Credit deflation and the reflation cycle to come (part 3)

[Starsend]

1 hour ago, DoINeedOne said:

@DurhamBorn and others whilst i was looking into MoneySuperMarket i had this in my notes the information below which involves the insurance companies, not sure how badly it will effect them or even benefit them if they can get customers to stay longer

but thought it would be interesting for some here 

 

Regulatory Risk

 

ENBP = Equivalent New Business Price

The FCA in (28 May 2021) published its policy statement formally confirming its proposals for tackling price walking in the home and motor insurance markets.

Price walking, also known as the loyalty penalty or dual pricing, refers to when new insurance customers receive more competitive and cheaper premiums compared to long standing customers renewing their cover.

According to the FCA, over six million existing insurance customers would have saved £1.2 bn in 2018 if they had paid the average price for their actual risk, as opposed to falling victim to the price walking model.

The regulator added that because of price walking, insurance customers have had to shop around for their cover every year to avoid higher premiums.

Many firms offer a below cost price to attract new customers. They also use sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more the FCA explained.

Insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer.

It is likely that firms will no longer offer unsustainably low-priced deals to some customers. However, the FCA estimates that these measures will save consumers £4.2 bn over 10 years, by removing the loyalty penalty and making the market work better.

Alongside the new rules on price walking, the FCA has also introduced rules to

- Give most consumers easier methods of cancelling the automatic renewal of their policy.

- Require insurance firms to do more to consider how they offer fair value to their customers.

- Require home and motor insurance firms to report data to the FCA so that it can supervise the market more effectively.

Consumers can still benefit from shopping around or negotiating with their current provider, but won’t be charged more at renewal just for being an existing customer.

The FCA plans to review the effects of its remedies in 2022, ahead of a full evaluation in early 2024.

Alongside today’s policy statement, the FCA has also published research on how incentives affect consumers’ choices, focusing on purchases of motor and home insurance made through price comparison websites. The research was undertaken to inform the regulator’s approach to the new pricing rules.

Several respondents felt that, unless our rules prevented it, firms might offer discounts and incentives to new customers to subvert the aims of the pricing rules. For example, firms might offer a discount for new business customers and reduce this discount at subsequent renewals to reproduce the effect of price walking.

To prevent firms circumventing the object of the rules, the rules on incentives apply when the incentive is either wholly or partly funded by a firm setting a renewal price. This means that if a firm that sets the renewal price funds a cash or cash equivalent incentive that is given to customers by another party in the distribution chain, then the firm that funded the incentive will still need to include it in the ENBP for renewing customers.

We remind firms that using cash or cash‐equivalent incentives to systematically discriminate against customers based on tenure would breach the rules.

This is going to be a bumpy ride for insurance brands and consumers alike in the short term. The FCA has revealed that cash and cash equivalent incentives, other than toys and carbon off setting, cannot be used to entice new customers without being offered to renewing customers. This means the savviest consumers who shop around each year will see prices rise and discounts and offers disappear.

They bought this on themselves with their piss taking behaviour. Normally I'd favour as little legislation as possible, preferring free markets but it's hard to find much sympathy.

I recall I was with the same motor insurer for something like 15 years, age 20 to 35. Every year they'd send a renewal, sometimes almost the same as the previous year, other times a small increase. It was painless and easy to renew.

Then everybody moved to a new dishonest model where they try to rip you off if you're not paying attention. This forces you to waste hours and hours of valuable time doing something fucking boring - finding the cheapest quote, reading the policy, sending documentation to them - just so you can pay a similar price to last year. I preferred the old model where I didn't have to interact with these painful companies as much.

I remember the AA got in on the new model as well. £120 or something for the first year. Second year £170ish, third year £380 or something crazy like that haha. Had to keep alternating between the RAC and the AA for years as they both had the same rip off the customer model. Been with StartRescue now for years who are a third the price and are excellent. They don't appear to use the fuck the customer up the arse model probably preferring to build an honest, long term successful business with a happy customer base.

[Noallegiance]

The title is about gold, but there's loads more great stuff in here:

 

[DurhamBorn]

18 minutes ago, HousePriceMania said:

The answer to this turns out to be Nationwide BS.
 

Can anyone explain to me what the question means ?

I assume it's not good.

My gran had a pint glass in the cupboard with £100 in for emergencies.It went down to £86 before anyone knew there was an emergency.She had to use it for something.Unless she could build it back up before things got worse she would go under before everyone else who still had the £100 in a glass.Tier 1 gets drained first when there is stress.

[Dogtania]

2 hours ago, DurhamBorn said:

What i find incredible is that my numbers were showing this roadmap,but i didnt have full understanding of why.I can lay this directly over those numbers and it plays out.I think this is hugely important to the thread and we need to see the above as a given and invest as such.Few sectors will hold their value,and its critical we start from low valuations,simple products,short supply chains,free cash to reduce debt quickly if needed.The main problem i see is the polos and media dont understand this and will keep handing out more and more in bennies etc.If they do they will find very soon nobody will work at all.If 50% of the people are having to fund their fall in living standards and stopping the bennies from losing theirs we will see a systemic collapse.When i first saw the numbers come together i scribbled the term distribution cycle with a ?.The above describes the underlying driving the numbers.Portfolios need to be built around the macro and the above i think.

Need to just keep doing what should be the right thing I guess.   Only other viable alternative would be to divest completely run to the hills become self sufficient and hope if when we get some kind of complete collapse the polos don't try to collectivize your land and possessions first.  Not like there is a way to invest wrt to say a UBI landscape becoming adopted or forced through or is there.

[Castlevania]

2 hours ago, sancho panza said:

I think you're absolutely right that our Politicians aren't seeing this train coming.At some point the expectations of the average Joe(welfare,pensions,NHS,benefits) and the ability of the economy  to deliver said expectations are going to diverge to a point where it's obvious to 80% of people that it's unsustainable and that's when I suspect we'll start to see the rise of extrmeist parties on both sides and some cities witness a rise in street violence/political protest..

I thought we were already well on our way to this? The political centre is all but dead.

[belfastchild]

26 minutes ago, HousePriceMania said:

The answer to this turns out to be Nationwide BS.
 

Can anyone explain to me what the question means ?

I assume it's not good.

Ive no idea what this means.
I do know they dropped my cash isa down to 0.13%, yes, really.

[Majorpain]

42 minutes ago, HousePriceMania said:

The answer to this turns out to be Nationwide BS.
 

Can anyone explain to me what the question means ?

I assume it's not good.

IIRC its the measure of the banks actual reserves (that they use to magic up money from), so if the bank has £1m in cash and £10m of loans its CET1 ratio is 10%.  That ratio dropping either means its collateral is falling in value or its loans are either increasing in size or becoming more risky so the bank needs to allocate more collateral to compensate.

Basically the riskier the activity the more the bank needs to hold in reserve to compensate for the risk, its part of the Basel stuff brought in after 2008.  It does change over time.

DYOR and everything as this stuff is rather complicated.

[HousePriceMania]

2 minutes ago, Majorpain said:

IIRC its the measure of the banks actual reserves (that they use to magic up money from), so if the bank has £1m in cash and £10m of loans its CET1 ratio is 10%.  That ratio dropping either means its collateral is falling in value or its loans are either increasing in size or becoming more risky so the bank needs to allocate more collateral to compensate.

Basically the riskier the activity the more the bank needs to hold in reserve to compensate for the risk, its part of the Basel stuff brought in after 2008.  It does change over time.

DYOR and everything as this stuff is rather complicated.

It's a useful summary.

 

NW, risky, got it 

[Noallegiance]

40 minutes ago, DurhamBorn said:

My gran had a pint glass in the cupboard with £100 in for emergencies.It went down to £86 before anyone knew there was an emergency.She had to use it for something.Unless she could build it back up before things got worse she would go under before everyone else who still had the £100 in a glass.Tier 1 gets drained first when there is stress.

She was lucky I only charged her £14.

I'm a heck of a specimen.

[Democorruptcy]

38 minutes ago, Castlevania said:

Possibly worth hiding the quoted text so that anyone who has no interest in reading it can easily skip.

Can you do a using the 'hide' option for dummies? Cheers.

[Barnsey]

Apologies can't remember which recent video I saw this info on, but terminal rate for Fed seems to be around 3%, reached within a year or so. The key thing the markets still expects is a rapid reverse when something breaks, but that doesn't seem to be what the bond market is predicting, more of a stabilisation around 2.7%. Very much a rapidly moving target though. 

Random thought of the day, anyone reckon there will be a glut of cheap motor homes for sale in the next year after the mad demand last year?

 

[Democorruptcy]

6 minutes ago, Barnsey said:

Apologies can't remember which recent video I saw this info on, but terminal rate for Fed seems to be around 3%, reached within a year or so. The key thing the markets still expects is a rapid reverse when something breaks, but that doesn't seem to be what the bond market is predicting, more of a stabilisation around 2.7%. Very much a rapidly moving target though. 

Random thought of the day, anyone reckon there will be a dearth of cheap motor homes for sale in the next year after the mad demand last year?

 

I was reading this earlier

https://www.dosbods.co.uk/topic/20150-the-motorhome-in-the-coalmine/#comments

[Pip321]

Demand for baccy and alcohol up….good news for the baccy boys in here. 

The irony on the BBC headlines ‘Pressure builds on Sunak to act on rising living costs’.

Come on now Sunak…we need more money because these drinks and fags don’t pay for themselves.

Prioritisation is going to be a really steep learning curve for some…and indeed too steep for some. 

[Castlevania]

11 minutes ago, Democorruptcy said:

Can you do a using the 'hide' option for dummies? Cheers.

There should be an option if you’re on a proper computer.

If on mobile to get a box like the below put the word spoiler in between [ ] brackets (no spaces), enter your text, then end it with /spoiler again in square brackets.

 

 

[HousePriceMania]

Straw poll....are you up or down this week ?

10 minutes ago, Pip321 said:

Demand for baccy and alcohol up….good news for the baccy boys in here. 

The irony on the BBC headlines ‘Pressure builds on Sunak to act on rising living costs’.

Come on now Sunak…we need more money because these drinks and fags don’t pay for themselves.

Prioritisation is going to be a really steep learning curve for some…and indeed too steep for some. 

If people are drinking at home then pubs and restaurants are ****ed

[DoINeedOne]

20 hours ago, Harley said:

This podcast sooooo belongs here it makes you wonder.  Got loads of the themes mentioned here, but some are only mentioned in passing (like buying fixed debt companies) so needs attention.

 https://anchor.fm/stephen-clapham1/episodes/Episode-9---Two-Capital-Cyclists-e1h4g9m

Napier and co, of course!

Interesting podcast well timed too as i just finished reading the book "Capital Returns"

[Democorruptcy]

12 minutes ago, Castlevania said:

There should be an option if you’re on a proper computer.

If on mobile to get a box like the below put the word spoiler in between [ ] brackets (no spaces), enter your text, then end it with /spoiler again in square brackets.

  Reveal hidden contents

 

Testing the square brackets with a share tip

never pay when sharing

[HousePriceMania]

Yikes !!!

[Democorruptcy]

9 minutes ago, HousePriceMania said:

Yikes !!!

Rubbish. It's only the lowest since 2008, it's a series of lower lows since 1974.

[Axeman123]

An interesting signpost re capital controls and trapping people in "approved" asset classes in this article:

https://uk.finance.yahoo.com/news/fca-willing-regulate-crypto-cost-concerns-remain-130042769.html

"The chair of the FCA, Charles Randell, said in a speech at Queen Mary University of London that the FCA's success in regulating speculative crypto is going to be judged and questions need to be answered.

“Should people be encouraged to believe that these are investments, when they have no underlying value? When the price of Bitcoin can readily halve within six months, as it has done recently, and some other speculative crypto tokens have gone to zero?

“Should a couple with retirement savings of £250,000, ($311,684) which would buy them an annuity of perhaps £6,000 at age 65, be treated as 'high net worth' and encouraged or permitted to speculate on crypto or other high-risk products with these savings?

“Should people without any significant savings or financial experience be encouraged or permitted to buy speculative crypto at all?”

[Plan-b]

1 hour ago, HousePriceMania said:

It's a useful summary.

 

NW, risky, got it 

And you'll be pleased to note that the NW are heavily exposed to the property market

[Loki]

18 minutes ago, Axeman123 said:

permitted

[Starsend]

18 minutes ago, Axeman123 said:

An interesting signpost re capital controls and trapping people in "approved" asset classes in this article:

https://uk.finance.yahoo.com/news/fca-willing-regulate-crypto-cost-concerns-remain-130042769.html

"The chair of the FCA, Charles Randell, said in a speech at Queen Mary University of London that the FCA's success in regulating speculative crypto is going to be judged and questions need to be answered.

“Should people be encouraged to believe that these are investments, when they have no underlying value? When the price of Bitcoin can readily halve within six months, as it has done recently, and some other speculative crypto tokens have gone to zero?

“Should a couple with retirement savings of £250,000, ($311,684) which would buy them an annuity of perhaps £6,000 at age 65, be treated as 'high net worth' and encouraged or permitted to speculate on crypto or other high-risk products with these savings?

“Should people without any significant savings or financial experience be encouraged or permitted to buy speculative crypto at all?”

"Permitted" Cunt needs to remember who's money it is.

As for shitcoin halving in 6 months, so what! So have BP and Shell recently, more in fact. Perhaps we shouldn't be "Permitted" to buy those either. 

[Plan-b]

14 minutes ago, Starsend said:

"Permitted" Cunt needs to remember who's money it is.

As for shitcoin halving in 6 months, so what! So have BP and Shell recently, more in fact. Perhaps we shouldn't be "Permitted" to buy those either. 

Come on mate Shell & BP have not halved in the last 6 months

[DurhamBorn]

1 hour ago, Noallegiance said:

She was lucky I only charged her £14.

I'm a heck of a specimen.

My grandads nickname was Slasher ,you sure ?