¶ Money to the Masses Podcast Episode 506
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Hello and welcome to episode 506 of the Money to the Masses podcast with your resident expert as always Damien Fay and me Andy Licks. Damien welcome back how are you doing well I can see from your face how you're doing because you've got an update on what happened last week. Yeah I know this is going to be
Well, just over more than a week ago since the events of Bilbao. But please indulge me because, as you know, if you listen to the podcast in recent weeks, I travelled to Bilbao to watch Spurs play in the Europa League Cup final. And as a long... suffering Spurs fan season ticket holder. I'm obviously pleased to say that we won.
The final in Bilbao against Man United. And it was amazing. For those of you who followed us on our socials, on Instagram, we had a story showing our travels to the game. And it started out, we went from Gatwick to Madrid on the Tuesday. We stayed overnight. for a few hours, then got up in the morning and drove all the way to Bilbao, which was about three and a half-ish hours, to a place just outside of Bilbao. We stayed in a lodge, really, that was way up in the hills.
If you imagine the cross between the Sound of Music and Cumbria, because the northern part of Spain, if you've not been there, is incredibly green because they have weather very much like ours. And so we've gone from the heat of Madrid to the... kind of british style weather of rain and cloud and gloom
And then we went from the lodge to the city and we went and spent the day in the city and then went to the game. And of course, the result was incredible. The atmosphere was amazing. We met loads and loads of fans out there in the fan park. It was incredibly well. That's the one thing I would say from the club, but also from the city mainly in terms of where you had to go.
Despite what you saw on TV or people mentioned when I got back, there wasn't really any trouble out there at all. It was very good-natured. I think if you've got two sides who are universally accepted and accepting of... where they are, that is basically at the bottom of the Premier League, then I think they had very low expectations as to what was going to happen. And there is no real, I suppose, animosity between the two sides. There's no real rivalry, given that Man United win things.
never do so it was a really good atmosphere and like I said we met lots of different people had some crazy journeys to get there Way crazier than I had. People who've driven non-stop for like a day. People going via the most bizarre routes. Having extra holidays to try and get the flights to get them to Bilbao in time. Spending like a week in Magaluf and all sorts of... things so yeah the game was great afterwards the sort of street party was brilliant and then we headed back to our
like lodge in the hills in the early hours of the morning and then we came back about a day or so later via madrid again so a lot of traveling in the space of about three or four days it felt like i didn't stop and interestingly as an aside i said i met a lot of people i actually met
one of these sky sports news presenters out there when justin i were staying in the hotel on the last day before our flight at about well we had to go about three in the morning to come back to the uk we're in our hotel and we're having dinner we end up
bumping into a group of people who turned out worked for Sky. And in the end, I did recognize one of the people who actually is a presenter who does all of the transfer updates on Sky Sports News. And we spent the evening with them. They were... chatting away and it was really good fun and when you're in an atmosphere like that what's great is when you bump into people everybody's
Felt like in Spain, who wasn't Spanish, was there for the football and open to chatting. And it was just a really good vibe between... Like I say, both sets of supporters. So, yes, Andy, I'm absolutely buzzing. I will stop going on about it, but you have to give me, if you listen to this, some leeway because it's been about, what, 40 years since we've won a major trophy like a European... cup so yeah we are champions of europe at the moment so it was it was brilliant i loved every minute of it
I have to say, I mean, I love working for Money to the Masses anyway, but the last week in particular has been particularly sweet to be around you and Justin. You've been skipping along and just enjoying life. It's been good fun. And actually, there's been lots of other things happening. in the background of money to the masses one sort of work related one not work related but we'll save that for updates on next week's podcast so i suppose that brings us to what's coming up on this week's show
Damien, you're going to do the first piece. Yeah, so I'm going to be doing a piece on ethical investing and sustainable investing. It was inspired by a question from a listener who mentioned that they're trying to get their son to invest in.
and they mentioned about investing in a global tracker, but the Sun didn't want to because they didn't want to have exposure to defence stocks, so companies that make ammunitions, for example. And so they... asked me well how they go about investing without being having exposure to certain themes and so this is all about ethical investing and sustainable investing and the reason why this is a particularly key topic to bring to the podcast because since we covered it
Probably a few years ago, there's been some massive changes in the UK in terms of the FCA directives and this legislation around the labelling. of certain investments. So I'm going to give you an update on that. And Andy, you're going to be covering two pieces on the podcast this week, which is quite good because it saves my voice because the one downside of traveling and having an impaired immune system.
like mine, is that I've been sick for most of this week with the post-airplane cold. So save my voice, but you're doing two pieces this week on the podcast. Yes, so the first piece, the energy regulator of Gem has been... busy really in the last week or so first announcing a change to the energy price cap but it also announced a compensation package following the completion of a review that affects eight major energy suppliers and around 40,000 customers.
So I'll explain exactly who is impacted by that, how much they can claim, as well as an update on the best fixed price energy deals. And we'll be doing that later on in the show. And the final piece I'm going to be covering is just a quick piece, really.
listeners will of course have witnessed the gradual decline in the interest rates being offered on their savings accounts and cash ices of course there's been cuts to the bank of england base rate and with further cuts expected it means savers have to be proactive when it comes to securing the best rate on their savings so I'm going to be looking at a particular way almost a cash ISA hack in which listeners can easily move from one cash ISA to another I'll explain more later in the show
And just to reiterate that point, it has been frustrating because in the lead up to the end of the tax year, we saw a price war, didn't we, with cash ices with, well, almost every hour. Different providers were trying to be the leading rate in the market to capture customers. Of course, once the tax year passed and we entered the new tax year, we've seen those rates come down. There is still a bit of a price war going on. Not as keen as it was at the end of the...
tax year but what is frustrating and lots of people out there who listen to the podcast will be sharing in this is they will have seen the rates come down on some of their savings and if you're in a cash isa in particular they want to keep that money within an isa wrapper
You might want to move it around. It might seem cumbersome, but Andy, like you said, has got a bit of a hack for you. Okay, so let's move on to that first piece of the podcast then, Damien. You're going to be talking about ethical investing.
¶ Understanding Sustainable Investing
So I'm going to explain how you can go about investing ethically or sustainably in line with your views, plus some of the best free tools to help you find funds or companies that you might want to invest in. There's been a massive shift in ethical and sustainable investing in the UK, specifically when it comes to unit trusts, investment trusts and exchange traded funds. So they're known as ETFs. Now, a lot of investors want their money to do good, not just.
to make them profit so that's why they'll start to think about where they place their money if it's doing good and that's where we get to ethical investing or sustainable investing but recently there's been a massive change in how ethical investments are categorized and promoted
So if you've previously looked for ethical options, you might have noticed things do seem a little bit different when you look at them now. And that's due to the Financial Conduct Authority, the FCA. They actually had a new sustainability disclosure requirement. known as SDR. Now, this framework was designed to bring a much-needed transparency in combat what was called greenwashing, where funds were making misleading sustainability claims. But if we rewind a little...
little bit to pre-SDR. Historically ethical investing was awash with jargon such as socially responsible investing, SRI, words like impact investing, ESG, green investing, dark green investing. in light green investing and now the problem was that there was a lack of standardization across all of those terms and so funds could use labels like ethical sustainable or esg without a clear or universal agreed upon definition.
This ambiguity made it incredibly difficult for investors to compare funds or verify if their claims were genuine, which is where the phrase greenwashing came in. So this flaw is precisely why the FCA decided to step in.
Sustainability Disclosure Requirements, or SDR, came into effect on the 31st of May 2024. And the idea was to try and build trust and provide clarity. And it was deemed a bit of a game changer for how... funds were marketed and evaluated in the UK now it hasn't quite gone as they thought it would do but there are two main pillars to the SDR the first is an anti-greenwashing rule which is mandatory for all FCA authorised
firms and this rule demands that any sustainability claims made in communications must be fair clear and not misleading and proportionate to the actual sustainability profile of the product in question and this is a crucial baseline protection against misleading marketing even for funds that don't adopt the new labels which i'm going to come on to now the second pillar is the voluntary labels i've just mentioned and these are labels which fund managers can choose to adopt
for their products from the 31st of July last year. Now the system introduces four distinct investment labels designed to help you differentiate funds based on their sustainability objectives and approaches. Now to qualify...
for any of the labels the fund must meet strict criteria including investing at least 70% of its assets in line with its sustainability objectives. Now the four labels I'm showing on screen include sustainability focus and this is for products that invest in assets already deemed environmentally and socially sustainable consistently meeting a robust standard this has been the most popular label so far that funds have applied for then there's sustainability improvers
This is for products investing in assets that have the potential to improve their environmental or social sustainability over time. Then you've got sustainability impact. Now, this label is for products whose primary objective is to... achieve a positive measurable environmental or social outcome and this is the second most popular label and the last label is sustainability mixed goals and this is for products that combine elements of the other labels pursuing sustainability
outcomes both directly and indirectly. Now before I move on there is also a new naming and marketing rule which came into effect from December 2024 and there was a bit of temporary flexibility until the 2nd of April 2025 and what it means is that funds that don't qualify for a label or choose not to have one don't forget you don't actually have to apply for a label if you don't want to if you're a fund house but if you still have sustainable characteristics they must clearly
differentiate themselves so this means that many of them will have changed their fund names and you will have seen that in your own portfolios where funds have suddenly changed names in the last couple of months so while the SDR labels are good news it's something we need in the sustainable investing world fewer funds have adopted the labels than initially expected but the latest estimates are that there are around 100 funds that have adopted the labels but while that is positive news it has
a bit of a two-tier market which you need to navigate so many long-standing ethical funds especially those focused on negative screening like avoiding arms dealers haven't applied for SDR labels because the labels are focused on which is focused on investing in organisations that can demonstrate great practices and policies in terms of environmental impact or their social responsibility.
quality of their internal governance. Ethical investing is something slightly different. It is subtle, but ethical investing tends to focus on excluding certain investments rather than an outright explicit sustainability of So that means ethical funds can be sustainable in nature, but that is not what their objective is, and therefore they will struggle to meet the...
label criteria to apply for labels so there are many and in fact most ethical funds in fact there was only one ethical fund the last time I checked that had an SDR label most don't have an SDR label because of the way they are managed. Now these funds have been around for decades, so it doesn't mean they're not a good choice. It's the difference between
ethical investing and sustainable investing. One is a subset of the other. So what does that mean for you if you want to make ethical investment choices? Well, firstly, you need to define what your ethical stance is. That's not change. So there's no single definition of what ethical means and so you are having to make that choice yourself and primarily you're going to have to focus
on looking at investments fund fact sheets and their prospectuses to see if they meet your own criteria. That means it's probably going to be negative screening involved from your side and you're going to have to find funds that maybe exclude certain...
¶ Navigating Ethical Investment Tools and Resources
sectors or companies, like I've already mentioned, arms dealers. So if you look at a fund fact sheet, you'll want to consider the underlying investments of the fund.
invests in now that will require a bit of work but fortunately there is a way to find out the ESG rating of an individual company which is useful if you want to invest in the individual stock directly if you want to invest in shares for example or if you're just looking at the holdings within a fund that you might want to invest in then S&P Global have a really useful tool that gives ratings on a whole range of ethical criteria.
There's a link to the tool in the notes but as you can see on screen, you just simply enter the company in question and then you can scroll down and see how the company compares against its peers within the same sector on a whole range.
of different ethical or esg criteria so that can be things like customer relations supply chain management sustainable raw materials business ethics climate strategy occupational health and safety so this is free to use and allows you to get very granular when it comes to making judgments on ethical and sustainable investment options but let's assume instead that you want to focus just on sustainable investing and you want to use the official fund sustainability ratings the sdr rating
as a starting point for your research. Now the difficulty is that the FCA doesn't actually publish a list of the funds which have secured each rating, which isn't very helpful. However, I found a way in which you can...
So if you go to Fidelity, the investment platform has an investment finder. There's a link in the note. And you can use the investment finder to screen only... unit trusts but also ETFs and investment trusts by a whole range of criteria including the sustainability labels so you can pick one like sustainability focus then you can find the various different options under different asset classes
and then start your research from there. Crucially, you don't have to be a customer. This is a free to use tool that everybody has access to. Now using that tool, you can also add the fun to a watch list, look at past performance as well. But what about if you actually want some suggestions rather than... and carrying out your own research. Perhaps one of the best ways to find sustainable and ethical unit trust, investment trust,
or ETF ideas is to use the research provided by another investment platform, namely Interactive Investor, which is also known as II. Now, Interactive Investor has an ACE list, so it's called the ACE 40, which is the UK... first rated list of sustainable investments and contains 40 funds on there now you can see there's a link to the list in the notes again but you can see on screen they are categorized by their different
asset classes that they are exposed to and you can click through to find out more information about them and carry on your own research.
But what about if you want to find passive funds, such as trackers that invest sustainably or match your ethics? Now, this is a tricky one, but one of the best ways to find funds is to use Morningstar's fund screener tool. Again, there's a link in the... notes I'm showing it on screen and you can look for funds based on Morningstar's own ESG rating as well as other criteria such as management style so you can pick active or passive or even performance risk so if you look at the
tool you click on show more you can see the ESG risk ratings these are proprietary to Morningstar you can read about how they assess individual funds but you can then pick management style you could go for passive for example and then And when you click on the funds, it will show you those funds with their Morningstar ESG rating, but also their Morningstar rating. And then you can look at all other things like fees, the risk.
that the portfolio has as well as performance metrics. So having said all that.
¶ Evaluating Ethical Investment Performance
Is it actually worth investing ethically in terms of performance? Well, that ultimately depends on what you invest in, but perhaps one way of giving some insight into that is looking at another possible option for people who want to have... somebody manage their money for them they don't want to pick the underlying funds so there's a range of robo advisors out there that actually offer normal standard portfolios as well as ethical options now i'm showing you on screen
a full analysis we carry out on the best performing stocks and shares ISAs in the market. If you scroll down, we have a table that looks at the... performance of various portfolios from a range of robo advisors including money farm wealthify and nutmeg and we look at the five-year annualized performance we
compare the equity exposure of each portfolio so you can make sure you're comparing like with like and we even break down the charges and the individual performance going back over the last five years and in that way you can see that often the ethical investments have performed and performed as well, or in some cases outperformed.
their non-ethical counterparts. Now that very much depends on the underlying trends within markets because some ethical investments might have more exposure to technology for example and therefore when tech stocks do well then some ethical investments will
do so as well by osmosis there is a link in the notes you can look at the full details of that at your own leisure so there you go Andy a roundup of ethical and sustainable investing and how you go about it okay so let's move on to the next piece of the podcast then now
¶ Investigation into Prepayment Meters and Compensation Agreement
mentioned at the start of the show that Ofgem, the energy regulator, have been extremely busy over the last couple of weeks. The first was an announcement about the energy price cap, and that's going to be going down. I'll cover that.
at the end of this piece because they'll actually cover also the latest fixed price energy deals and let people know whether it's a good time to fix or not. So let's park that one. Let's look at something else that was announced by Ofgem and it was following a major review.
that they've conducted into the installation of prepayment meters and it's resulted in a substantial compensation package for thousands of customers. The core of this issue is that a number of energy suppliers are found to have inappropriately installed prepayment meters or remotely switched smart meters to prepayment mode for a number of customers. Now this often happened without valid consent and in some cases involve customers in vulnerable situations.
Now, what followed was a major investigation. In fact, over 150,000 cases were looked at between January 2022 and 2023. And Ofgem essentially found that the installations that were happening were either not safe or not reasonably safe. practicable and they determined that customers didn't receive the necessary support that they needed when they were getting into energy debt so as a result eight major suppliers have agreed compensation now those major suppliers are octopus
And that also includes customers from Bulb and Shell because Octopus took on those customers during the pandemic period. And also EDF. Eon, Utility Warehouse, Scottish Power, Ecotricity, Good Energy, and True Energy. Now you may have noticed there's some major ones I've missed out there.
notably British Gas, OVO and Utilita. Now these are actually being investigated separately so these aren't part of this initial compensation claim that I'm talking about. So as a result of those eight suppliers being investigated 18.6 million pounds worth of compensation has been agreed and those energy suppliers have agreed to this as well. Now that is broken down as 5.6 million pounds in direct payment to customers as compensation.
And £13 million of that £18 million is being put into what they call debt write-offs, which will be fantastic news for those who are worried about that. So we've written an article on the Money to the Masses website, which goes into far more detail than I'm going to cover on this podcast. And I'll put a link to that in the show notes. But ultimately, this compensation package impacts around 40,000 customers between that period again, January 2022.
January 2023 and I've got an article on screen now which just covers off how that compensation will be paid out to customers now I won't read it all out it is there for people who are watching it on the podcast but it goes from 40 to 60 pounds at the lower end but those who were more significantly impacted by these breaches if you like can get up to a thousand pounds in compensation and that is for an inappropriate installation a switch
or use of the prepayment meters and so if you listen to this and thinking well that could be you you may be eligible to claim there's no need for you to actively claim the energy suppliers will be actively contacting eligible customers directly to arrange payments and they will be credited to their accounts for some this will include having a portion of their debt written off as well what I would say though is if you do think it's you then do keep an ear out do keep an eye on your emails
And if you don't receive anything and you think you should have done, of course, you can chase your energy supplier. Ofgem has announced that it is expected to provide further information and updates in regards to this review. And specifically, that will be regarding those other customers.
British Gas, OVO and Utilitas. So do listen out and we will put an update on the Money to the Masses website and probably do a quick update on the podcast when those details are announced. So as I said at the start of the piece, Offgem have been busy. Let's also now focus on the...
¶ Energy Price Cap Update
energy price cap the announcement has come out and from the 1st of July the price cap will be cut by around about seven percent so for a typical household with a dual fuel tariff it means annual savings of around about 130 pounds a year or just under £11 per month. So there will be a lot of people who listen to the podcast thinking well they hear the energy price cap goes up.
and then it goes down. I mean, where are we? Now, Andy has created a bit of analysis in the chart that shows the historic price cap movements. It's on screen if you're watching this show, and we put a link to it in the notes as well. And what you'll see is that the... drop in the energy price cap from july really just takes the price cap back to where it was roughly at the start of the year and it will still be about 10 percent higher than it was in july 2024 so that gives you a feel for where
the energy price cap is going and the predictions going into the end of the year are for it to fall slightly again and of course the further you go into the future the less reliable these predictions are but what is interesting is that the
Best fixed deals now are some of the best we've seen in the last two years when you compare them to the energy price cap. We've put them on screen. Again, we'll put links in the notes. And the best fixed rate deals you can get in the market at the moment are about 20% below the... current energy price cap because when that drops in July it's still going to be probably about 10% cheaper than that so it's still a good time to fix your energy bills and the other thing that
why we want to bring it to the podcast. There'll be plenty of people who may be fixed in the autumn last year or late summer that will be coming up to perhaps their deals coming to an end and want to look at what they could be doing in terms of fixing again. But more importantly...
There were a lot of deals that people were on that didn't charge you exit penalties if you switch to another fixed tariff with the same provider. And so that means there are some really good deals out there that you could potentially, even if you've already fixed.
move to an even cheaper fix now so this is a job for everybody to do after this podcast look at what deal you're on and have a look at your energy bills because you could potentially save money okay so moving on to the last piece then andy of the podcast i know you were going to do it but i'm
¶ Cash ISA Hack
so chipper i think it's the buoyant mood of spurs winning my voice is holding up i think i've got to just go straight into it and it's talking about that cash isa hack and the hack really is that we become frustrated with cash isa rates that are falling particularly on easy access
cash isis we've all been impacted now if you look at the best rates out there on easy access there are a lot of rates that have short-term bonuses attached so we're talking about three month bonuses that then drop off and the under line rate on the easy access might be 4.2 percent variable for example and the best easy access cash isa at the moment without any kind of bonus is 4.8 percent and the next best after that is 4.63
and the frustration is if you want to then move it can take you quite some time to move your cash item you have to stay within the wrapper and it requires form filling and it could take a number of weeks for even to be completed but cash saving platforms exist that allow you to move your savings between different providers they work as a hub you have one online registration there are lots of different
bank accounts within that that you can have access to and you can move your savings from one bank to another bank and it saves account at the click of a button via this hub now the one drawback for a long time was that there was no cash available within this kind of mechanism. And then Hargreaves lands down.
came up with a cash iso now at the moment they are the only people in the market that have this this does feel like a bit of a promo for hargreens but it's not it's just they have a product that facilitate you to be able to move your cash isa to various different providers to try and secure the best rate as these rates keep dropping so at the moment if you're watching this you can see on screen the best
Easy access cash ISA rates at the moment, with Hargree's lands down, is 4.4%. Now, as I've already mentioned, that is already near the best easy access rates that you can get at the moment. 4.8% is the... best in the market but then it's 4.63% but a lot of the leading ones you're seeing headlines for like money box for example the underlying rate is only 4.2% but they have a very short term bonus rate so the message for this part of the podcast is that is a solution out there.
Hargreaves Lansdowne have a cash savings platform that has a cash ISA where you can move between lots of different banks if you want to, to try and secure a better rate. You're not necessarily going to get the best rate in the market, but as it stands... They have rates that are competitive within it. It's something to...
keep an eye on. They also have fixed rates on there which are much closer to the leading rate in the market. The leading one year fixed rate in the market at the moment is 4.26% and they give you access to 4.15%. So it's a useful tool now that you can open up more than one cash ISA in a given tax year that you might find this useful.
to use to maximize your interest one thing to point out when you are using the platform when you move from one savings account to another with that cash isa you have to move into the hub and then on again it's just a click of a button but if you leave it on the platform, you don't actually earn any interest because you haven't moved into the...
other cash isa so just bear that in mind but it's worth bringing it to the podcast because it is a savings tool that is separate to the main hargreaves platform and just one other thing on that hargreaves cash isa is there is a
bit of an annoyance with people transferring cash isos in so if you look at that Hargreaves cash iso and you think do you know what that's for you I'm going to move over my existing cash isos from elsewhere there's a bit of a nuance on it you have to move it into a Hargreaves Greaves Lansdowne stocks and shares ISA which sits in cash and then they move it from that cash pot in the stocks and shares ISA over to the cash ISA so they admit themselves that there's a
bit of a complex situation there they're looking to iron it out they said that they should have it fixed in the next few months so just something to be aware of so it's a bit of an annoyance but the crucial factor is you can move existing cash ices from elsewhere in to that Hargreaves cash
So that is it for this week on the podcast. Andy, as ever, please do leave a review from wherever you do consume your podcast. Also, don't forget to join our socials. It's not just images of me going to Bilbao. There's lots of content on there that never...
makes it to the podcast and insights it's on threads it's on instagram it's on youtube and of course in our facebook group and tiktok i do try and keep all the content different on those different platforms and in threads i give a lesson and a
Q&A question so multiple choice question every day as well as well as talk about the contemporary news on threads as well which I don't tend to do on a lot of the other platforms so do make sure you follow us on all of the different social channels and make sure you share the content as well because it really helps us as a brand and of course don't forget to follow us on our youtube channel as well so andy i think all that's left for us to do is say until next time until next time you