introduced for landlord buyers in 2016, adding 3% to the duty paid by buy-to-let or second home purchasers.

    With the average purchase price of a buy-to-let property now £174,580, landlords are therefore paying an additional £5,238 in tax.

    Both of these changes have impacted landlords’ profits. Furthermore, The Bank of England has tasked lenders with “stress testing” loans and imposing stricter conditions on lending to those with four or more properties.

    What are the benefits of buy-to-let?
    Depending on your portfolio strategy, it may not be all doom and gloom. Some experts believe this is an opportunity for landlords, as a decreased appetite for buy-to-let mortgages has caused lenders to offer record low rates. It’s also creating less competition between landlords for properties as well as tenants.

    Many investors are hoping the downward trajectory will soon be over, while in the meantime they are taking the opportunity to snap up bargains.

    And despite these changes in government policy, the private-rented sector is predicted to grow as many struggle to get on the property ladder. Hamptons International estimates that by 2022, 20.5% of all UK households will be renting, up from 19.4% in Spring 2018. It predicts 6 million households will be renting by 2025.

    So, as an income investment, buy-to-let still looks attractive – especially compared to currently low savings rates and coupled with cheap mortgages.

    What other factors should be considered?
    Some areas of the UK are still trying to regain the ground lost during the housing slump caused by the financial crisis, and investors are increasingly looking for stronger returns in these areas – particularly in the North and away from London and the South East.

    Finally, experts are warning landlords taking out new mortgages to be mindful of low rates. Currently, mortgage rates are an investor’s dream, but at some point when they do rise you’ll need to be sure your investment is robust enough to still be profitable.

    Read more
  • 07/03/2019 | Investments News

    March is Free Wills Month

    If you’re over 55 you may be able to get a simple will written up or altered for free.

    What is Free Wills Month?
    Free Wills Month is a campaign that aims to help charities while encouraging more people to get their will written up – or altered if your circumstances have changed. It’s a good reminder to write a will if you haven’t already, or update your current one if you haven’t in the past 5 years.

    How do I take part in Free Wills Month?
    Contact a participating solicitor to request an appointment. Although it’s worth noting that appointments come on a first-come, first-served basis.

    Find a participating solicitor via the Free Wills Month website

    What’s the criteria to take part in Free Wills Month?
    The campaign is open to anyone aged 55 or over who would like to have a simple and straightforward will drawn up. In the case of couples writing ‘mirror’ wills, only one of the two should be 55 years old or older.

    Why is it free?
    It’s hoped that participants will donate to one of the many deserving charities involved with the campaign – but this donation is 100% voluntary. You can choose which charity you’d like to donate to. The charities include:

    • Lifeboats
    • Marie Curie Cancer Care
    • Age UK
    • Pet charity Blue Cross
    • NSPCC
    • National Trust
    • Dogs Trust
    • The armed forces charity SSAFA
    • Mental health charity Mind
    • Diabetes UK
    • Redwings Horse Sanctuary
    • Breast Cancer Now

    What should I do if I need a more complicated will written up?
    Free Wills Month is an excellent opportunity to get a simple will or pair of mirror wills drawn up. If you want something more complicated you can still take part, but your solicitor may ask you to pay for the extra work. However, most people will only require a simple will.

    Why is having a will important?
    According to IFA database Unbiased, 60% of UK adults don’t have a will. If someone dies without a will, this is called dying intestate and can cause huge difficulties for their loved ones.

    People often assume that if they’re married their loved one will automatically inherit their assets, but unfortunately it’s not always as simple as that.

    What happens if you die intestate?
    Dying intestate risks your estate being cut up and distributed against your wishes. Without a will, the law decides who gets what.

    For example, say you’re married, or in a civil partnership, and have two children. If you die intestate then your estate (up to the value of £250,000) will be split in half, with one half going to your husband, wife or civil partner and the other half going to your children.

    However, any lifelong partners or cohabiting couples who are not married or in partnerships, will often be left unable to inherit anything. Ex-spouses do not receive anything under the intestacy rules of England and Wales.

    What are the benefits of writing a will?

    • Help reduce inheritance tax
    • Provide for dependents, such as children and grandchildren
    • Less hassle and stress for your loved ones at an already difficult and upsetting time.

    Find out more about the benefits of writing a will

    Why is it important to keep your will up to date?
    Even if you already have a will it’s important to keep it up to date. This is also free of charge during Free Wills Month – with participating solicitors.

    Gov.co.uk recommends you review your will every 5 years (or if your executor dies) and alter it to take into account any major life changes, such as:

    • having a child
    • moving house
    • getting married (this voids any previous wills)

    Find out more about Free Wills Month

    Read more
  • 18/02/2019 | Group News

    Our latest financial statement

    Castle Trust has published its latest financial statement, as at 30th September 2018.
    Castle Trust has published its latest financial statement, as at 30 September 2018. The full detail of the statement can be found in the updated 'Supplementary Prospectus 19 01 31' document in the Prospectus Documents section of the Investments page, and a downloadable Financial Strength Summary can be found at the bottom of the About Us page.

    The summary is as follows:

    Castle Trust is a financial organisation that continues to go from strength to strength. We are a provider of investment, mortgage and consumer lending products, employing over 230 people across our executive headquarters in the City of London, and an administration centre in Basingstoke, Hampshire. Launched in October 2012, Castle Trust’s principal shareholder is the leading private equity firm J.C. Flowers & Co., which currently manages circa £6 billion in assets.

    Investments
    As at 30 September 2018, customers had invested £735 million into our Fortress Bonds since they were launched in July 2014. In the last 12 months alone, interest payments of more than £13 million had been made to customers, with all payments (including capital repayments) being paid to those customers when due. Customer satisfaction was such that approximately 75% of customers reinvested with Castle Trust when their existing investment reached maturity.

    Lending
    As at 30 September 2018, Castle Trust’s total loan book had grown to over £708 million. This included £532 million of mortgages secured on UK based, predominantly residential, property with the remainder of the book being unsecured consumer and wholesale lending. The business also had over £118 million of cash and cash equivalents that were held in reserve to meet short term funding requirements.


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  • 13/02/2019 | Investments News

    5 ways to detect a phishing email

    Clickbait or ‘Phishing’ is a fraudulent attempt to access sensitive information such as passwords or access to systems.

    It can sometimes be hard to identify a phishing scam, or you realise a little too late. 

    Phishing scams usually look like a legitimate email, often from a brand that you may recognise. Cyber-scammers will often use the names, and branding of larger companies that you are more likely to recognise, such as HMRC, your bank, Apple or Amazon to help give an air of legitimacy to their email. One of the most common approaches is to ask you to click on a link to update your account, or to access a refund that has been awarded and is ready for collection. Even if you think you know the sender, they may not be who they say they are so it’s always worth undertaking a few checks before you click on that link. If there is any doubt that the sender may not be genuine, or if they are encouraging an undue sense of urgency, don’t click until you’re absolutely confident that it’s the right thing to do.  

    5 ways to detect a phishing email 

    1. The email is sent from a public email address 
    2. Look at the sender’s email address, this will give more clarity into who the actual sender is. It will be different from the company address that it is making out to be from. For example, an email from Amazon is unlikely to come from an address that includes ‘gmail’ or has a series of numbers in it. 
    3. Strange attachments 
    4. If the email is unexpected, or comes from an unknown recipient (or one that looks untrustworthy), beware if it asks you to open an attachment. These attachments can contain malware (malicious software programs that load automatically) that can harm your computer and capture personal data, often without you knowing this is happening.
    5. The unnecessary creation of a sense of urgency
    6. Phishing emails will often make themselves out to be urgent, in the hope that you will panic and not pay enough attention to the potential risks. This may be achieved by saying that your personal data has already been accessed, and that you should verify or make changes to it urgently, or reset a password to stop any further damage occurring.
    7. Links to unrecognised websites, or website addresses that subtly misspell a familiar domain name
    8. Phishing emails normally ask you to click on a link within the email. If you hover your mouse over the link it may come apparent that the website address (or URL) is mis-spelled, or completely different from who they are pretending to be. 
    9. Poor spelling and grammar 
    10. You can often detect a phishing email by the way it is written. The style of writing or tone of voice used will often be very different from the sender who they are pretending to be; poor spelling or grammar is a good giveaway to a phishing scam that has originated overseas. 
    If any of these warning signs appear at any time or if in any doubt at all, do not click on any links, or open any attachments. If you wish to check the validity of the email, you should contact the provider (using a publicly available contact email address or telephone number from their website, and not the contact details specified within the email itself).

     

     
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  • 04/02/2019 | Investments News

    The FCA publishes findings on the High-Cost Short-Term Credit market

    Over 5.4 million unsecured loans with interest rates (APR) of 100% or more were made in the year to 30 June 2018.

    Recent research published by the Financial Conduct Authority (FCA) has highlighted the size of the high-cost short-term credit (HCSTC) market, which includes payday loans normally repayable within one month, and short-term instalment loans repayable within a maximum of 12 months. More than £1.3bn was borrowed between 1 July 2017 and 30 June 2018 at interest rates (APR) of more than 100%, with the amount repayable on that borrowing being £2.1bn.

    The FCA data, sourced from regulatory returns and the FCA’s own Financial Lives Survey 2017 also includes the following key statistics:

    • Over 5.4 million HCSTC loans were made in the year to 30 June 2018
    • Lending volumes increased when compared to 2016, but were well below the levels seen in 2013
    • The average loan amount was £250, with the average amount repayable being £413 i.e. 1.65 times the amount that was borrowed
    • The average APR charged was around 1,250% (mean value), with the median value slightly higher at 1,300%.
    • The North West has the highest number of loans per head of adult population (125 per 1,000), with Northern Ireland having the lowest (74 per 1,000)
    • The average loan values were the highest in Greater London
    • The highest proportion (37%) of payday loan borrowers are aged 25 to 34
    • 37% of HCSTC borrowers are tenants, and 26% are living with parents

    Perhaps the most concerning, but unsurprising statistic supports the cycle of debt – 67% of payday loan borrowers and 49% of short-term instalment borrowers are over-indebted, compared with 15% of UK adults. As part of efforts to protect the more financially vulnerable in society, the FCA introduced price capping in January 2015 which limited interest and fees to 0.8% per day of the amount borrowed, with an overlying restriction that fees and interest can not exceed 100% of the amount that was borrowed.

    The full findings of the FCA research can be found here.

     

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  • 10/01/2019 | Investments News

    Pensions cold calling has now been banned by law

    The ban on pensions cold-calling will come into force early in 2019, after being approved by parliament on 18 December 2018.
    Cold calls have, unfortunately, become a way of life. Whilst some controls have been put in place over recent years to try to reduce the number received (for example, GDPR regulations were launched in 2018, and you can register with the Telephone Preference Service to opt out of unsolicited contact), they continue.

    Whilst some cold calls can just be seen as an inconvenience, many people have suffered by following inappropriate pensions advice from unsolicited telephone calls – resulting in the loss of significant sums of money, which could have a notable effect on their standard of living in retirement. Inappropriate actions could include losing valuable guarantees by transferring the pension to a new scheme, or incurring high costs and/or increased risks by investing in more speculative investments.

    In the Autumn of 2016 the government committed to consulting on a ban on pensions cold calling, with the consultation subsequently being launched in December 2016. There was little disagreement with the proposed interventions, and the response to the consultation (including the proposed approach to the ban) was published in August 2017. Legislative changes needed to be made to push the ban through, and these were included in Section 21 of the Financial Guidance and Claims Act 2018, which received Royal Assent on 10 May 2018 . Whilst the intention was to introduce the ban in June 2018, this was delayed whilst the Treasury consulted on further technicalities, but the ban was finally approved on 18 December 2018, and is expected to become effective early in 2019.

    The Telephone Preference Service (TPS) is the official, free central opt-out register for unsolicited sales or marketing calls. It is a legal requirement that all organisations (including charities, voluntary organisations and political parties) do not make such calls to numbers registered on the TPS unless they have your consent to do so. If you would like to register with their service, it can be done via their website at  www.tpsonline.org.uk. 
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  • 19/12/2018 | Investments News

    The FCA proposes ‘radical changes’ to reform the dysfunctional overdraft market

    Newly announced plans from the FCA form part of its high-cost credit review.

    Banks have been criticized for charging excessive fees for unauthorised overdrafts, making it extremely difficult for customers to climb their way out of the red. Research undertaken by the Financial Conduct Authority (FCA) has found that banks and building societies made over £2.4bn in 2017 from overdrafts alone, with around 30% of this coming from unarranged overdrafts. In some cases, these fees can be more than 10 times as high as charges for payday loans; the full report can be found here. The FCA is planning to crack down on banks charging higher prices for unarranged overdrafts and in doing so, protect some of the more vulnerable customers who are more likely to be impacted by these fees.

    What are the FCA proposing, and why?
    Overhauling the way fees are charged: The FCA are proposing to simplify interest rate charges on overdrafts by introducing a simple, single interest rate with no daily or monthly charges. This comes with a ban on fixed fees for borrowing through an overdraft. They are also proposing a ban on charging higher prices for when customers use an unarranged overdraft; currently the daily interest rate for unarranged drafts regularly exceeds 10%.

    Forcing clearer advertising: The FCA report states that only 20% of consumers fully understand the pricing differences and charging structures in the current overdraft market. The financial regulator is encouraging transparency in the market by mandating that arranged overdraft prices must be advertised in a standard way, which will make it easier for customers to compare accounts with alternatives offered by the competition.

    Issuing new guidance on reasonable fees: Banks have been criticised for charging hyperbolic amounts compared to the administrative costs they incur for attempting to collect payment through a direct debit. The FCA are reiterating that fees relating to refused payments should correspond to the administrative costs of refusing those payments, and explain that these costs may be incurred.

    Telling banks to ‘do more’ to identify vulnerable consumers: The FCA reported that in 2016, 14% of consumers who used their overdraft every month paid 69% of all arranged, unarranged and refused payment fees. StepChange (a UK debt charity) have stated that overdrafts were the second most commonly held consumer credit debts after credit cards, with the average amount £1,523. The FCA are urging banks to identify overdraft customers showing signs of experiencing financial strain or financial difficulty, and to help them to reduce their overdraft use. This supports the proposal’s objective of providing greater protection for overdraft customers, particularly the most vulnerable.

    What have the FCA done so far?
    Whilst these proposals have just been announced, the FCA is already taking action on the overdraft market following a consultation in May. The following reforms have already been introduced:

    Digital comparison tools: online eligibility tools have been introduced that allow customers to check if they can get a cheaper overdraft elsewhere or whether other forms of credit may better suit their circumstances.

    Clearing up the complexity of fees: banks and building societies are required to provide overdraft charge calculators that help customers translate interest rates into pounds and pence.

    Making customers better informed of their overdraft: The FCA has asked for mobile phone alerts when accounts look like they may go overdrawn, and changes to show overdrawn balances to the customer at cash machines. These changes have been brought in to address unexpected overdraft use.

    New rules to be in place by December 2019
    The Chief Executive of the FCA, Andrew Bailey, says this proposal is the ‘biggest intervention in the overdraft market for a generation’. Whilst the FCA recognises that overdrafts are an integral part of the UK banking market, the proposed changes will make using overdrafts more of a safety net and less of a slippery slope for millions of people in the UK who use them.

    Banks and building societies have been asked to respond to the report by 18 March 2019. The FCA will then consider responses and final rules will be published in early June 2019, giving firms a six-month window to comply with the new rules, before they come into force by early December 2019.

    Sophie Redgell
    Investment Marketing Team

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  • 11/12/2018 | Investments News

    Bank of England ‘quietly confident’ UK banks are prepared for a cliff-edge Brexit

    The Bank of England have effectively been preparing for a no-deal Brexit since the day after the referendum, says Mark Carney.

    It’s been just 10 years since the last UK financial crisis, and the heavy criticism that followed that the banks were not adequately prepared for such an event. Who could forget the run on Northern Rock bank, the subsequent bailouts, and the recession that followed? With Brexit now coming to a head, the Bank of England is ‘quietly confident’ that UK banks are ready for all Brexit eventualities, and the impact it may have on the economy . So why has the Bank of England come to that conclusion?

    Stress-testing for a cliff-edge Brexit
    The BoE has modelled some of the more extreme economic scenarios that could fall out of a no-deal Brexit, and has then stress-tested lenders’ balance sheets against some of these scenarios. The good news is that the BoE has predicted that UK lenders will be able to withstand scenarios such as a fall in UK GDP of 4.7 per cent, and house prices plummeting by 33 per cent.

    Rainy-day fund
    Yes, even banks need a rainy-day fund.

    The requirement to hold a buffer was introduced in 2010 by the Basel Committee on Banking Supervision. The Bank of England now requires banks to hold a rainy-day fund, known as the counter-cyclical buffer (CCyB), which can be freed up to help ensure the economy does not stall. The CCyB is currently set at 1 per cent of banks’ total assets, but notes published by BoE recently show that the BoE was ready to lower lenders’ capital buffers to 0% in an attempt to maintain £250bn of lending to the wider economy; this was most recently done in July 2016. This £250bn boost to lending to UK households and businesses is designed to stabilise the UK economy in the event of an economic downturn.

    Forcing banks to improve easy-to-sell assets
    The BoE has been forcing lenders to improve the amount and quality of easy-to-sell assets, to enable them to lend more to UK households and businesses. Lenders now collectively hold £1 trillion of high-quality assets, and some lenders have placed collateral with the Bank of England to enable them to borrow even more to lend out should the economy call for it.

    Mark Carney believes the BoE has put all the measures they can in place to prepare for a no-deal Brexit, although the nature of the exit has today become more complicated following the Prime Minister’s announcement to delay the vote on the draft Brexit agreement she negotiated with the EU.

    Sophie Redgell
    Investment Marketing Team

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  • 26/11/2018 | Investments News

    Over 800 nominees have been put forward for the face of the new £50 note so far

    The Bank of England has asked the public for nominations, with the window closing on 14th December.

    The Bank of England has released a list of the scientists that have been nominated by the public to replace James Watt and Matthew Boulton on the new £50 note, with over 600 men and almost 200 women being nominated so far.

    The list of nominations includes black holes expert Stephen Hawking, telephone inventor Alexander Graham Bell (if you ignore competing claims by Antonio Meucci and Philipp Reis), mathematician and computer scientist Alan Turing, penicillin discoverer Alexander Fleming, father of modern epidemiology John Snow, naturalist and zookeeper Gerald Durrell, fossil pioneer Mary Anning, British-Jamaican business woman and nursing pioneer Mary Seacole and Margaret Thatcher, who was a scientist before becoming British Prime Minister.

    There’s still time to submit your nomination if you wish to; this can be done on the Bank of England's website. Nominations must be real people, have contributed to the field of science in the UK (this can include anyone who worked in any field of science including astronomy, biology, bio-technology, chemistry, engineering, mathematics, medical research, physics, technology or zoology), and are deceased. Of the 174,112 nominations received so far, 114,000 have met the eligibility criteria.

    Once the nomination window has closed, the decision will be made by the Bank of England’s Banknote Character Advisory Committee, which will include space scientist Maggie Aderin-Pocock, author and genetics expert Emily Grossman, editor of the British Journal for the History of Science Simon Schaffer, and theoretical and particle physicist Simon Singh.

    According to the Bank of England, there are currently 330 million £50 notes in circulation, with a combined value of £16.5bn. A year ago there were doubts that the £50 note would continue to exist at all; fears that the largest denomination note was widely used by criminals, and rarely for ordinary purchases, prompted a government-led discussion on whether to abolish it.

    Nevertheless, in October, ministers announced plans for a new version of the note, to be printed in the UK, which they said would be plastic - so, more durable, secure and harder to forge.

    The deadline for nominations is 14th December 2018.

    Jeremy Stevens
    Investment Marketing

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  • 12/11/2018 | Investments News

    Castle Trust: Our investment story

    We answer some frequently asked questions to help you learn more about Castle Trust and our investment products [Updated 01/05/2019]

    [Updated 01/05/2019 to reflect the release of the latest financial statement]

    Castle Trust is authorised and regulated by the Financial Conduct Authority and is a participant in the Financial Services Compensation Scheme. You risk losing capital should Castle Trust become insolvent.

    It’s possible that until not too long ago, you hadn’t heard of Castle Trust and what we have to offer. It may even be that you’ve only just discovered us. We recognise that we are a small player in a big financial services market, but we believe that is part of our strength; small doesn’t necessarily mean bad, in the same way that big doesn’t necessarily mean good. To help you understand a little more about us, we’ve covered off some frequently asked questions that our Call Centre Associates often receive below.

    Where is Castle Trust based?
    Castle Trust employs over 230 people across our executive headquarters in the City of London, and our administration centre in Basingstoke, Hampshire. The call centres for investment and mortgage clients are staffed by helpful, friendly experts in the Basingstoke office. If you have any questions about Fortress Bonds, you can call (Freephone) 0808 164 5000, between 9am and 5pm Monday to Friday or write to us at Castle Trust, PO Box 6965, Basingstoke, RG24 4XE.

    What is Castle Trust’s financial position?
    Castle Trust was launched in 2012, with backing from private equity firm JC Flowers & Co. Our Fortress Bond range of investments was launched in July 2014. As at 30 September 2018 (the date of our last published accounts), customers had invested £735 million into our range of Fortress Bonds; in the last 12 months alone, interest payments of more than £13 million had been made to customers, with all payments (including capital repayments) being paid to those customers when due. For more information on Castle Trust’s financial position, you can download a summary version of Castle Trust's Financial Strength document. For a more detailed read, our full financial statements are available under the Prospectus Documents section of the Investments Information page.

    What does Castle Trust do with the money I invest?
    To generate your investment returns, Castle Trust uses the majority of the funds you invest to advance mortgage loans to residential property owners and property developers, as well as making loans to consumers. The balance is held by Castle Trust in cash instruments to manage the short-term cash requirement of the business.

    Why can’t I see Fortress Bonds in the Best Buy tables?
    Whilst Fortress Bonds achieve the same goals as fixed term deposit accounts – a rate of interest set at the outset, over an agreed term, with interest paid at regular intervals or at maturity – there are some key differences. Fortress Bonds are investments that offer an alternative to traditional savings accounts, and as the Best Buy tables only show like-for-like options (in this case deposit accounts) Fortress Bonds aren’t able to be included, despite their often market-leading rates.

    For more information on Castle Trust, please visit the About Us page  and the Investments Information page  to learn more about the company and the products we offer.

    Sophie Redgell
    Investment Marketing

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  • 02/11/2018 | Investments News

    How might the 2018 budget affect Castle Trust customers?

    We take a look through the budget announcement and highlight the key changes we think will be of most interest to our customers.

    The 2018 budget was announced this week in a speech by Chancellor Philip Hammond. With any budget, some areas benefit more than others, so we’ve taken a look through the detail and have highlighted some key changes which we believe might be of interest to our customers.

    The tax-free Personal Allowance will rise to £12,500
    The Personal Allowance will rise from £11,850 to £12,500 on 6 April 2019. This change was due to come into effect in 2020 but will be implemented in 2019 and will be held at this level in 2020. This affects all taxable income, which includes employment and pension income, as well as earnings from investments.

    Higher Rate Threshold set to increase from £46,350 to £50,000
    The Higher Rate Threshold will go up by £3,650 (a 7.8% increase) on 6 April 2019, meaning that people will now be able to have a taxable income of £50,000 before they pay tax at 40%.

    Fuel duty will remain frozen for a ninth year
    With petrol prices recently reaching the highest they have been in four years , this point in the budget may come as some respite for motorists.

    Short-haul rates of Air Passenger Duty
    Air Passenger Duty rates on short-haul flights will be held steady for the eighth year in a row, benefitting 80% of passengers. Whilst long-haul rates will rise, the increase will be in line with inflation.

    Lifting the borrowing cap to allow local authorities to build more housing
    Whilst developers will still need to go through the standard planning permission hurdles that are associated with building new homes, from 29 October 2018, the government is lifting the borrowing cap in England which will increase the amount local authorities are able to borrow to build housing.

    The Welsh Government is taking immediate measures to remove the cap in Wales.

    Up to £19 million in commemoration of the Centenary of the WWI Armistice
    A combined total of up to £19 million has been committed to mark 100 years since the end of the First World War. Up to £8 million will be available to help with the cost of repairs to village halls, Miners’ facilities and Armed Forces organisations’ facilities. £10 million will support veterans with mental health needs, and £1 million will fund First World War Battlefield visits for school students.

    Billions committed to improving roads
    £28.8 billion has been committed to the National Roads Fund, paid for by road tax, the largest ever investment of this kind. This figure includes £25.3 billion for the Strategic Road Network which addresses motorways, trunk and A roads; it will also help fund the new network of local roads and larger local network projects.

    In addition, local authorities will receive an extra £420 million to fix potholes and renew bridges and tunnels, and £150 million to improve local traffic hotspots such as roundabouts.

    Over £1.5billion to support the high street
    Whilst the government is limited on helping high street shops with their rent costs, they can help them in other areas. Small retail businesses will see their business rates bills cut by a third from April 2019, for two years, saving them £900 million.

    Transport links will be improved using a budget of £675 million which will benefit local high streets.
    This money will also be used to re-develop empty shops as home and offices and to restore and re-use old and historic properties.

    Increasing funding to help departments to prepare for Brexit to over £4 billion
    Unsurprisingly, Brexit received some attention from the 2018 budget with £500 million of additional funding being provided to departments to prepare for Brexit for 2019-20. This brings the total budget for Brexit for 2019-20 to £2 billion.

    A commemorative 50p Brexit coin will be available to buy from Spring 2019
    One for the coin collectors; the Royal Mint will create a new commemorative coin to mark the UK’s exit from the European Union. On the topic of Brexit, Hammond has cautioned that should a successful deal with the EU not be reached ahead of Brexit, he may have to deliver an unscheduled emergency Budget and revise the plans announced this week.

    Sophie Redgell
    Investment Marketing Team

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  • 19/10/2018 | Investments News

    Protect yourself against identity theft

    We cover how to spot suspicious activity and ways to stay safe online
    Icons_QuestionWhat is identity theft? 

    Identity theft happens when fraudsters access enough information about someone’s identity (such as their name, date of birth, current or previous addresses) to enable them to commit identity fraud. Identity theft can take place whether the fraud victim is alive, or deceased.

    If you’re a victim of identity theft, it can lead to fraud that can have a direct impact on your personal finances and could also make it difficult for you to obtain loans, credit cards or a mortgage until the matter is resolved.

    What is identity fraud?
    Identity fraud is the use of a stolen identity for criminal activity, such as to obtain goods or services by deception. Fraudsters could use your identity details to:

    • Open bank accounts
    • Obtain credit cards, loans and state benefits
    • Order goods in your name
    • Take over your existing accounts
    • Take out mobile phone contracts
    • Obtain genuine documents such as passports and driving licences in your name.

    You may not become aware that you have been a victim of identity fraud until you receive bills or invoices for things you haven’t ordered, or if you receive letters from debt collectors for debts that aren’t yours.

    What is phishing
    Fraudsters may try to trick you into revealing personal information by pretending to be from a legitimate source – this is known as ‘phishing’. A phishing scam usually begins with an email (perhaps with a link to a fake website, or with a form attached), a text, or an unexpected call which looks or sounds like it’s from a genuine business. The email or website might even have all the right logos or fonts on it. The scam might ask for personal details like usernames, passwords, PINs, or even ask directly for your bank account details. Alternatively, you may be encouraged to open a document attached to an email, which could in fact infect your computer with a virus.

    Often, the approach is made under the premise of conducting routine maintenance, or to update your security details. A more dramatic approach (designed to frighten you into taking action) can be to tell you that you have already been the victim of fraud, and that the details are required to confirm that you are who you say you are, and to stop any further fraud taking place.

    How can I spot a possible phishing scam?
    Phishing isn’t always easy to identify, but there are a number of clues to look out for, for example:

    • Poor spelling or grammar – scams often originate overseas, where the scammers have weak English language skills
    • Non-personal address – the scammer probably doesn’t know you by name, so they might address you as ‘Dear Sir/Madam’ or similar, or something less formal such as ‘Dear Friend’
    • Unexpected email – try to think whether there is a good reason for this business to be contacting you
    • Suspicious email address – some of the email addresses used in such scams clearly raise suspicion, because they look like a personal email address. Others, however, can look like they are from a genuine organisation, but there may be clues to indicate that isn’t the case – perhaps a letter may be out of place, or a section of the email address (perhaps after the ‘@’ symbol) looks inappropriate
    • The website address that a link takes you to – check that it appears to be genuine, isn’t unusually long, or has letters substituted by numbers (for example, a 3 instead of an E, or a 4 instead of an A)
    • Requests to act quickly – you’ll often be urged to take action immediately, perhaps on the premise that your account will otherwise be suspended, or to prevent any further fraud taking place against you (a double-bluff).

    What should I do if I suspect a scam?
    If you have any reason to suspect whether the contact is genuine – even if it just doesn’t ‘feel’ right – proceed with caution.

    Phone calls
    • Don’t disclose any personal or financial details to the person on the phone
    • Don’t tell them any password or login details
    • Don’t reveal your PIN number, or any of the numbers on your credit or debit card
    • Tell the caller that you will contact their organisation directly instead, and hang up. Don’t be afraid to be authoritative
    • Wait a few minutes, and check that you have a dialling tone before you call any Helplines (sometimes the fraudulent caller may remain on the line).
    Emails
    • Don’t reply to the email
    • Don’t open any attachments
    • Don’t click any links in the message
    • Don’t phone any numbers or visit any website address included in the message
    • Delete the email from your Inbox, then delete it from your Deleted Items folder (sometimes called Trash).
    Texts
    • Don’t reply to the text
    • Don’t click on any links in the message
    • Don’t phone any numbers or visit any website address included in the message
    • Delete the text.

    What should I do next?
    If the contact claims to be from an organisation that you already have a financial relationship with, check previous correspondence you have received from them (a bank or credit card statement, for example), or look up their website address via a search engine such as Google or Yahoo, to find a genuine Helpline telephone number. Call their Helpline, explain the contact you have received and ask them if it is genuine or not; they may be able to help you immediately, or may need to put you through to their fraud department to confirm whether the contact was genuine or not.

    If you do not have a financial relationship with the organisation that has contacted you, there is more reason to be suspicious. Search for their website via a search engine such as Google or Yahoo, and contact their Helpline number.

    Icons_Docs

    You can download this information in our Protect Yourself Against Fraud guide.

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  • 10/10/2018 | Investments News

    Citizens Advice explores 'vast rip-off' of vulnerable and disengaged consumers

    Citizens Advice raises a super-complaint covering five 'essential markets'.

    On September 27, Citizens Advice (CA) raised a super-complaint with the Competition and Markets Authority (CMA) about long-term customers overpaying for key services in five ‘essential markets’, including mortgages, household insurance, mobile, broadband and savings accounts.

    Whilst all individuals have the right to complain, designated consumer organisations can make a super-complaint on behalf of thousands, or potentially millions of people. A super-complaint requires regulators to investigate the markets or market practices that the consumer organisation thinks are significantly harming the interests of consumers. 

    This complaint calls on the CMA to tackle the ‘loyalty penalty’ in essential markets to “protect people from being ripped off”.

    CA estimates that people who are loyal to their service providers are losing out on more than £4bn a year, when compared to the deals available to new customers, or customers who switch providers. Within its complaint the consumer group claimed “It is, in effect, a systematic scam”, adding that nobody would choose to pay these extortionate sums and that companies charge these prices solely in the hope that people won’t notice.

    Citizens Advice doesn’t use its power to make a super-complaint frequently. The last time it raised one was seven years ago, regarding the mis-selling of Payment Protection Insurance (PPI) – which has since led to £32.2bn being returned to customers in refunds and compensation.

    Savings accounts headlines
    The headline observations from the super-complaint relating to savings account are:

    • 80% of easy access accounts have not switched in the last 3 years (FCA Jan 2015)
    • 37% of people with a savings account likely to be paying a loyalty penalty, with an estimated average loss of £48.26 in interest for people holding cash ISAs
    • The total loyalty penalty attributed to savings accounts was £1.136bn a year
    • People aged 65 or over are more likely to have done no shopping around before entering into a contract than those aged 18-64, across broadband, mortgages, mobile contracts, home insurance and savings accounts. Over 8 in 10 (87%) of over 65s pay the loyalty penalty in at least one market in comparison to 72% of those aged 18-34.
    As part of its complaint, CA has drawn on the Financial Conduct Authority’s cash savings market study, which found that large current account providers have a considerable market advantage, because they could attract the most easy access balances despite offering lower interest rates. As a result, while there are over 100 providers, more than two-thirds of the market is controlled by just six savings providers. 

    The super-complaint will require the CMA to complete a thorough investigation into the ‘loyalty penalty’ in all five essential markets, including savings accounts, and take appropriate action following the result. 

    The next stage is for the CMA to publish a response within 90 days and the possible outcomes of its investigation competition or consumer enforcement action or launching a further market investigation or market study.

    Castle Trust has long been an advocate of encouraging customers to shop round for the best deal – savings rates, for example, can vary widely even in a low-interest environment such as the one we have been in for the last ten years.  Our blogs ‘Big banks pay the best interest rates – right? Wrong!’ and ‘FCA says savers missing out on £480m in interest’ have more information on this subject.

    More information about the super-complaint can be found here:
    Citizens Advice announcement
    CMA Press Release
    Citizens Advice complaint

    Jeremy Stevens
    Investment Marketing Team
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  • 10/10/2018 | Investments News

    More and more people rely on the bank of Mum and Dad to get on the property ladder

    A significant number of people are now finding themselves worse off financially as a result of making the gift.

    Recent research from Legal & General has found that whilst parents continue to lend or give money to children or grandchildren to get on the property ladder, they are feeling the pinch themselves with the average contribution going down by 17% this year to £18,000. A significant number of people are now finding themselves worse off financially as a result of making the gift. Nevertheless, more than one in four buyers still expect to receive help from family or friends.

    Despite the amount being lent or given dropping to £5.7bn this year compared to £6.5bn last year, the so-called Bank of Mum and Dad was still a ‘prime mover’ in the housing market.

    Key findings from the research were:

    • In total, 27% of homebuyers will get assistance – up from 25% in 2017. Almost 317,000 housing transactions this year will rely on at least some parental help
    • Parents and grandparents will lend £5.7 billion in 2018, helping more than a quarter of new home buyers (27%). The average amount has dropped from £21,600 in 2017 to £18,000 in 2018
    • 17% of parents and grandparents accept a lower standard of living to allow their children and grandchildren to get on the property ladder
    • Whilst nearly three in five people under the age of 35 get help from parents, one in five homeowners aged between 45 and 55 also now require support from their elderly parents to purchase property
    • The highest average contribution is £31,000 in London, with the lowest being £11,000 in Scotland.

    You may have already helped a family member with a property purchase, or be considering doing so in the future. If that’s the case, it’s important that you give any money you put aside the opportunity to grow at least at the rate of house-price inflation – but with house price inflation varying across the country, it is difficult to know just how much these savings have to grow by to hold their value.

    Sophie Redgell
    Investment Marketing Team

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  • 10/10/2018 | Investments News

    ISA Transfers – don’t neglect your old ISA contributions

    Could your previous tax years' ISA contributions be working harder for you?

    If you’ve already saved your ISA allowance for this year, you probably shopped around to find a competitive rate first. The ISA rules allow you to choose a different ISA manager for your contribution each year if you want to; you don’t have to save with the same ISA manager each year. 

    Whilst this flexibility gives you the freedom to find the best rate for the current year’s allowance, it can also leave your finances fragmented, with your ISAs spread across several providers – and that could mean that you’re losing out overall. The rate you managed to find a few years ago may have been competitive at the time, but that might not be the case now.

    This is where the ISA Transfer option can prove to be beneficial. ISAs accumulated in previous tax years can be moved about independently of the ISA manager that you’ve chosen for this year’s allowance – allowing you to shop around for the best interest rates for the contributions you’ve made in previous years, as well as this year.

    The transfer of a cash ISA is normally very simple – you instruct the new manager to request the transfer from the old one (via the application form, usually), and the cash value is then applied for, and moved across on your behalf.

    Stocks & Shares ISAs are a little different.  Whilst the process for requesting the transfer is the same, the actual ISA value can be transferred in one of two ways. The first is as per a cash ISA; any assets held within the stocks and shares ISA are encashed, and the cash value is then transferred to the new ISA manager.

    The second is known as an in-specie transfer and here the actual assets, rather than their cash value, are transferred to the new ISA manager. These types of transfer can only be arranged if the new ISA manager is able to accept and hold the assets, and there may be charges involved in facilitating the transfer. The main benefit of an in-specie transfer is that the assets will remain invested throughout the process and will therefore avoid the risk of the re-purchase price being higher than the price achieved when the assets were sold.

    It is essential to remember that, for an ISA value to retain its ISA status, any transfer must be made using the formal transfer process.  If you cash your ISA in and then try to forward the value to a new ISA manager, you have effectively withdrawn your money from the ISA and so any subsequent contribution paid to the new ISA manager would be counted as part of your current tax year’s ISA contribution allowance.

    You can find out more about ISAs by viewing our ISAs Explained Q&A Guide article. If you’re interested in finding out more about Castle Trust’s Fortress Bond ISAs, there’s more information on our Investments Information page.

    Jeremy Stevens
    Investment Marketing Team

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  • 10/10/2018 | Investments News

    ISAs explained - Q&A Guide

    Our Q&A guide aims to answer your questions about ISAs, to help you make the most of your tax efficient savings allowances.

    [This guide has been updated to reflect the 2019/20 tax year changes, you can read the updated guide here]

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    What is an ISA?
    ISA stands for Individual Savings Account. An ISA is a way of holding savings or investments without paying personal tax on interest received, or on the growth of your investment.

    What kinds of ISA are there?

    • Cash ISA
    • A type of savings account, where any interest received is tax-free
    • Stocks & Shares ISA
    • A ‘wrapper’ for investments, where any investment growth is tax-free
    • Innovative Finance ISA
    • A ‘wrapper’ specifically for peer-to-peer investments, where any interest received is tax-free
    • Help to Buy ISA
    • A regular savings Cash ISA, where the government will add up to £3,000 if you have
      contributed £12,000 yourself
    • Lifetime ISA
    • A type of Cash or Stocks & Shares ISA available to the under 40s from 06 April 2017, designed to help people save for their first home, or for their retirement. Any interest received or investment growth is tax-free. Savings of up to £4,000 per year
      will be matched by a contribution of up to £1,000 from the government; any savings above that amount will not receive any additional bonus
    • Junior ISA
    • A type of cash ISA where parents can save up to £4,260 per year tax-free for the child. The child gains access to the money at the age of 16, and the account becomes a standard cash ISA at the age of 18
    • Inheritance ISA
    • A cash ISA specifically for widows, widowers or bereaved civil partners, where the deceased’s ISA can be transferred across into the surviving partner’s name, in addition to their own annual allowance.

    How much can I save into a Cash or Stocks & Shares ISA?
    There is a limit for how much new money you can place into these ISAs each year. For the 2018-2019 tax year, that amount is £20,000.

    What are the tax year dates?
    The tax year starts on 06 April each year, and runs to the following 05 April.

    Do I have to use the same ISA provider each year?
    No. Your options start afresh each tax year. If you contributed to an ISA with a company in any particular year, you’re not committed to using them again in the future – you could choose a new company for each year’s ISA contributions if you wanted to.

    Can I save into more than one ISA during the same tax year?
    You can contribute to one Cash ISA, one Stocks & Shares ISA, and/or one Innovative Finance ISA per tax year (so you could contribute to one, two or three types during the same tax year if you wanted to). Whilst you could choose a different company for each one of these ISAs, you can’t contribute to the same type of ISA with two different companies during the same tax year – for example, if you make a contribution to your existing Cash ISA provider during a tax year, you can’t then also make a contribution with a different Cash ISA provider in the same tax year. Your total contributions during the tax year can’t exceed the annual ISA contribution allowance.

    Can I transfer any existing ISA savings to a new ISA provider?
    Subject to each ISA provider’s terms, you can transfer existing ISA savings to a different ISA provider – and as the value being transferred relates to contributions made in a previous tax year, any transfer is in addition to your current annual contribution allowance. A transfer of contributions made in the current tax year must be made in full; ISAs built up in previous years can be transferred partially or in full, but this again may be subject to the terms of the provider that currently holds the ISA.

    If you are considering transferring an existing ISA, you should contact the provider to whom you wish to make the transfer first; they will then arrange for the transfer value to be requested from your existing provider. If you withdraw the existing ISA value and send it to the new provider, this would make the existing value lose its ISA status, which would then mean it would be classed as a new contribution again – which might mean that you exceed the current year’s annual contribution allowance.

    Can I transfer one type of ISA into another type of ISA?
    Yes. For example, you could transfer an existing Cash ISA into a Stocks & Shares ISA with a different provider.

    Can I withdraw money from an ISA?
    Subject to the ISA provider’s terms allowing withdrawals to be made, you can make withdrawals from your ISA. An example of when you might not be able to make a withdrawal is if you put money into a fixed-term savings account, but not yet have reached the end of the term.

    If a withdrawal is made, that money loses its ISA status; if it is then put into a new ISA, it will count towards the current year’s annual contribution allowance. The exception to this is if you make a withdrawal from a Cash ISA that you are contributing to in the current tax year; if that’s the case, you can replace the money you have withdrawn without it counting towards your annual ISA contribution allowance, providing that you do this during the current tax year.

    What happens to my ISA if I die?
    If you die, a surviving spouse or civil partner is eligible for a one-off additional ISA contribution allowance that is equivalent to the value of the deceased person’s ISA at their time of death; this is referred to as an ‘additional permitted subscription’, or APS allowance. This additional allowance is available even if the actual ISA value is bequeathed to someone else in your will (the benefits themselves will lose their ISA status). To allow time for the administration of more complex estates to be completed, ISAs can retain their tax-free status for up to 3 years the date of death.

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    You can download the latest ISA information in our ISAs Explained Q&A Guide.

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    If you’re interested in finding out more about Castle Trust’s Fortress Bond ISAs, there’s more information on our Investments Information page

    Jeremy Stevens
    Investment Marketing Team

    This material is provided for informational purposes only and does not represent investment advice or recommendation to invest in any financial instrument or security.
    Please note: the information in this article was correct at the time of publication, but is subject to change in the future.

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  • 10/10/2018 | Investments News

    Should you pay in the local currency, or Sterling when using cards on holiday?

    This handy tip could make your holiday money go that little bit further.

    If you're making a payment abroad using a credit or debit card, you may be asked whether you want to pay in the local currency, or in Sterling. This might seem an innocent enough question, but beware because a nasty sting in the tail awaits those who ask to pay in Sterling.

    Typically you are better off opting to pay in the local currency, rather than converting to Sterling as you make the purchase. If you pay using the local currency, the transaction will then be converted into Sterling at the Mastercard, Visa or Amex own rate. This rate is set daily by Mastercard, Visa or Amex and is linked to the interbank rate, which is a wholesale price agreed between banks. Your card provider will then typically add their own profit margin – usually between 2.75% to 2.99% and the total cost will appear on your statement in Sterling.

    Should you elect, however, to pay Sterling at the point of purchase, a service known as Dynamic Currency Conversion (DCC) may be employed which allows the merchant – that is the shop, bar or restaurant – to set their own exchange rate rather than using the Mastercard or Visa official rate. Surveys have shown that this can typically add around a 7% fee; Cash machines seem to be the biggest culprits, with the conversion having been shown to add up to 18% of the cost of the cash withdrawal if you choose to be billed in Sterling, and not the local currency. If you consider how much you may spend on your card during a typical holiday this huge cost can add up to a big, nasty surprise when you open your statement the following month – so beware, and if not offered the opportunity to pay in the local currency, you should ask for it.

    Small differences in the interest rates you are being charged, or the interest rates your savings are earning, can add up. If you want to make the most of your money and you’re interested in fixed-term, fixed rate investments you’ll find more information about Castle Trust’s Fortress Bonds by viewing our Investments Information page.

    Jeremy Stevens
    Investment Marketing Team

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  • 10/10/2018 | Investments News

    FCA says savers missing out on £480m in interest

    Savers are losing out by waiting for the interest rate to go up on their existing savings account, instead of switching to a new provider.

    When the Bank of England increases the base rate of interest, you might understandably think that the interest rate on your savings account will also go up shortly afterwards. Of course, some banks will drag their feet, but surely it’s only be a matter of time before the increase is passed on to savers as well as borrowers?
     
    In fact, when the base rate was increased in March 2018, the interest paid on half of all savings accounts failed to rise at all. Of those that did, the average rise was below the 0.25% increase in the base rate. The Financial Conduct Authority (FCA) has estimated that savers could miss out on up to £480m in interest by waiting for the interest rate to go up on their existing savings account, instead of switching to a new provider.
     
    With the base rate as low as it is, it’s understandable that savers might think there will be little difference in the rates offered by different providers. Unfortunately, that's not the case; the spread of interest rates paid on both fixed term and instant access accounts (including ISAs) continues to be significant, hence the FCA’s startling estimate of how much interest is being missed out on.

    It pays to shop around for the best rates for your savings. If you’re interested in fixed-term, fixed rate investments you’ll find more information about Castle Trust’s Fortress Bonds here.

    Jeremy Stevens
    Investment Marketing Team

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  • 10/10/2018 | Investments News

    The Compounding Effect

    Act sooner rather than later to start feeling the snowball effects of compound interest.

    Often when reading about interest rates, many adverts will tell you to act quickly and or you’ll suffer the ‘cost of delay’. But if you choose where to put your money now or in 6 months’ time, your starting balance is the same, so what is the rush for consumers? Is it just a ploy for financial service providers trying to increase their customer numbers?

    The focus of this post is to understand why it is in your interest to act sooner rather than later. There is, of course, a benefit to the financial service provider; the sooner they get your money, the better it is for them. However, the cost of delay is certainly something worth considering from your own point of view as well, especially when thinking about making your money work as hard as possible for you. Essentially, the cost of delay comes about from the loss of compounded interest. None other than Albert Einstein called compound interest the “eighth wonder of the world”, stating “He who understands it earns it, he who doesn’t pays it.”

    Compounding is, essentially, interest earned (or charged) on interest, which creates a snowball effect. The power and impact of compounding is easiest seen over longer periods of time; whilst you won’t feel significant effects immediately, the longer you give your money to grow, the more you’ll see the beneficial impact of compounding. The cost of delay refers to the fact that the benefits of compounding can’t start to be felt until interest starts to be earned.

    The compounding effect is boosted by higher interest rates. Big banks make much of their money by relying on customer lethargy, from those who delay choosing better options for their savings; you can read more about this here. By leaving sums of money in low interest accounts to think about again 6 months down the line, you are missing out 6 months’ worth of higher interest that could have been compounding the whole time; whilst the benefit may not be significant over 6 months, the benefit will grow the longer those savings are held. In a low interest environment, compound interest can also help to combat the effects of inflation. By taking ownership of your finances now and making active choices, you’ll personally start to feel the positive effects of the snowball effect that others might be missing out on. And Albert Einstein would be proud of you.

    Sophie Redgell
    Investment Marketing Team

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  • 08/10/2018 | Investments News

    Are you losing out by sticking with the big banks?

    With giants like Tesco and Amazon striking the balance between prices and profits, do big banks focus too much on shareholder returns?

    It’s not an unreasonable starting point to think that in business and finance, bigger is generally better. The sheer size of some companies enables them to drive economies of scale, which then enables them to price their product or service competitively, whilst continuing to provide acceptable levels of returns to shareholders. You might consider Tesco, Primark, Amazon or Superdrug in this category, for instance.

    These economies of scale are not always used to drive the best deal for all customers though. Some industries rely on the lethargy of their huge customer bases to enable them to charge higher prices, and then give better deals to customers who query this; Insurance companies often offer better rates to new customers than to existing ones, and magically find the ability to reduce a quoted rate when a customer threatens to move to a competitor. Gas and electric suppliers are also often criticised for allowing some of their longest-serving customers to remain on expensive (and more profitable) tariffs, without making sufficient effort to advise those customer that cheaper tariffs are available if only they were to ask.

    Surely the big banks do the best for their customers? And if not, do customers vote with their feet (and their business)? Whilst banks often offer up to £200 to switch banks, and this has never been easier to do thanks to the ‘current account switching service’ , take-up is still disappointingly low. Indeed, research in 2015 showed that people were more likely to get divorced than to change their bank account.

    The big banks often offer some of the lowest savings rates as well - meaning that they can harness the lethargy of their customer base to help maximise their profits. The big advantage banking customers have, however, is that they can move some of their business elsewhere; if moving a current account sounds like too much hassle, there’s no reason why savings or ISAs can’t be moved elsewhere to get a better rate. There are plenty of websites that will provide information on the best savings rates available such as MoneyFacts, MoneySuperMarket, and CompareTheMarket – and a few minutes spent on these websites will show just how much more interest your hard-earned savings could be earning for you.

    You can find out more about Castle Trust’s Fortress Bonds, and the rates available, by viewing our Investments Information page.

    Jeremy Stevens
    Investment Marketing Team

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  • 18/09/2018 | Group News

    Senior management changes

    On 2nd May 2018, Castle Trust announced two further management changes.
    2nd May 2018

    Castle Trust announces two further management changes. 

    Barry Searle, the company’s current Chief Operating Officer will become the company’s new Managing Director (Mortgages).  Barry has been with Castle Trust since 2014, he has been instrumental in the growth of the company, especially within the mortgage division. He held the largest underwriting mandate and had overall responsibility for operations.  During Barry’s financial services career he has held senior roles at various institutions including Legal and General’s mortgage division and GMAC RFC.

    Stuart Sykes will be joining the company as Operations Director from MyJar, where he has been Group Customer Operations Director for the last four years.  He has previously held roles at ICICI Bank, RBS and Lloyds Banking Group.

    Speaking of the appointments, Martin Bischoff, Chief Executive Officer said:

    “As the company’s COO, Barry is already very familiar with both the industry and the aims of the business and was a natural choice to fill the role.  He has contributed enormously to the success of the business so far and will be a pivotal part of our transition to become a bank.

    “Stuart has extensive experience in the lending environment, particularly in consumer finance.  We are delighted that he has chosen to join us as we move into Castle Trust’s next phase.”

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  • 18/09/2018 | Group News

    Castle Trust applies for banking licence

    On 3rd April 2018, following continued success, Castle Trust entered discussions with the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to pursue a banking licence application.
    3rd April 2018

    Following continued success, Castle Trust has entered discussions with the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to pursue a banking licence application.

    This represents the next phase of growth for Castle Trust, which was originally authorised by the FSA in September 2012.  Since then, Castle Trust has offered investment products alongside its mortgage range and now has approximately £750m of assets under management and £660m of bonds outstanding.  In 2017, Castle Trust further expanded the offering with the acquisition of Omni Capital Retail Finance.

    As a result of this growth, the company has applied for the licence to support the continued evolution of the business and enable it to further expand the product offering across both the mortgage, savings and consumer finance arms.

    Speaking of the application, Sean Oldfield, Group Chief Executive said:
    “We are delighted with the progress of the business to date and today marks a significant moment in the evolution of the company.  Making the application for a banking licence will allow us to continue our innovative approach to both investments and mortgages as the business continues to grow.”   

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Mortgages
Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Your home may be repossessed if you do not keep up repayments on your mortgage. Loans are subject to status, terms and conditions. This website is for information purposes only. If you are in any doubt regarding suitability of our products please seek advice from an accredited independent mortgage adviser.

Investments
You risk losing capital should Castle Trust become insolvent.

Castle Trust is the trading name of both Castle Trust Capital plc (company number 07454474) and Castle Trust Capital Management Limited (company number 07504954). Castle Trust is authorised and regulated by the Financial Conduct Authority, under reference numbers 541910 and 541893. Registered office: 10 Norwich Street, London, EC4A 1BD. Registered in England and Wales.

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