MTTM Podcast Episode 506 – Ethical & sustainable investing explained, Cash ISA hack & Energy payouts

Listen to Episode 506

In this week's episode I take a look at ethical and sustainable investing, explaining the FCA's new fund labelling rules (SDR) and share some of the best free tools that can help you find investments that match your values. Next, Andy explains how some energy customers who had prepayment meters wrongly installed could receive up to £1,000 compensation. Then, with the energy price cap due to fall, we look at the latest fixed-price energy deals and how much you can save. Finally, I reveal a simple 'hack' that allows you to switch your Cash ISA between providers via the click of a button, ensuring you can secure a competitive interest rate.

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Episode 506 Podcast Summary

How to invest ethically and sustainably

Summary

I explain the significant changes in ethical and sustainable investing following the introduction of the FCA's new Sustainability Disclosure Requirements (SDR). I break down the four new fund labels designed to combat 'greenwashing' and clarify why many long-standing ethical funds (which focus on excluding certain industries) may not qualify for them. I also provide a guide on the best free online tools from Fidelity, Interactive Investor, and Morningstar to help you research funds, check their sustainability credentials, and find investments that truly align with your personal principles.

Key Insights:

• New FCA 'Sustainability Disclosure Requirements' (SDR) have been introduced to combat 'greenwashing' with an anti-greenwashing rule and four new voluntary fund labels: Sustainability Focus, Sustainability Improvers, Sustainability Impact, and Sustainability Mixed Goals
• To qualify for a label, a fund must invest at least 70% of its assets in line with its stated sustainability objectives
• Many traditional 'ethical' funds, which often use negative screening to avoid sectors like arms or tobacco, don't fit the new 'sustainability-focused' criteria and therefore have not applied for a label
• You can use free tools from platforms like Fidelity to screen for funds with the new SDR labels or browse curated lists of sustainable options on Interactive Investor's 'ACE 40' list
• Morningstar's Fund Screener is an excellent tool for finding passive tracker funds that have strong ESG (Environmental, Social, and Governance) ratings

Energy Bill Compensation & The Best Time to Fix

Summary

Andy details a major review by the energy regulator, Ofgem, which has resulted in a compensation package for around 40,000 customers. Eight major suppliers will pay out a total of £18.6 million in compensation and debt write-offs to customers who had prepayment meters inappropriately installed between January 2022 and January 2023. Andy explains who is eligible and also covers the latest energy price cap announcement—a 7% cut from 1st July. He analyses whether now is a good time to lock into a new fixed-rate energy deal, highlighting that the best fixes are still significantly cheaper than the upcoming price cap..

Key Insights:

• Eight energy suppliers have agreed to an £18.6m compensation package for the inappropriate installation of prepayment meters. Affected customers will be contacted directly to arrange payment
• Customers of British Gas, OVO, and Utilita are part of a separate, ongoing investigation, with updates to follow
• The energy price cap will fall by 7% on 1st July 2025, which will save a typical household around £130 a year
• Despite the price cap reduction, the best fixed-rate energy deals are currently around 10% cheaper, making it a good time to consider fixing your tariff
• If you are already on a fixed tariff, check if your provider will let you switch to a new, cheaper fix without charging an exit penalty

The Simple 'Hack' to Switch Your Cash ISA

With Cash ISA interest rates declining since the start of the new tax year, savers need to be proactive. I provide a simple 'hack' to bypass the often slow and paperwork-heavy process of transferring a Cash ISA. I explain how Hargreaves Lansdown's Active Savings platform can act as a hub, meaning you can hold your Cash ISA in one place and switch the underlying provider with just the click of a button, making it easy to move your money to a more competitive rate.

Key Insights:

• Interest rates on many Cash ISAs have been falling, meaning savers need to actively manage their money to get the best returns.
• Traditional ISA transfers can be slow and cumbersome, often taking weeks to complete.
• A Cash ISA savings platform allows you to move your money between different banks' ISAs easily and quickly from a single online account.
• While the rates on a platform may not always be the absolute market-best, they are competitive and offer unparalleled ease and speed of switching.
• This tool is particularly useful now that rules have changed, allowing you to pay into more than one type of ISA in the same tax year.

Episode quiz 

1. What is the primary purpose of the FCA's new Sustainability Disclosure Requirements (SDR) framework discussed in the podcast?
a) To combat 'greenwashing' and provide clarity for investors on sustainable funds
b) To force all companies to publish their carbon footprint
c) To guarantee a minimum return on all ethical investments
d) To rank investment funds based purely on their 5-year performance

2. To qualify for one of the new FCA sustainability labels, what is the minimum percentage of a fund's assets that must be invested in line with its stated sustainability objective?
a) 50%
b) 70%
c) 90%
d) 100%

3. The £18.6 million compensation package from Ofgem is for customers who were affected by the inappropriate installation of what?
a) Inefficient boilers
b) Faulty smart meters
c) Prepayment meters
d) Solar panels

4. From 1st July, by approximately how much will the energy price cap be cut for a typical household?
a) 3%
b) 7%
c) 11%
d) 15%

5. What is the primary advantage of holding your Cash ISA with a Savings Platform
a) You get a welcome bonus
b) You get reduced fees on your Stocks & Shares ISA
c) You a guaranteed to get a market-leading rate
d) You can easily switch between providers without having to complete transfer forms

Answers

1. a) To combat 'greenwashing' and provide clarity for investors on sustainable funds
2. b) 70%
3. c) Prepayment meters
4. b) 7%
5. d) You can easily switch between providers without having to complete transfer form

Resources

Links referred to in the podcast:

• S&P Global Rating Tool
• Fidelity Investment Finder
• ii Ace 40 List
• Morningstar Fund Screener Tool
• Ethical Performance Analysis (Managed Portfolios from J.P. Morgan Personal Investing, Moneyfarm and Wealthify)
• Energy customers to get up to £1,000 compensation
• Should you fix your energy tariff? 
• Cheapest fixed-price energy tariffs in the UK

 

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