Money Advice service now available for consumers

There is no doubt that there are many people these days that are desperate for financial advice, as they have a range of money issues that they need advice and help with, including debt advice, pensions advice, and advice on savings and other financial services. However, it has become increasingly difficult for people to get the advice that they needed over recent years, especially in respect of debt with demand for these services soaring.

However, the government has now launched its Money Advice Service, which is designed to provide consumers with advice relating to a wide range of financial issues that may be causing confusion or problems. Consumers are able to use the service online or can use it by phoning or visiting an advisor in person. The aim of the service is to offer free, impartial advice to those that have issues relating to their finances.

The service deals with a wide range of different areas relating to finance, and it is available to anyone that needs advice regardless of what their financial situation is. The service also offers access to a range of tools and resources for consumers to use in order to help them with their financial queries and issues. The service has evolved from the Consumer Financial Education Body, which was launched in 2010.

The service’s chairman Gerard Lemos said: “The Money Advice Service is here to make people’s lives easier and better. We’re not here to sell people anything and we won’t charge anyone – we are here to help people take decisions about their money and plan for a better future for themselves and their families.”

Another official stated: “It is important that everyone in the UK has the knowledge, skills and confidence to make the financial decisions that are right for them. We welcome the launch of the Money Advice Service as a new way to give consumers information about managing their money and choosing the financial products that are right for them.”

Tags: better future, service online, anyone, service, launch, advice, way

Huge fine for Barclay’s over investments

High Street banking giant Barclay’s Bank has been fined a fortune by the financial services regulator, the Financial Services Authority. The bank has been ordered to repay customers around £60 million, and has been fined £7.7 million on top of this, resulting in total fines of nearly £70 million.

The fines have been imposed as a result of investments that were mis-sold by the bank. The FSA carried out an investigation that revealed ‘serious failings’ in the way in which the bank had sold the two investments, which were Aviva’s Global Balanced Income fund and Global Cautious Income fund. The two funds were sold between July 2006 and November 2008, and the total value of the investments came to nearly £700 million.

According to the FSA the investments were mis-sold because the bank did not take into account a number of crucial factors when selling the funds. The regulator said that the funds were sold to over twelve thousand customers in total, but that the FSA did not consider important factors such as the financial circumstances of the customers, their investment knowledge and experience, or their investment objectives.

An official from the FSA said: “The FSA requires firms to have robust procedures in place to ensure any advice given to customers is suitable. Therefore, when recommending investment products, firms should take account of a customer’s financial circumstances, their attitude to risk and what they hope to achieve by investing. On this occasion however, Barclays failed to do this and thousands of investors, many of whom were seeking to invest their retirement savings, have suffered. To compound matters, Barclays failed to take effective action when it detected the failings at an early stage. “

She added: “Because of this, and given Barclays’ position as one of the UK’s major retail banks, we view these breaches as particularly serious and fully deserving of what is a very substantial fine.”

Tags: compound matters, financial services regulator, advice, uk, substantial fine, important factors, funds, High Street

Warning for women over store cards

Christmas is fast approaching and many High Street retailers will have geared up to try and get women to take out store cards when they go into the shop to buy an outfit for the festive season. Many women every year take out store cards, as shop sales staff make them sound enticing by offering customers money off their purchase right away.

Many of the popular High Street retailers have a big push on store cards at this time of the year, but these cards come with very high rates of interest, with some charging almost 30 percent interest. This means that a debt as small as £500 could take over a decade to repay if the cardholder only pays the minimum repayment each month, as the bulk of the repayment will be swallowed up in interest.

Store cards are said to be one of the most expensive forms of borrowing, but despite this there are around 12.9 million of them in circulation, with around £2.2 billion spent on them. The number of single women struggling to repay store card debt is three times higher than the number of single men, and women are now being urged to think twice before taking out and spending on a store card this year.

An official from the Citizen’s Advice Bureau said: ‘There is a problem with the way store cards are sold. Targeting young women at the till means customers are usually more focused on the discount for their purchase than the terms and conditions of the credit.’

Another finance industry official added: ‘Customers who repay only the minimum amount on store cards could end up paying twice the price and still be repaying the debt in a decade’s time. Do not touch store cards unless you can afford to pay off the balance in full every month.’

Tags: expensive forms, Debit card, way, finance industry official, sales, advice

Stop Overpaying Your Mortgage

In the past year, homeowners have been advised to overpay their mortgage whenever possible. However, this advice has changed in light of the news that banks and buildings societies have increased the interest rates they are paying on savings accounts. Read more

Tags: mortgage repayments, lower mortgage payment, savings accounts, all-time low, advice

Where should you head on your holidays?

Whilst most of us are trying to make cutbacks wherever possible in the current difficult financial situation, most of us do not want to give up our annual treat of some time away on holiday. Read more

Tags: bank, advice, whilst, holidays, shorter period, family, financial situation, recession

Local authorities have lost hundreds of millions of pounds

News about the failure of Icelandic banks that have recently collapsed has been dominating the headlines, and the government has confirmed that local authorities have invested a total of over £840 million with these Icelandic banks. This has caused outrage amongst consumers, but government officials have said that councils were not being reckless with the cash by investing it in these Icelandic banks. Read more

Tags: charities, recklessness, bank losses, LGA, guarantee, government, basis, advice

Can you afford to give to charity?

Just a couple of years ago many of us were happy to give generously to a range of worth causes, and we were prepared to whip out our debit or credit cards whenever there was a charity appeal, sign up to monthly donations for charities, and make one off payments to worth causes. However, household finances have been hit hard over the past year, and households have had to cut down on their expenditure in order to keep their heads above water financially. Unfortunately, for many this has also meant having to cut back on the amount of money that they are able to donate to charity. Read more

Tags: charity, Social Issues, high rates, fuel, Charities Commission, advice, Big Society, usage

Graduates urged to prioritise costly debt

Graduates may have to put up with student loans but credit card debt should be paid off as quickly as possible, an expert has urged.

Richard Brown, chief executive officer of financial information website Moneynet.co.uk, remarked that university leavers have a considerable period in which to repay their student loan and should prioritise the repayment of more expensive debt first.

He explained that student debt is “a fact of life unfortunately, whereas carrying big wads of debt on a high interest credit card isn’t”.

Mr Brown made his comments after his organisation published advice to students, urging them to stop “fretting” over the amount they owe through normal student debt and to concentrate first on paying off their most expensive borrowing.

Recently published figures compiled by Credit Action showed that at the end of April, total levels of personal debt in the UK stood at £1,436 billion, an increase of £110 billion compared to 12 months previously.

Tags: advice, information, debt, Student loan, expensive debt first.He, expert, consumer debt, credit

Change your lifestyle to get good credit report, advises expert

People who have had their credit card applications turned down should re-evaluate their lifestyles and have a close look at their finances, Fool.co.uk has said.

David Kuo, head of personal finance at Fool.co.uk, said that people are often refused credit because they have too much debt compared to their income or because they have previously defaulted on credit card or other payments.

Earlier this month, MoneyExpert.com reported that 18,000 credit card applications are being refused every day and one in 14 people (seven per cent of the population) have had a credit card application rejected in the last six months – a total of 3.24 million applications.

According to a new survey by Citizens Advice, record numbers of people are seeking help with financial difficulties and many are struggling to pay their essential household bills.

“People need to re-evaluate their own lifestyles at the moment, have a look at their own finances and if someone turns you down for a credit card then ask yourself: ‘Why?’ The answer is in your credit report,” says Mr Kuo.

Tags: home, total, moment, Credit counseling, Mr Kuo

ABI: Don’t just go for the cheapest home insurance

With one in three households getting into arguments with their neighbours, people should not simply choose the cheapest home insurance policy as it may not cover the legal cots of a dispute, says the Association of British Insurers (ABI).

Kelly Ostler-Coyle, spokesperson for the ABI, advises people to consider what is covered in the insurance policy rather than simply choosing one based on cost.

Ms Ostler-Coyle, says that when shopping for insurance, people should ask themselves “Does it include legal cover? Does it have all risk extension fees so you’re covered for your items when you’re outside the home and how much [in terms of] belongings am I covered for?”

Yet people often take what they believe is a good deal without taking any advice and later find their claims rejected since the insurance policy they chose does not cover issues such as disputes, says an expert.

Over a million people say they have argued with their neighbours over noise, according to a new survey from Allianz Insurance.

Tags: Financial economics, advice, expert, British Insurers, Social Issues, Allianz Insurance, abi, Business and Economy

Not all children ‘would be interested in taking financial advice’

Children would benefit from more financial education in order to make the most of their Child Trust Funds (CTF), but they might not “necessarily be interested in taking that kind of advice”, claims a financial expert.

Ark Financial Planning said that although there are children who have been made aware of the ‘value’ of money, there are more who are concerned about what they can do with it rather what it can do for them.

Phil Perry, a spokesperson for the company said that issues arise when attempts are made to label money in funds for educational costs when not everyone wants to go to university.

“I certainly think the government need to have a little bit more idea on what they expect that money to be used for,” he added.

CTF are saving accounts for children and those born after September 1st 2002 who receive a £250 voucher to start their account.

According to reports in the Daily Telegraph, those children born within a year of the September 1st 2002 can expect windfalls worth a total of £2.4 billion when they reach 18 years of age.

Tags: daily telegraph, value, little bit, CTF, advice, company, expert, child trust funds

Uncapped mortgage charges ’skyrocketing’

The number of mortgages with uncapped upfront fees has risen dramatically in the past 12 months, it has emerged.

Now at 506, the number is five times what it was a year ago, with application fees rising as high as 3.25 per cent of the loan value, according to MoneyExpert.

Sean Gardner, chief executive of the website, commented: “Borrowers need to look carefully at mortgage deals and not just focus on the interest rate. What might look like a good deal will soon become a bad deal once fees are taken into account.

“Mortgage application fees are nothing new but lenders often won’t publicise a change to their fee structures, meaning some homeowners could be unaware of this huge shift to uncapped charges.”

Capped upfront fees have also gone up in the past year by an astonishing 63 per cent, with the average fee growing to £834 from £509 in November last year.

Mr Gardner concluded that those confused about fees should work out how much they are able to afford and then seek advice about whether the fees can be added onto the loan.

Tags: chief executive, borrowers, advice, business, fee

OFT helps to ‘Save Xmas’

A scheme aimed at advising people on their Christmas saving options launched earlier this year is to be continued.

The Office of Fair Trading (OFT) has announced new funding for the “Save Xmas” campaign, through which community groups and consumer bodies explain directly to people in their areas what their options are for saving safely and wisely over the year.

The scheme was in July in the wake of the collapse of the Farepak Christmas hamper savings scheme late last year, which saw many people lose all the money that they had put away over the year for Christmas presents when the company went bust.

Save Xmas helps savers to identify the most suitable schemes for them, and the OFT has produced a leaflet, a short film and background research to support the local training sessions.

Sue Cook, OFT head of consumer and business education, said: “We are delighted to be able to provide additional funding to our partners at grass roots level. Citizens Advice’s involvement has been fundamental in delivering the Save Xmas campaign to local communities.

“We would urge groups and organisations who are interested in delivering Save Xmas training and helping people make choices that best suit their needs when saving for Christmas training to contact us promptly.”

Tags: head, Consumer Focus, Hamper, advice, Christmas saving options, best suit, local training, suit

Borrowers warned not to ’stretch themselves’

Consumers are advised not to “stretch themselves too far” with unsuitable mortgage products, an industry expert has said.

According to Andy Pratt, chief operating officer at Alexander Hall, doing so, whether fraudulently or accidentally, could land people in financial difficulty.

He explained: “[Sometimes] it’s a genuine mistake where they stretch themselves too far; a good mortgage broker should alert them to that by assessing their income and outgoings.”

Meanwhile, he said, there was no real cause for concern as the market “has got better and better” with the possession levels relatively steady.

According to the Council of Mortgage Lenders, in the first half of this year, 14,000 properties were taken into possession, representing 0.12 per cent of total mortgaged properties.

Alexander Hall is a UK mortgage brokers offering independent mortgage advice and helping develop the operations of the mortgage industry.

Tags: mortgage products, industry expert, difficulty, UK mortgage brokers, industry, Andy Pratt, advice

Loans to family ‘may be counterproductive’

People who lend money to friends and family may only be a short-term fix for those in debt, according to one expert.

Stephen Rose, the director of the not-for-profit information provider Debt Advice Bureau, argues that issuing loans to people who are in debt may only mask an underlying financial issue.

“We have seen a minority of cases where people have wracked up debts and – usually a parent – has bailed them out and paid off their credit cards.”

“And in no short space of time debts are being wracked up again,” he adds.

As such, Mr Rose argues that if someone is tempted to loan money to a loved one they could instead work with the person to establish where their money is going.

The directors’ comments follow research from DebtSmart found that out of the 59 per cent of people who had leant money to a friend, just over one in four had been repaid.

Tags: Mr Rose, comments follow research, advice, loan money, Credit Cards, Financial services, money

Gapyear travellers “don’t understand insurance”

People taking a gap year do not understand travel insurance and see taking it out as an obligation, according to one industry figure.

Tony Griffiths, the founder of gapyear.com, states that although gapyear travellers are becoming more aware of the importance of taking out insurance, they do not understand “what it is or what it does”.

Mr Griffiths also said that some travellers feed they are “indestructible”, particularly males who are aged between 18 and 24. He also added that many people have a “it won’t happen to me” attitude.

“The reality is most of the claims are for things like people falling off a curb. We had an example of someone who fell off a curb in Barcelona and broke their ankle.”

Gapyear.com is part of the Gapyear Company, which is an organisation that provides free information and advice to people considering taking a year out.

It states that 25 per cent of people on a gapyear have either no or inadequate insurance, and that the average spend of 18 to 24-year-olds while travelling is between £3,000 and £4,000.

Tags: Australia, Financial economics, figure, Gap, com, reality, advice

ABI says younger drivers “should have year of lessons”

Younger drivers – traditionally a higher risk when it comes to car insurance – have been recommended to take a full year of lessons before their test.

The advice, from the Association of British Insurers (ABI), would in effect raise the driving age limit in the UK

A one-year rule of sorts is already in place in other European countries, with the ABI citing Sweden in particular as a positive example for the UK to follow.

Association spokesperson Malcolm Tarling said: “We suggest a minimum of one year pre-test driving experience before you get to the stage of taking your test.

“The overall aim is to reduce the number of young newly qualified motorists and their passengers that die or are seriously injured on the road.”

He added: “The key thing is to ensure that young drivers, once they have passed their tests, are better equipped to be in control of a potentially lethal weapon.”

The ABI’s position is backed up by recent research from the House of Commons Transport Committee.

It reported last month that adoption of a one-year training programme prior to all UK driving tests would reduce the UK’s road accident rate.

Statistics from the Department for Transport show that 3,150 people were killed on roads in the UK during 2006.

Tags: car insurance, Department for Transport, house, UK driving tests, advice, driving age limit, test, abi citing sweden

Some Brits could be in debt all of their lives

A recent report has highlighted how many consumers in the UK could be facing lifelong debts that will be with them for many decades as a result of high debt levels and low income.

Research was conducted by the Citizen’s Advice Bureau and indicated that many consumers in the UK could be facing debt for up to 77 years. This was based on the people that have been contacting the charity for assistance and advice in relation to their debts.

The debt mountain facing the UK has been the centre of concern for some years, and more and more people have been finding themselves unable to meet their financial obligations and having to find help. According the toe CAB the majority of consumers that made contact in order to get advice and help with their debts were, on average, around £13000 in debt, but were on just half of the national average income.

According to the CAB many of these consumers will face a lifetime of poverty, as they will spend many decades trying to repay their debts with a minimum income. The number of those needing advice and counselling for unsecured debts had doubled in the last eight years according to CAB officials.

David Harker, Citizens Advice chief executive, stated: “Low income, combined with badly informed and poorly understood financial decisions, are at the root of many of our clients’ debt problems. The reality is that they are condemned to a lifetime of poverty overshadowed by an inescapable burden of unpayable debt.”

The Cab is now looking to the government to put forward plans for solutions to these debt problems, such as Debt Relief Orders (DROs) which could help to ease the debt problems for those with high debt levels, low income, and nothing significant in the way of assets.

Tom Smith
28th August 2007

Tags: debts, orders, advice, spend, cab, relief

Abbey first time buyers turn to family

First-time buyers (FTBs) are increasingly turning to brokers rather than friends and family for mortgage advice, Abbey said today.

According to research from the lender released today, 23 per cent of homeowners consulted those close to them while buying their first home – compared with 13 per cent who asked a broker for advice.

However, 28 per cent of the first-time buyers of today – those in the 25-34 age group – said that they used a broker: the largest proportion across the demographics. This could signify an increasing dependence on professional rather than personal mortgage advice.

By way of comparison, just two per cent of OAPs consulted a broker over their first property purchase.

Managing director at Abbey Ricky Okey said that the research was “promising”, because it showed “a shifting attitude of young first-time buyers who are waking up to the benefits of seeking advice from intermediaries.

“Brokers can build on this changing attitude to become a positive driving force in the first-time buyer market.”

Tags: demographics, driving force, Driving, abbey, today, comparison, advice

Financial advisers now under scrutiny

UK regulators have been cracking down on all sorts of services and sectors over the past year, from bank and credit card charges to travel insurance and payment protection cover. Read more

Tags: finance, charge, advisers, products, Insurance, advice, free, personal. mortgages, recommend

Interest rate rise reaction

The Bank of England yesterday (July 5th) announced another 0.25 per cent increase in the base rate, taking it to a six-year high of 5.75 per cent.

Mortgage holders, credit card borrowers and those with loans will be hit hardest and many industry figures are warning of the implications of the rise.

Citizens Advice warns that many people will be adversely affected by the rate rise and says that it has seen an increasing number of people visiting its local bureaux after falling behind with mortgage payments.

It says that the rate rise will tip over the edge those who are just about struggling along and is calling upon lenders to be sympathetic to their borrowers.

Despite the dangers associated with a base rate increase, many first-time buyers (FTBs) will not be deterred from trying to get onto the property ladder.

That is according to new research by Bradford & Bingley that shows 46 per cent of FTBs are concerned that house prices will become even more unaffordable in the future and so do not want to wait.

Many industry figures are predicting that the Bank of England will announce a further rate rise before the end of the year, taking the base level to six per cent.

However, this could lead to further criticism from many, with Scottish Widows Investment Partnership already saying that a further rise is unnecessary as it expects inflation to fall in the coming months.

Tags: advice, local bureaux, ladder, cent, cent increase, high

Bad credit doesn’t mean bad mortgage

It is something that occupies the minds of many young adults today but a leading mortgage broker claims that bad credit need not mean higher mortgage rates.

London and Country (L&C) claims that 71 per cent of people with credit problems who have visited them have walked away with a mainstream mortgage deal.

This is despite the borrower’s belief that he or she will be hit hard for a previous bad record.

L&C admits that most lenders will not deal with people who have recent defaults and County Court Judgements but points out that the situation is never black and white.

It is possible that some lenders will be more lenient than others and the broker claims that many people with only minor blemishes may be surprised by the kind of deals available to them.

“All too often, people assume that because they’ve had some credit problems in the past, they will have to pay a much higher interest rate and in some cases, high broker fees,” said James Cotton, mortgage specialist at L&C.

“In fact, our research shows that by getting whole of market advice from L&C, borrowers can seek out the best deal for their circumstances and can often secure a better rate than they thought possible.”

The news will be welcomed by first-time buyers, many of whom are of the belief that they will have to wait years until they can get a mortgage.

Tags: best deal, advice, Financial services, Mortgage broker, interest rate, circumstances

Musical instruments can cause mayhem

As Valentine’s Day approaches (February 14th) the country’s romantic souls are being offered a few words of advice.

Allianz Cornhill Musical Insurance (ACMI) says that this time of year can often lead to accidents involving musical instruments as boyfriends try to impress their beau by serenading them.

According to the firm, many claims are lodged each year regarding damage or accidents involving a musical instrument and they have decided to disclose a few.

Among the most humorous was a claimant whose cello spikes got caught in clothing and led to him falling onto his instrument and breaking it.

Many claims are made regarding young brothers getting carried away in a bit of rough and tumble, only to destroy their prized musical instruments.

Finally, ACMI says it has even received a claim after a wasp flew down someone’s shirt, leading to a fit of panic and a smashed instrument.

“Some of our policyholders have come up with some ingenious ways to damage their instruments so we have become quite expert in providing risk management advice,” said John Feaver from ACMI.

“The advice in this case is quite simple: please don’t try climbing a ladder while playing a guitar or violin – it could seriously damage your health and your instrument.”

If you are considering taking out insurance for your instrument, it may be worth checking your current home insurance policy to see if it is already covered.

Tags: Manufacturers, clothing, Types of insurance, health, advice, allianz, firm, finance

Home Insurance Advice

If you have a mortgage you will already have Buildings insurance for your home. This is required to replace anything connected to your home that will affect the valuation. This may include roof repairs, flooding, storm damage or damage to internal fittings such as kitchens, bathrooms or interior decor. Read more

Tags: room, home insurance, home contents insurance, jewelry, finance, advice

Surprise interest rate rise

The Bank of England has stunned economists by raising the interest rate to its highest level for six years.

In the build up to the decision being announced, it was considered by almost everyone in the industry that the rate would be held.

However, on Thursday January 11th, it was announced that the interest rate would rise by 0.25 per cent, taking it to 5.25 per cent.

It is the third time since August that the Bank of England has increased the rate by 0.25 per cent and is bad news for people with mortgages.

“This is another rise in a short period of time that could hit some homeowners hard,” said Peter Tutton from Citizens Advice.

“We are already seeing a rapidly growing number of people falling behind with mortgage payments and in some cases threatened with repossession, and we know some people are taking on mortgages that stretch them to the absolute limit.

“Any increase in mortgage interest rates could spell disaster for people whose finances are balanced on the very edge of affordability,” he added.

The rate rise is good news for savers however, although the uncertainty created by today’s announcement is unstabling for most people.

“Markets are going to be wondering if this marks a more intensive process of monetary tightening,” Peter Dixon, economist at Commerzbank, told Reuters.

“Is the bank going to raise again? That’s the question that is going to be ringing round the dealing rooms this afternoon.”

Tags: homeowners, economists, Federal Reserve System, advice, today's announcement, absolute limit, highest level, limit