Court still allowing consumers to sue over bank charges

The row over unlawful and unfair bank charges has been raging for some time, and many bank customers have managed to reclaim past charged for exceeding the overdraft limit and for returned cheques and direct debits – some going back up to six years – after UK financial regulators stated that the fees were unjust and unfair last year. Finally, earlier this year, regulators and banks decided that a test case was needed in order to determine whether or not the charges were fair.

In the meantime courts and judges were advised that pending cases filed by bank customers that were trying to reclaim their charges could be put on hold until after the test case had gone ahead in order to make a decision easier. However, despite this many consumers are continuing to successful sue their banks, which indicates that many courts and judges are continuing to let these actions to through.

One claimant who won nearly £3000 stated that her case was only heard as a result of the bank not turning up to defend itself. She stated: “When it was my turn, I found out that there was nobody from Abbey to deal with my case and went in to face the judge alone. She told me that as Abbey hadn’t turned up to defend against me, she would be finding in my favour, but had Abbey turned up, she would have granted a stay, as that was what they were all doing until after the test case.”

Apart from in Wales, and in Devon and Cornwall, where a blanket stay of outstanding cases has been granted, courts and judges can make their own decisions, and many are doing this on a case by case basis according to some officials.

• Claimants strike back at banks

Tom Smith
29th September 2007

Tags: fee, test case, Banking, bank customers, september 2007 court, blanket stay, bank charges

Drivers affected by insurance company blunder

A payment blunder made by a popular vehicle insurance company has resulted in many drivers being stranded without insurance cover and having their insurance policies cancelled.

The blunder was made by Hastings Direct, and due to a mistake that the company made with regards to its charges and premiums over 2500 drivers were left with no insurance cover after their policies were cancelled by the insurance giant.

The drivers that have been affected by the problem were contacted in writing recently by the insurance company. The payment error that was the fault of the insurance company meant that the consumers in question had been paying too little for their cover. Policyholders are being offered refunds on a pro rata basis following the blunder, and the insurance company claims that it has kept the Financial Services Authority up to date on what is going on.

In a letter that was sent to the affected policyholders Hastings Direct stated: ‘You have seven days from the date of this letter in which to make alternative insurance arrangements. No cover under the existing policy will be in force after this period and no further notice of cancellation will be issued. May we take this opportunity to remind you that it is an offence under the Road Traffic Act to keep a motor vehicle on the public highway without valid insurance cover being in force.’

This has left customers of the insurance company angry and upset, and with the problem arising in the peak of the summer it is thought that many could be away on holiday and therefore not even realize that they are no longer insured.

Tom Smith
29th September 2007

Tags: cancelled, blunder, car, vehicle, act, policy, Insurance, drivers, traffic, road

HIPs In Place For Three Bedrooms

Estate agents are warning that the new Home Information Packs (HIPs) are going to cause a shortage of larger properties on the market. One agency reported that the number of large homes on offer for sale is down by 40% over the last 12 months, and experts in the industry are blaming the packs for the problems. Each pack costs around £500, and they have been compulsory for homes with four bedrooms and more since 1 August.

The Government says that the packs will shorten the time of the buying process, but agents claim that they are actually putting off sellers and pushing up prices as they try to cover costs. Each pack must include an energy performance certificate and standard searches.

Estate agency Chancellors said that it had seen a fall of 42% in the number of large homes being brought to market since 1 August when compared directly with the same period in 2006.

Many sellers are unhappy with the process. Some say that it verges on interrogation, with questions on construction dates, central heating, loft insulation and the use of low-energy light bulbs, and multiple photographs throughout the property. Some people have seen the process through to sale, but many more have not. The Royal Institution of Chartered Surveyors (RICS) said that 53% of its members reported a drop in the number of four bedroom homes put on the market since 1 August, compared with the same period last year – worse even than the Chancellors figure. This fall has not been in line with expectations, despite rising interest rates, stock market turmoil and the credit squeeze, and HIPs are being blamed.

Now, since Monday 10 September, HIPs are required for homes with three bedrooms, despite warnings from those within the housing market.

Jeremy Leaf, housing spokesman for RICS, is unhappy with the way the government has handled the implementation. He said: “I have never known legislation so badly introduced. Homeowners clearly have no faith in the packs or the policy, which have only brought more bureaucracy and mass uncertainty to an already paralysed market. Before they are heaped on the rest of homeowners, we need to see some evidence-based justification that this policy benefits consumers. At the moment it doesn’t exist.”

Nick Salmon, an estate agent and founder of the campaign group Splinta (Seller’s Pack Law is not the Answer), said: “I cannot think of any [benefits consumers have seen from HIPs]. There is a great deal of anger among homeowners who do not see the point of these packs and consider them another stealth tax. HIPs have simply heaped more expense at the wrong end of the transaction, and sellers have nothing but contempt for the new law.” The Government stands to boost its coffers by the VAT applied to the Packs.

There are still loopholes in the law. Sellers can avoid a HIP by 1) converting a bedroom to a study, 2) cancelling a pack after it has been ordered, as it only need to be ordered, not actually purchased, 3) pay the £200 fine for not having a HIP – much cheaper than the £500 a HIP costs. In fact, getting caught is unlikely as trading standards officials admit they don’t have the resources to enforce the packs.

Mr Salmon believes the government is running the risk of drying up the housing market by introducing HIPs for three bedroom properties. Gordon Brown, he claimed, may rue the day he passed up the chance to kill of HIPs.

Tom Smith
29th September 2007

Tags: house, fine, packs, government, hips, bedroom, information, surveyors

London Leads The Way On House Prices Again

The Land Registry’s latest House Price Index suggests that the average price of a property in England and Wales was £181,039 in June 2007. That is a 0.4% increase for the month (slightly less than the May), and the annual house price inflation rate is now at 9.1%.

It is prices in London that once again have driven the price growth. For the third consecutive month London’s rate of increase was more than 6% a year higher than the rate for England and Wales overall, and the difference is at its greatest since early 2005, but at that time it was London that was behind the rest of the country by 6%. The average house price in London in June 2007 was £338,950.

Average property prices across England and Wales for detached house were £271,530 in June 2007, up 7.5% from their level of £252,573 a year before. Flats and maisonettes showed the greatest increase on the previous June at 9.7%, increasing from £154,838 to £169,874 on average. For semi-detached properties the rise was 8.7% from £157,244 to £170,952, and for terraced houses the rise was 9.3% from £129,246 to £141,278.

All regions saw increases in their average prices over the last 12 months. The highest annual increase was in London at 15.8% – 1.5% on the month. The next highest annual increase was in the South East 1t 9.1%, although the region experienced a 0.3% decrease in prices during the month. The highest monthly change behind London was in the West Midlands at 1.2%, and an annual increase of 7.1%. The biggest loss in the month was in Wales at 1.1%, although its annual change was still an increase of 6.6%. The smallest annual rise was in the East Midlands at 5.5%, with a monthly fall of 0.6%. All in all half (five of ten) regions showed a decrease in average prices during the month.

In terms of county and unitary authorities Brighton and Hove saw the greatest annual price change with a rise of 16.3%. There were 25 areas in total that experiences an annual price increase in double digits. There were no county or unitary authorities that saw an annual price fall to June 2007. Strongest monthly growth was seen by Rutland at 2.5%, whereas Powys saw the highest fall of 2.4%. Behind London, Windsor and Maidenhead has the highest average prices at £327,345. Lowest prices were to be found in Merthyr Tydfil at £81,697.

The metropolitan district with the biggest annual increase in average prices was Manchester at 11.7%. Bury saw the highest monthly increase of 1.7%. The lowest annual rate of house price growth was in Salford, with growth of 2.8%. The district with the largest fall in house prices for the month was Barnsley with a fall of 0.6%. In Metropolitan districts Solihull had the highest average prices at £210,139, and the lowest average prices were in Oldham, at £106,971.

In London, the borough with the fastest rate of growth was Kensington and Chelsea, up by 25.7% for the year. The same borough had the highest monthly growth at 2.2%. Newham saw the lowest annual growth of only 6.3%, and Barking and Dagenham saw a monthly fall of 0.1%.

In the first four months of 2007, the number of house sales averaged 87,734 per month, representing an increase from the same period last year when sales volumes averaged 87,559.

Tom Smith

Tags: cost, home, prices, london, house, increase

Increasing consumer credit leading to more debt

The increasing availability of consumer credit which has caused the recent boom in the UK economy is contributing to rising levels of debt.

That is according to R3 (the Association of Business Recovery Professionals), which has suggested that various financial services have been “tripping over themselves to lend money”, which in turn has resulted in the inadequate checking of the suitability of borrowers.

Vice president Nick O’Reilly said that IVAs and indebtedness are on the increase because “the level of personal consumer debt in the UK has grown significantly over the last four to five years – in fact the main boom in the economy has been fuelled by personal consumer spending“.

He added: “Now that the level of borrowing is so much bigger in terms of trillions, the level of people with debt problems is obviously higher than it used to be.

“It’s a much more competitive financial services market these days, and people are tripping over themselves to lend money. That must mean, by its nature, that their credit checks are less rigorous than they used to be.”

Tags: consumer debt, recent boom, competitive financial services, consumer spending, borrowers

Pet insurance affected by location and housing

The cost of insuring a pet can be affected by where the animal is housed and what part of the country you live in.

According to insurer Allianz, there are various factors which determine the price of pet insurance premiums such as the age and breed of a pet, how much it cost to buy it, how much physical activity it takes part in and if the owner lives in an area where it is expensive to run a veterinary surgery.

Clare Wheatley, risk and underwriting manager for Allianz’s Petplan programme, noted that “the cost of setting up and running a vet practice can vary greatly across the UK”.

She added: “We take a pet’s age, breed and location into account when insuring them.

“Age is a factor because just like humans, pets are more likely to fall ill as they get older. A man or woman may develop diabetes and arthritis later in life, and so may a pet. Therefore, to cover the additional risk of insuring an older animal we charge slightly more for dogs over the age of eight (five years for some breeds) and cats over the age of ten.”

Tags: Human Interest, pet, United Kingdom, Financial economics, woman, risk, allianz, Physical exercise

Buy-to-let mortgage market affected by credit crunch

The UK’s buy-to-let mortgage market is being adversely affected by the recent credit crunch, according to a financial website.

Research from Moneyfacts.co.uk indicates that it is becoming increasingly difficult for potential property investors to obtain a buy-to-let mortgage as more and more lenders are raising the cost of taking out such a loan.

It is also thought that some lenders have decreased the number of products they have available for potential borrowers.

“The trend over recent years has been a falling rental income cover requirement, so with lenders reversing this trend, it’s a definite sign that some are taking a more cautious outlook,” commented Moneyfacts mortgage expert Julia Harris.

Nonetheless, she did note that while the buy-to-let market is “taking a battering at the moment” if you are prepared to look “there are still some very competitive deals to be found”.

“Perhaps lenders are just taking a breather, giving them time to evaluate the market and perhaps re-launch with re-priced products, which will more than likely be at a higher rate.”

Tags: borrowers, moment, rate, launch, outlook, market, property investors

Students expect to be in debt

Young people in university education now treat debt as an expected way of life, it is claimed.

National Debtline spokesperson Becky Boden-Wilkes has commented that young people in Britain are no longer frightened and more accustomed to getting in to debt because they are used to acquiring an overdraft or student loan from the age of 18.

However, despite most graduates expecting to accrue a debt total of £15,000 by the age of 21, she said, students are not worried about the issue because they belief their learning potential accrued from university will enable them to pay of their debt later in life.

Thisismoney.co.uk recently reported that debt among UK graduates has increased by 197 per cent over the last decade to a current total debt figure of £3.2 billion.

Ms Boden-Wilkes acknowledged that students are encouraged to make friends and meet new people when they begin university, which can result in a substantial expenditure of money.

“There definitely needs to be more talk about budgeting and people working out what they need each week,” she said.

Tags: cent, university education, Britain, UK graduates, figure

Mothers should be able to make pension contributions

More action is required in order to ensure that women are able to contribute to their pensions through motherhood, according to the Fawcett Society.

Company spokesperson Sarah Campbell has claimed that the government and employers need to act on the issue, noting that women who take time out of work during motherhood have reduced access to both private and state pensions.

Her comments follow research by the society that reveal that men save £51.03 more each month than women, while 55 per cent of single mothers were found to have no savings at all.

Ms Cambell believes that the gender pay gap lies at the root of the problem and that mandatory pay checks for all employers should be enacted to prevent the problem.

“Measures are needed to increase access to flexible working for parents and to encourage and enable men to take more responsibility for caring for children, so that this task can be shared more equally,” she added.

A UK campaign group for equality between women and men, the history of the Fawcett Society traces back to 1866 when Millicent Garrett Fawcett instigated a peaceful campaign for women’s votes.

Tags: problem, Yvette Cooper, United Kingdom, cambell, pay, women's votes, women, employment

More financial education needed says CCCS

Britons need to be better educated on their financial management, an expert has warned.

According to Consumer Credit Counselling Service (CCCS) spokesperson James Ketchell, many people lack sufficient knowledge when it comes to using credit and assessing whether they can afford it.

Commenting that there needs to be more financial education among young people, he highlighted the difference between managing credit in comparison to a student loan, which provides cheap credit and is automatically deducted out of a borrower’s wage packet.

Mr Ketchell said that it is currently very easy for people in employment to be offered to take on more credit, adding: ” As prices have gone up and wages have stagnated and mortgages have gone up, people have to use a bit more common sense in their financial dealings.”

His warnings come after Credit Action recently stated its assertion that young people in Britain, amidst rising figures of debt saddled by today’s graduates, have been “educated into debt but not about debt”.

Tags: difference, packet, action, borrower's wage packet, personal finance, Britain, wages, Knowledge

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