OFT bank charges study welcomed

The announcement by the Office of Fair Trading (OFT) that it will be launching a study into bank charges and the perceived effects of the loss of free banking has been welcomed.

A number of organisations have come forward to welcome the decision which many hope will change the way in which banks treat their customers.

Citizen’s Advice (CAB) has backed it, saying that bank charges for unauthorised overdraft use punish the most vulnerable in society.

“We welcome the further work being done by the OFT concerning bank charges,” said Tony Herbert from CAB.

“Evidence from local bureaux shows that bank charges have a disproportionate effect on people already on low incomes; one charge may be enough to push them into the red and keep them there, incurring more charges that push them further into debt.

“It’s like running up the down escalator – you’ll probably never reach the top,” he added.

The British Bankers’ Association (BBA) has also given its support to the new study, welcoming the OFT’s realisation that the issue of charges is a complex one.

However, the BBA says that it “continues to believe that the fees are legal”.

Tags: tony herbert, bank, organisations, Fair Trading, Law Crime

Homebuyers cutting corners

A large number of homebuyers in the UK are cutting corners financially as house prices rise and this could lead to big problems in the future.

Research by AA Legal Services highlights an alarming trend of buyers failing to ensure that their new home has been properly checked before signing up to buy it.

The average home in the UK currently costs around £185,000 and Brits owe a combined £340 billion in mortgage repayments.

It is this debt, says the AA, that is causing new homebuyers to run the risk of cutting corners.

“With home buyers stretching themselves to the financial limits to afford their home, many are cutting back on the relatively low costs of basic legal and social inspections,” said James Molloy from the firm.

“New home owners who do not carry out basic checks, face discovering too late that their dream home could actually be a financial time bomb.”

According to AA Legal Services, only 28 per cent of homeowners questioned had commissioned a structural survey on their property or looked at the flood risk.

In addition, only 14 per cent had tried to get an independent conveyancing service, while just 21 per cent looked for an insurance quote and 29 per cent considered council tax costs.

“I’m very worried that so few take steps to protect their investment and ensure that their interests are represented,” added Mr Molloy.

Tags: Brits, addition, United Kingdom, GBP, aa, large number, big problems

Rental market is growing

The demand for rented accommodation in the UK is reaching record levels.

That is according to Paragon Mortgages, which carried out research and found that a huge majority of landlords are seeing demand for their properties grow.

In total, 92 per cent of respondents say that demand is stable, growing or booming and Paragon claims that this is the second highest level on record.

The mortgage provider says that these results point to a changing housing market with people opting to rent instead of buy due to its affordability and flexibility.

In addition to these figures, Paragon also discovered that landlords’ properties are now empty for less time than previous years, with the average property being without a tenant for just 2.96 weeks per year – a fall of two per cent compared to the last quarter.

“We have been running this survey for five years and have seen a very strong trend of growing tenant demand throughout this period,” commented John Heron, director of Paragon Mortgages.

“But recently, in both our own research and that of others, we’ve seen demand for private rented accommodation hit new peaks.

“Demographic influences that underpin the private rented sector are all continuing to rise, which bodes well for continued healthy growth of the buy-to-let sector,” he added.

If you are interested in buying a property and then renting it out make sure that you shop around for the mortgage that best suits your needs.

Tags: new peaks, sector, john heron, accommodation, rent, buy-to-let sector, market

Newly-weds must update contents cover

Newly-married couples in Britain are being warned that they must ensure they have adequate cover for any wedding gifts they receive.

We are entering the traditional British wedding season and Churchill Home Insurance is concerned that many couples are not taking precautions.

One in ten married couples estimate that they received around £3,000 or more in gifts on their special day and this has a big impact on the value of their home contents.

However, many people do not take action and, should the worst happen, their home contents insurance does not cover the cost of the goods.

“Newlyweds should consider the insurance implications of receiving such a large number of valuable gifts and the impact this could have on the value of their home contents,” commented Frances Browning from Churchill Home Insurance.

“We urge all newly-married couples to check their home insurance policies to make sure they have adequate cover to suit their needs.”

Churchill calculates that the average wedding gift costs in the region of £60 which means that the total value of gifts can quickly add up.

The most popular wedding gift is money or vouchers, while traditional gifts such as kitchenware and electrical appliances also rank highly.

Make sure that you are adequately insured by regularly updating your contents insurance cover.

Tags: contents insurance, British people, kitchenware, newlyweds, churchill home insurance, home contents insurance, valuable gifts, Impact

Insurance sells process must improve

Firms which sell general insurance have been told that they must improve their standards when cold calling potential customers.

The Financial Services Authority (FSA) is concerned that customers are not being treated fairly and the organisation is demanding that standards improve.

Research by the FSA, which looked at the sales processes of 43 firms, found that the standard of sales were poor when the company contacted the customer.

“The quality of cold calling in general insurance sales was disappointing – consumers were pressurised and the benefits of the product were sometimes exaggerated,” said Vernon Everitt, director of retail themes at the FSA.

“We expect to see significant improvements when consumers are cold called. Swift action has been taken to deliver those improvements at the firms we visited and we are following up with other firms which use cold calling as part of their sales strategy.

“The bottom line is that firms must never pressurise consumers into making a rushed decision and must always clearly spell out the nature and limitations of the products,” he added.

The FSA advises consumers to make sure that they do not make a rushed decision and keep a cool head when being sold a product which they did not enquire about.

The same piece of research from the FSA found that the standard of sales was high when a customer initiated the phone call.

Tags: general insurance sales, insurance sales, strategy, head, Cold calling, Economy of the United Kingdom, swift action, organisation

Financial fraud on the rise

Financial fraud in the UK is growing with new statistics showing that the problem is far from going away.

CIFAS, the UK’s Fraud Prevention Service, has found that almost all types of financial fraud have increased in the country between 2006 and 2007.

Research by the organisation focuses on results from the first quarter of 2006 and the same period this year and it does not make for good reading.

According to CIFAS, application fraud, which sees people lying in order to obtain credit cards, loans, bank accounts or insurance, has increased by 21 per cent in the last 12 months.

Identity fraud is also on the rise, with cases increasing by 12 per cent and current address and previous address fraud are also growing.

“These quarterly figures show a worrying escalation in many types of financial fraud,” commented Peter Hurst, chief executive of CIFAS.

“The scale of fraudulent activity is alarming. It emphasises the need for businesses constantly to be alert when dealing with applications.”

Despite large growth in many areas, CIFAS says that it has been experiencing positive results in its bid to prevent fraud.

According to figures released by the organisation, fraud prevention activity saved organisations £94,000 per hour, compared to £74,000 per hour for the same period in 2006.

Tags: reading, application fraud, current address, need, Deception, previous address fraud, fraud prevention

Association supports government plan regarding unclaimed assets

The government in the UK has recently proposed an initiative in relation to unclaimed banking assets, and the British Banker’s Association has confirmed that the banking industry is backing this initiative.

The banking industry has been finalising technical details relating to the initiative with the cooperation of the government, and consumers are being given priority so that they can reclaim their money whenever they want to.
The Chief Executive of the BBA, Angela Knight, stated: ‘The banking industry has been in a detailed discussion with the Government since the 2005 Pre-Budget Report on the introduction of an unclaimed assets scheme for bank and building society accounts with the aim of getting the technical detail right on their initiative.

All along our priority has been the protection of the right of customers to reclaim their monies at any time.  A key element of the approach proposed within the consultation paper therefore is that even after the transfer of their ‘unclaimed assets’ individuals will retain the right to reclaim their monies via their bank or building society as at present.’

According to the BBA banks will continue to effectively deal with customers to minimize on the number of claims that have to be moved over to a central account and to minimise on inconvenience. The regulations mean that any unclaimed assets will them be moved into a central fund after fifteen years if no claim has been made.

At present there are hundreds of millions of pounds in UK banks that remains unclaimed, and it is thought that every year tens of millions more may be left unclaimed. Authorities also plan a consultation later this year to decide upon distribution of unclaimed funds.

Tom Smith
25th April 2007

Tags: approach, building society accounts, Angela Knight, inconvenience, government plan, United Kingdom, initiative, priority

MP claims that banks are too laid back about ID theft

A Tory Party MP has claimed that banks in the UK are far too laid back when it comes to the problems of identity theft – a problem that is growing in the UK and has become a major concern in many areas. Read more

Tags: id theft, identity fraud, Crimes, Tory Party MP, british bankers association, access, identity theft, identity

Apology from Lloyds over call centre problems

Lloyds TSB has made an apology over problem with their call centre number, where customers calling the 0845 number were left hanging on the line to listen to a recorded message for up to ten minutes whilst being informed by an automated message that their enquiry would be dealt with as soon as possible.

The calls cost consumers three pence per minute, and around half of the cost of the call goes to the bank, which means that Lloyds was raking in a tidy profit from all the people that were left hanging on the telephone.

Lloyds recently announced that it was looking into systems that would ensure that customers of the bank received a more efficient and faster service, which made this situation all the more embarrassing for the bank. Its Bombay call centre was closed last month, after the bank claimed that the automated system could handle most enquiries. The 0845 number would also enable customer to get the telephone number of their local branch according to Lloyds, which previously customers could not do.

However, according to staff agencies the bank has failed to ensure that there are adequate staffing levels to deal with the new system, and Lloyds TSB has been accused of misleading employees, media, and customer with its claims about the automated service. Angry customers have been left holding on and paying a small fortune each time they call, the bank – which made over three billion in profits last year – has been raking in a fortune from the calls, and staff have been left to deal with the changes with no additional resources.

Over two hundred staff members lost their jobs when the Bombay centre was closed, and Lloyds have claimed that the efficiency of the automated system meant that staff members could be reduced.

Tom Smith
25th April 2007

Tags: call, telephone, recorded, india, bank, bombay, cheap

Costs are recouped on credit card penalty ceiling limits

In 2006 financial regulators in the UK reviewed the penalty charges that were being imposed on the accounts of credit card holders that made late payments or went over the agreed credit limit on the card, even if only by a few pounds.

In many cases these charges were set at around thirty pounds – sometimes more depending on the card issuer or credit card company. As a result of the review, financial regulators in the UK enforced a new rule that meant that banks and credit card companies in the UK could not charge more than twelve pounds in this sort of situation – a move that cost many card issuers and companies a fortune in lost revenue.

However, it seems that many banks are now trying to recoup the revenue that has been lost through the ceiling limits placed on these cards by finding other ways to try and get money out of card holders. They are doing this by pushing up the cost of making transactions through cash machines, charging customers huge amounts of interest for the privilege of using their card to withdraw cash from machines.

A spokesperson from the price comparison website Uswitch stated:  ‘Consumers could be forgiven for thinking that they are being treated as the banking industry’s personal ATM. It’s easy to see why the major banks continue to announce record profits, which this year alone totalled in excess of £40bn, when the welfare of their customers continues to take a backseat to shareholders.’

According to Uswitch the amount of interest charged for cash withdrawals has rocketed recently, going from around twenty percent in 2005 to over twenty seven percent. Card issuers have also reduced interest free periods on credit cards.

Tom Smith
25th April 2007

• Credit Card Charges

Tags: credit, costs, charges, penalty, issuers

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