Consumers’ impulse buys costs them

A love of impulse buying helped by credit cards and the internet is leaving Brits financially out of pocket, according to new research.

Findings from swiftcover.com show that 91 per cent of respondents made a regrettable impulse purchase last year with a further 60 per cent admitting to spending in excess of £100 last year on spontaneous buying.

A fifth of consumers blamed credit cards for their impulse spending while a further 26 per cent said the convenience of online shopping made them susceptible to

Tina Shortle from swiftcover.com. said: “Whether it’s a pair of killer heels, or the latest ‘must-have’ gadget, it seems that we’re addicted to spending now, paying later.”

He added: “But that means that we’ve also dropped our guard when it comes to ’sensible’ habits like shopping around and as a result we are getting stung by shops’ returns policies.”

The survey showed that seven out of ten people admitted that they do not bother to read returns policies before buying.

Meanwhile, Which? has reported that shoppers are opting for cheaper supermarkets as Asda and Lidl entered the top ten of stores used by consumers in a recent survey.

Tags: love, consumer, respondents, pocket, online shopping

Mortgage market “still buoyant”

The mortgage market is “still buoyant” despite the recent financial crisis due to the amount of remortgage business available, claims one expert.

Despite the market being healthy, Bestinvest said that it is becoming increasingly harder and more expensive to look at remortgaging property. .

Peter O’Donovan, mortgage manager for Bestinvest, said: “There are still plenty of people looking to buy houses, it’s just the cost of doing so, and once again making sure they understand exactly what it is they are entering into.”

Previously a remortgage would only cost a couple of hundred pounds but now the average fee is a £1,000, he added.

According to the Council of Mortgage Lenders, the credit crunch has resulted in funding difficulties for a number of mortgage lenders, reducing their capacity to lend.

Lenders have responded by reappraising the risks involved in lending, resulting in a tightening in lending criteria and a widening in mortgage margins to parts of the market.

Tags: expert, lending, mortgage manager, funding, amount, UK mortgage terminology, crisis, manager

Consumer wellbeing ‘worsening’

Many consumers are facing increasing strain on their day-to-day living costs and spiralling levels of debt, according to research from financial experts.

Findings from the Financial Reality Index from the Alliance Trust, which analyses factors underlying consumer wellbeing, has revealed its biggest fall in 18 months.

The index decreased by 10 per cent, from 88.6 in the previous quarter to 79.7 per cent in the fourth, one of the lowest levels in the study’s 11 year history.

Shona Dobbie, head of the Alliance Trust Research Centre, said: “Our measure of consumer wellbeing shows a worsening picture not only for household budgets, but for consumers’ net wealth and the economy as well.”

She added that, although consumer spending does not appear to have taken stock of the financial reality, “we expect consumer spending to slow further over the next year”.

Over spending for the past two years is supposedly to blame for the current pressures upon budgets with higher food and fuel prices and heavy levels of debt and mortgage payments.

Meanwhile research from the Alliance Trust has shown that the over-75s and under 30s suffer the worst rates of inflation.

Tags: factors underlying consumer, Dobbie, trust research, mortgage payments, household budgets, debt, picture

BIBA calls for investigation into price comparison websites

The British Insurance Brokers’ Association (BIBA) has called for an investigation into price comparison sites by the Financial Services Authority (FSA), saying the body’s regulations were not written with these websites in mind.

Findings from the research revealed that over half of insurance buyers do not understand the difference between each insurance policy offered by comparison websites.

A further 84 per cent admitted to being confused by insurance policy details offered while only six per cent believed the details offered were true.

Eric Galbraith, BIBA chief executive, said: “The current FSA rules were written prior to the growth in aggregator sites.”

“I believe the regulator should now look again at developing more appropriate regulations, to ensure that consumers are being afforded suitable protections,” he added.

The research also found that many comparison websites base their calculations on assumptions meaning some consumers could purchase insurance policies which are not suitable for them.

However, Hayley Parsons, managing director of insurance comparison website Gocompare.com, said a review would be unnecessary as brokers and agents are already regulated by the FSA.

Tags: British Insurance Brokers Association, body's regulations, insurance comparison website, insurance comparison, British Insurance Brokers

Mortgage lending ‘drops to lowest levels for 2 years’

Mortgage lending dropped to its lowest level for over two years last month, according to figures from the Council of Mortgage Lenders (CML).

The statistics show a 25 per cent drop on gross mortgage lending compared with November and 21 per cent fall from the same figure recorded for the month last year.

Gross lending only reached £22.5 billion, the lowest amount since May 2005 and down from the £29.9 billion recorded in November.

Simon Rubinsohn, senior economist at the Royal Institution of Chartered Surveyors, said: “2007 may have been a banner year for the mortgage market as the CML data suggests, but the most timely indicators point to a sharp slowdown in demand for property-related loans.”

However, despite the effects of the credit crunch gross mortgage lending during 2007 reached an estimated £362 billion, an increase of five per cent from the £345 billion in 2006.

Meanwhile, mortgage lenders are putting increasing pressure on the Bank of England to help them raise funds to provide potential homeowners with loans reports the Financial Times.

Tags: demand, bank of england, Chartered, crunch, data, mortgage market, gross mortgage lending, Council

Bank loss in court case could bring debt to the consumer

If the Office of Fair Trading’s (OFT) court case into the overdraft charges of eight banks goes against the firms, then the long term banking climate could be affected for the worse for the consumer claims one financial expert.

FinanceDaily.co.uk said, that while the legality of the case needs clarification, if the banks lose they maybe required to make pay outs up to £1 billion in compensation.

Dale Lovell, editor of FinanceDaily.co.uk, said: “If the banks lose the case it will almost certainly be the end to ‘free’ banking in the UK because the banks will have to find alternative ways of earning money back from customers.”

He added that the interest paid by banks on current accounts could end while the introduction of monthly standing charges for current accounts is also a distinct possibility.

The application for the declaration is brought against Abbey National, Barclays, Clydesdale, HBOS, HSBC, Lloyds TSB, Nationwide Building Society and Royal Bank of Scotland.

According to industry commentators, the banks make an estimated £10 million per day in charges.

Tags: Economy of the United Kingdom, financial expert, business, royal, Lloyds Banking Group

Parents should open bank accounts for children ‘as early as possible’

Providing children with bank accounts as early in life as possible will enable them to have a better understanding of money say independent financial advisors.

MDM Associates said that opening a bank account as early as possible parents can then talk children through statements and show them where interest has been added.

Older children could receive an account with a debit card said the company.

Lisanne Mealing, managing director of MDM Associates, said: “That then starts to give them the idea of some financial responsibility – you’re trusting them because they’ll have access to that account themselves.”

Providing monthly pocket money to children can also be a good way to teach children about budgeting, she added.

According to an article on the Times Online, a recent survey by NatWest suggests that 51 per cent of young people want more advice from parents about how to manage money.

Many respondents said they were frustrated by well-trodden cliches such as ‘money doesn’t grow on trees’.

Tags: pocket, child, Business Finance, recent survey, idea

Insurance industry commits to pay out more

The insurance industry’s commitment to pay out more on claims for critical illness, income protection and life insurance has been welcomed by industry experts.

Previously clients, insurers and medical practitioners were sometimes “unsure of what position to take” when dealing with a claim where medical information had not been disclosed unless the customer has deliberately withheld it.

Graeme Trudgill, technical and corporate affairs executive of British Insurance Brokers’ Association, said: “The Association of British Insurers (ABI) are trying to make the situation a bit more black and white to help customers do the right thing and to pay the claim.”

He added that some claims have not been accepted for “various reasons” and critical illness has had a “bad time” in the press.

The ABI changes are hoped to make the process of making a claim more consumer friendly.

According to LifeSearch, one in five critical illness claims are rejected.

However, according to its research carried out in the fourth quarter of 2007, there has been a marked improvement in the number of claims being paid out in the last 12 to 18 months.

Tags: economics, lifesearch, quarter, consumer, black, corporate affairs executive, insurance brokers association

Over 9m Brits have no pension provision

Over 9 million Brits have no pension provision yet expect to retire when they reach the age of 62 according to new findings.

Research from Baring Asset Management found that of those adults yet to retire, 24 per cent have no pension provision at all.

The target age of retirement for those between 18 and 34 is 61, in spite of government recommendations stating that it is set to rise to 68 by 2044.

Rob Lay, Barings’ head of European sales, said; “People have to start taking a more proactive approach to planning for their retirement.

“These figures reveal a worrying trend of UK adults assuming that they will be in a position to retire without having made the necessary arrangements for funding that retirement,” he added.

The research also showed that 21 per cent of people expect to be able to retire before 50 with a defined contribution scheme, and 17 per cent expect to be able to retire on a defined benefit.

According to figures from the Government Actuary’s Department, life expectancy for men and women is set to rise to 86 years and 89 years respectively by 2050.

Tags: position, Pension, Department, personal finance, Financial services, contribution, funding

Changes to Isas will benefit consumers say experts

The changes to Isas anticipated to occur in April of this year have been welcomed by industry experts.

Robin Keyte, a director with the financial services firm Towers of Taunton, said that getting rid of the definition of mini and maxi Isas should benefit both the customer and the Inland Revenue.

The increase in the maximum amount a person is able to invest in an Isa in a tax year, from £3,000 to £3,600 should help encourage saving as well as rise in line with inflation, he added.

“You could also say that with the credit crunch digging in, it’s very timely, because people want to reduce their spending. The timing is good,” Mr Keyte said.

Removing the ‘Personal Equity Plan’ (PEP) description and treating the funds as Isas should also help simplify the situation for the consumer.

He said that there’s “no point” in keeping the name different, due to the amount of similarities between the two products.

According to figures released in November 2007 by HM Revenue and Customs, the amount of money saved in Isas has now reached £208 billion.

Tags: Personal Equity Plan, personal, definition, services firm towers, equity

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