Many paying for fuel with credit cards

For many people credit cards have provided a convenient and simple means of making payments instead of paying cash or using cheques. However, it appears that these days credit cards have become an essential tool to help people afford to fill up their cars so that they can get around. Many people have used their cards at petrol stations in the past simply because of the convenience that they provide. However, these days people are said to be using them out of necessity.

As all drivers will know the cost of petrol and diesel has rocketed over recent months, and the cost of filling up a tank has soared. As a result of this many people have had to resort to using their credit cards to pay for fuel at petrol stations because they cannot afford to do anything else, and this has sparked concerns about the knock on effect that this will have on consumer debt levels.

Daily living costs have soared in many areas recently, yet many people have seen their pay either frozen or reduced because of the recession and the financial climate, which has left most struggling to cope with the rise in the cost of living. Many people are not only paying for their fuel with their credit cards but are also now meeting other essential living costs with their cards. Many are unable to make much more than the minimum repayment after using their cards to this degree and will come to a point where they have maxed out their card and have massive debts to pay as well as still having to find a way to meet the cost of living.

One official said: “With inflation hitting 4.4 per cent last month, it’s not surprising that many families need to resort to using their credit cards for more and more living expenses. But we believe this does highlight just how important it is to keep on top of credit commitments overall.”

Tags: consumer, climate, credit, credit commitments, Daily, knock, consumer debt levels, payments

Don’t be frivolous with your credit card

Credit cards are something of a double edged sword to most people. On one hand they are able to help people out of money problems, providing a financial lifeline and helping them when they have severe cash flow problems. On the other hand they are the essence of temptation and can lead people into spiralling levels of debt that can result in financial disaster.

Many industry experts have urged consumers to learn how to use credit cards properly. There are many ways in which you can benefit from credit cards, such as being able to enjoy the convenience and ease of avoiding carrying cash, being able to pay for larger items and then repay the balance gradually, and being able to tide themselves over during difficult times.

However, there are many people that take out a credit card simply because they want to spend unnecessarily rather than for the convenience, ease, and flexibility that these cards offer. Many people that are approved for a credit card will go out of their way to spend on it and often buy things that they do not particularly want or need simply because they are able to do this.

This frivolous spending is partly what has landed the country in huge levels of personal debt, with consumers taking out loans and credit cards to buy all sorts of luxuries, pay for holidays that they cannot really afford, buy the latest gadgets and high tech devices at high prices, and even using their new found ‘wealth’ to treat other people to things. For many having a credit card only involves looking at how much they have to spend rather than how they will repay the money and how much they will have to pay because of interest.

A recent report has shown how many people that apply for credit cards are more concerned about how much money they will get in terms of their credit limit than how much they will be charged in interest. This is because so many people are planning to use their credit cards to spend, spend, spend, rather than use what they need to and then get it cleared quickly and at a low rate of interest. Many people spend on their cards needlessly even when they are paying high rates of interest, which is something that can quickly lead to spiralling debt levels that become impossible to manage.

Tags: low rate, Credit card, financial disaster, sword, frivolous spending, luxuries, Credit Cards

New rules set to come in for credit card companies

The start of 2011 will see new rules come into force for credit card providers, which will means that changes will have to be implemented with regards to minimum repayments on credit cards as well as on how repayments are allocated to the debt that is outstanding on credit cards.

It is thought that the changes that are brought in from this weekend coming will have a positive effect on millions of credit card users, as it means that they will pay off their credit card debt more quickly as a result of changes made to the minimum repayments, and also that they will save money on interest because card provider will have to allocate repayments to the most expensive debt first rather than the cheapest debt, as many do at present.

However, whilst the changes will come as good news for many consumers industry officials are warning that credit card firms could be sneaky in their tactics to try and recoup money. This could see some credit card firms hiking up interest rates to make more money from customers, and some may add on sneaky charges and fees.

The biggest change, and the one that will most benefit consumers, is the fact that credit card firms will have to allocate repayments to higher interest debt first before the cheaper debt. This could make a huge difference to the amount of interest that is paid by consumers.

One industry official said: “The new regulations and changes that have been brought in will be highly beneficial to credit card users, and could make a big difference to the amount of interest that they pay. However, it will also make credit card firms sit back and think about how they can make back their losses, so consumer need to remain vigilant.”

Tags: Debt settlement, result, Money Management, Stoozing, positive effect

Older people likely to cut back on spending before younger consumers

It has been claimed that older people in the UK are more likely to curb their spending on things such as credit cards and current accounts than younger consumers. With many people struggling financially, and with rising living costs, increasing VAT levels, and rising unemployment levels likely to further affect spending power amongst consumers, cutting back has become a necessity for many people.

An official from Lovemoney.com claims that it is the older members of society that are likely to react to economic changes before younger ones, and older people are more likely to reduce their spending on credit cards and via their current accounts. Older people are also more likely to start putting money aside in savings than younger people.

Ed Bowsher, the official from Lovemoney.com, said that with interest rates still at a record low younger people are more likely to continue spending in the short to medium term and less likely to think about reining their spending in or trying to save any money. However, he said that older people would not have that ‘feel good’ factor.

Bowsher’s prediction comes after the publication of a recent report, which showed that since the start of the recession around 75 percent of consumers in Britain had altered their spending habits, with many having to make huge changes to their spending levels because of the financial strains that have come about from the recession and the global financial crisis.

However, many people have turned to credit cards and overdrafts in order to keep up with their financial commitment or continue with a particular lifestyle, and this has led to rising debt levels amongst households in the UK.

Tags: factor, consumer, debt levels, power, United Kingdom, necessity

Banks may offer more competitive deals than brokers

A recent report has shown that banks in the UK may be offering more competitive mortgage loan deals directly rather than through brokers, which means that consumers that go through a broker could find that they end up paying more than they would if they went directly through a lender in some cases.

Direct providers and banks are said to be offering highly competitive mortgage loan deals to try and stay a step ahead of rival providers, and this means that going through a broker could end up being more expensive. However, brokers have stated that if consumers choose to bypass them they could end up missing out on a range of specialist deals.

Some mortgage lenders such as the internet banking giant First Direct, which is part of the HSBC group, have decided to bypass brokers altogether for their deals. Officials from First Direct have said that there is no need for the company to go through brokers when they are able to offer such competitive deals direct to the consumer.

However, brokers claim that there are a number of reasons why consumers should go through a broker rather than direct to a bank, such as the diminishing number of people that now qualify for banks’ deals, and the fact that whilst a particular bank may be offering the best rate at one point this can quickly change.

One broker said: “First Direct and HSBC may have the best deals today but this can change and, besides, the number of applicants who will actually qualify for the banks’ criteria of three times income, a squeaky-clean credit record and large deposit, is fast diminishing. The reality is that most cases are not this easy and will require the expertise and contacts of a mortgage broker.”

Tags: broker, consumer, fast diminishing, finance, point, bank, Mortgage broker, Business Finance

Consumers should shop around for Christmas credit cards

With the festive season almost upon us once again many people will be looking around at credit card deals so that they have the credit that they need to make their purchases for Christmas. Read more

Tags: consumer, festive season, borrowing, Credit Cards, repayment, christmas credit cards, purchases

Cardholders should close old accounts

According to a recent report consumers in the UK need to take more care to close their old credit card accounts when they have disused cards that they no longer use. Read more

Tags: close credit card accounts, fraud, MasterCard, credit card fraud, consumer, Cardholders, dormant cards, Credit Cards

Are you paying for mobile broadband speeds that you are not getting?

Recent research has suggested that the many consumers in the UK that are rapidly joining the mobile broadband revolution may actually be paying for speeds that they are simply not achieving, with many getting only a fraction of the mobile broadband speeds that are being advertised by the mobile broadband providers. Read more

Tags: broadband, broadband speeds, mobile broadband, games online, higher speeds, consumer, web browsing

Credit card summary boxes will be easier to understand for consumers

From June of this year credit card applicants and customers should find that the credit card summary boxes on the application forms and marketing materials of credit card providers is far easier to understand. Read more

Tags: industry body association, Marketing, credit card summary box, Credit Cards, consumer, layout, shop, Payment systems

Interest rate cuts do not impress all

Following the most recent Monetary Policy Committee meeting earlier this month the Bank of England announced that it was cutting the base interest rate for the fifth time in a row, taking it to a new historic low of just 1 percent, which is the lowest in the history of the Bank of England. Read more

Tags: desired effect, bank of england, lows, consumer, monthly repayments

Future bleak for economy in UK

According to business leaders the future for the economy in the UK is looking very bleak, with many claiming that in the final part of last year the economy experienced ‘frightening deterioration’. Read more

Tags: recession, Business Finance, rate, consumer, part, British Retails Consortium, uk economy

Claims that energy firms are ripping off consumers

Further claims have been made recently that the UK’s energy giants are continuing to rip off consumers, and as many households struggle to keep up with bills and payments on their homes, he energy giants are said to be sitting on billions of pounds worth of consumers many. The claims come amidst controversy that British Gas, one of the UK’s major suppliers, has been increasing the direct debits of customers by 50% or more over the winter, even in cases where the customer’s account is in credit. Read more

Tags: Direct debit, energy firms, Utilities, lib, cash, something, consumer, government official

Energy bills need to fall in line with oil prices

Officials from a consumer watchdog group have become involved in a row over energy prices, after insisting that the price of energy usage needs to be falling in line with crude oil prices. Since the summer the price of a barrel of crude oil has plummeted by around 50%, but energy prices have gone up twice this year and not come back down. Energy giants have said that the price of wholesale energy is still high, hence the price of usage has not come down. Read more

Tags: energy prices, July, watchdog, government, result, summer

August retail sales levels cause surprise

According to recent reports industry officials were pleasantly surprised recently when data showed that there had been an unexpected surge in retail sales levels for the month of August. The rise in retail sales levels was not a huge one, but many industry experts had been expecting sales levels to fall by around 0.5%, so the increase of 1.2% in high street sales came as good news. The figures came from the Office for National Statistics. Read more

Tags: street, school period, sales, consumer, increase, Marketing and Advertising, overstretched household budgets, retail sales

Whistleblower claims – “Employees at RBS being trained to lie”

According to an insider from the Royal Bank of Scotland employees at the bank are being trained to lie in order to stop customers from cancelling the Payment Protection Insurance on their credit cards. The whistleblower is apparently from the bank’s Customer Loyalty Team, and said that employees are trained to use a number of practices to stop customer from cancelling PPI on their credit cards. Read more

Tags: ppi, authority, call, rbs, ongoing investigation, cancel accounts, Credit card, consumer

Inflation hikes are making life “tougher”

With inflation rising higher this week than analysts predicted it would, an expert has said that the situation is making life “tougher” for many people.

According to Ann Robinson, director of consumer policy at uSwitch.com, some consumers have seen their food, energy and other essential bills increase by 20 per cent over the past year.

Ms Robinson commented that many people are feeling the pinch as living costs continue to rise yet salary increases lag behind.

“We are working harder than ever before but we are not getting any richer.”

Ms Robinson warned: “With inflation misery set to continue this summer, this is a difficult time for consumers.”

Earlier this week inflation went over three per cent and Ms Robinson advised consumers to carefully review their household budgets and try to make savings wherever possible.

She pointed out that people could save an average of £1,500 on essentials by doing so.

Tags: inflation, percentage, salary increases, food, essential bills increase

Be careful over accuracy of some insurance price comparison sites

Over the past few years an increasing number of us have started to use various price comparison sites in order to help us to get better deals and find the most competitive prices on a range of services and products, from utilities and financial products to insurance services and products. Read more

Tags: best deal, consumer, various price comparison, specialise, fsa, price comparison sites, nsurance comparison sites

People urged to fight unfair credit records

Credit card users are being urged by the Consumer Action Group to fight what they see as unfair bank charges, particularly if they have caused their credit ratings to suffer.

The organisation says people get “black marks” on their credit records if they go overdrawn and can even have their reputation destroyed if the bank defaults them in an extreme situation.

In this case, people are affected for a minimum of six years for defaults as little as £5. They may have difficulty in getting credit or have to pay a higher rate and may not be able to buy a home.

The Office of Fair Trading recently won the right to investigate whether banks are making excessive overdraft charges.

Marc Gander, founder of the Consumer Action Group, says if banks have unfairly charged their customers, it is not just the refunds they should be liable for but also the associated problems, such as a bad credit record.

Tags: unfair credit records, extreme situation, Business Finance, Consumer Action Group, higher rate

Consumers should “prioritise” when deciding on house insurance

Consumers need to decide what their main concerns are when making the decision on whether they can afford a home contents insurance policy, the British Insurance Brokers’ Association (Biba) has said.

Many policies are not overly expensive and cheaper prices are also available from some major metropolitan authorities and private landlords who buy in bulk, according to Peter Staddon, head of technical services at Biba.

Although this means that it is easier for people on low incomes to gain access to these insurance policies, Mr Staddon acknowledged that “if it comes down to a choice between putting food on the table for the children or insuring the house, the broker is failing”.

He concluded that consumers would have to decide whether home contents insurance was a priority for them, however, he also warned of the dangers and financial consequences that people without house insurance face in the event of a disaster.

Experts have noted that the insurance industry is looking for ways to make home contents affordable for those on low incomes, following the summer flooding last year.

Tags: insurance brokers association, disaster experts, British Insurance Brokers Association, consumer, head of technical services at Biba, metropolitan authorities

Brits spend record amount of £4.5bn online

British consumers have broken the record for the amount spent over the internet in January – with £4.5 billion being used to purchase goods online.

Findings from the Interactive Media in Retail Group (IMRG) reveal that the figure was a 75 per cent increase on figures from last year’s January.

Anthoula Madden, vice president of consumer products and retail at Capgemini UK, said: “The index shows that January sales are as large a phenomenon online as they are on the high street, with the overall online market continuing to show strong growth.”

He added that the high growth in the sales of electrical goods and clothing suggests that consumers are treating themselves to items missed from Christmas stocking lists.

According to the results of the survey, consumers spent 38 per cent more on electrical goods over the internet last month compared to January 2007, while clothing figures increased by 32 per cent.

The figures from January contrast with findings from those compiled by the Office for National Statistics which showed that spending in December dropped by 0.4 per cent compared.

Tags: record, uk, Capgemini, clothing, Brits spend record, Interactive, month, consumer

Credit card spending hits record levels

British consumer spending on credit and debit cards hit record levels during the last quarter of 2006, reveals new research.

Findings from the Association of Payment Clearing Service (APCS) showed that out of the total £91.5 billion spent during the Christmas period – an increase on the £86.6 billion spent at the same time last year – £32.3 billion was on credit cards.

Up to £2 million of this figure was spent on food and drink during December 2007, a rise of 25 per cent compared with the same period last year.

Chris Tapp, of Credit Action, a debt charity, said that as the financial squeeze on household budgets is tightened many people may start to use their credit cards to pay for shopping.

He said that, despite retailers’ sales figures being down, credit card spending has increased.

Speaking to the London Stock Exchange, he said: “This is not good news. People using their credit cards to meet their monthly bills is the first sign of a spiral of debt trouble.”

Meanwhile, Nationwide has been voted the UK’s most responsible credit card provider.

Tags: research findings, credit, increase, record, debit, service, consumer, food

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: respondents, pocket, Technology Internet, Brits, consumer, love, killer heels, online shopping

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: insurance brokers association, industry, quarter, black, lifesearch, consumer

Consumers must get into saving discipline

Consumers need to “get into the discipline of saving”, according to an independent financial advisor.

Colin Jackson, director of Baronworth Investment Services, has said that once a consumer gets into saving, it becomes part of general financial overheads.

“If you decide that you really must save every month it’s no good saying that you’ll put £10 in a building society account every month, set up some sort of saving scheme where it’s paid by direct debit,” he recommended.

Another tip for effective saving would be to work out what money is being put away for.

Mr Jackson advised that consumers should use a building society account for a holiday. An Isa would provide greater tax-free benefits if the money was being saved for retirement purposes.

Recent statistics showed that total UK personal debt at the end of October 2007 stood at £1,391 billion. The growth rate has increased to 9.7 per cent for the previous 12 months.

This equates to an increase of £122 billion.

Tags: previous 12 months, colin jackson, retirement, part, personal debt, consumer, investment, rate

Credit card Christmas spending likely to soar

Consumers are planning to splash out this Christmas on credit, and could find themselves in financial difficulties as a result.

Having studied the latest Bank of England consumer credit data, credit reference agency Callcredit found that last Christmas, vast amounts were borrowed on cards.

60 per cent of the whole of 2006’s credit card lending took place in December last year, and Callcredit has warned that this is likely to be repeated this year.

Indeed, with many experts warning that unsecured personal loans are getting harder and harder to get hold of, thanks to the impending credit crunch, this year’s figure could be even higher.

Head of consumer finance at Callcredit, Mark Ward, warned: “From our review of these statistics, and in spite of the widely reported credit crunch, we’re still anticipating that many consumers will turn to credit at Christmas in order to fund their spending.”

“Worryingly, it could be these people who may find it more difficult or expensive to borrow on credit,” he added.

Tags: head, callcredit, vast amounts, consumer, christmas, consumer credit data

People advised to stick to credit purposes

Consumers should use financial products for their “right purposes”, according to Sainsbury’s Bank.

Steve Baillie, head of loans at the bank, explained that using personal loans, credit cards and overdrafts for the correct purposes will help consumers avoid getting into debt without “anything to show for it”.

“Buying cars with overdrafts or buying cars on credit cards can be very expensive business if you look at the APR. And also, you’ve got to look at the lifetime value of the product that you’re buying,” he said.

Purchases with a short life over a long period should not be considered, he continued, before urging consumers to do their “research” in advance of taking on any new commintments.

Credit Action revealed that in September this year total spending grew by £11.2 billion, while secured lending was up by £9.8 billion in the month.

Similarly, there was total growth over the month in consumer credit lending to £1.4 billion.

Tags: right purposes, long period, overdraft, credit, consumer credit, consumer

Debt advisers expecting flood of enquiries

According to a recent report debt advisers across the UK are gearing themselves up for a flood of debt related enquiries as thousands of fixed rate mortgage deals come to an end. Many consumers across the UK took out fixed rate deals in 2005 for a two year period, with a low fixed rate of under 4.5% in many cases.
However, since that time interest rates have rocketed, with a series of five interest rate hikes in the space of a year, taking the rate up to 5.75%.

The credit crunch that was sparked in the United States sub-prime sectors has also had global repercussions, and has resulted in some lenders hiking up their mortgage rates even further. This means that the thousands of people that will be coming out of their fixed rate deals will not only face a huge rise in their interest rates and mortgage repayments, but will also find it increasingly difficult to remortgage to a more competitive deal.

Even those that switch to another fixed rate will have to fix at a far higher rate than they did in 2005, which means a huge rise in their monthly repayments.

It is thought that in the coming months around twelve thousand homeowners will see their fixed rate periods come to an end, and will face repayment rises of 40%. This means that many will have to find hundreds of pounds extra each month in order to continue with repayments on their mortgages, and this could send many households into the red, tipping them over the financial edge and leaving them facing repossession.

All homeowners that are due to come out of their fixed rate deals will face these problems, with many lenders having hiked up their standard variable rates to 8% or more. However, sub-prime borrowers will face severe affordability problems, as many sub-prime lenders have increased their rates to beyond 10% according to some experts.

It is thought that both the level of debt enquiries and the level of repossession will increase over the coming months as a result of this situation. The Consumer Credit Counselling Service has announced that it is opening a specialist repossession advice centre to deal with the severity of the situation.

Tom Smith
25th October 2007

Tags: advisors, credit, Loans, consumer, end, rate, period

GFA found to be ‘feasible’

The Thoresen Review of Generic Financial Advice released yesterday has concluded that it is a “feasible” project.

Appointed by the Economic Secretary to the Treasury, Otto Thoresen carried out an examination of the practicality of providing a national platform for generic financial advice.

The investigation found that the benefits of delivery such a service would “outweigh costs by 3.5 to one”.

It also set out the most important qualities for a national GFA service as found in consumer research. These stated that it should be “supportive and informative” as well as “persuasive” without being critical.

Furthermore, it should be “available to all” and “not linked to a product sale” while also be “jargon busting”, advising on debt management, taxation and benefits.

Mr Thoresen said: “Complete impartiality and effective marketing will be critical. But it’s also essential to design a system which will be of genuine benefit to people and which can be sustained over the longer term.

“We are currently running pilot schemes to test out elements of a national system and the findings will enable us to develop the proposals further in the months ahead.”

The review’s final report will be published early next year.

Tags: debt, product, important qualities, year, consumer

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: competitive financial services, checking, consumer debt, borrowers, loan, consumer, consumer spending, recent boom

Are banks playing on the consumer’s conscience?

Over recent months consumers in the UK have been finding more and more services and products that are going ‘green’, enabling them to get the services or products that they need whilst also helping the environment. Read more

Tags: consumer, Credit card, Credit Cards, banks, bank accounts, way

Consumers have ‘misconceptions’ about building societies

Most consumers prefer building societies to banks, a new survey by Fool.co.uk has suggested, in spite of at least a third of respondents not even knowing what the different between them is.

Results from the study showed that building societies consistently scored higher than banks in consumer’s eyes. Six out of ten people preferred to take out mortgages with building societies and a similar proportion felt more comfortable discussing personal finances with one.

Four out of ten people even professed to a belief that building societies have their best interests at heart – a notion that David Kuo, Head of Personal Finance at Fool.co.uk, described as “schmaltzy”.

Whereas banks are public companies owned by their shareholders, building societies are owned by their members, but Mr Kuo warned that does not necessarily mean they provide a superior service.

“Best-buy tables have indicated that banks provide better products than building societies in three key products areas, namely credit card, savings accounts and mortgages,” he said.

The new survey also revealed a degree of ignorance among consumers. A third of respondents could not explain the different between a building society and a bank, while a quarter were unaware that Alliance & Leicester is now one of the latter.

Tags: best buy, new survey, society, latter, key products areas, consumer, belief that building

ABI survey urges insurers to “come clean” on customer comments

An independent panel has urged insurers to give “warts and all” accounts of their performance, as they publish results from Britain’s first nationwide insurers’ survey.

Run by the Association of British Insurers (ABI), the Customer Impact study – currently in its first year – asked 18,000 insurance holders to rate their provider on products, sales and service.

Many major insurers have already published their first reports on how customers have rated them.

The Consumer Impact Panel, however, has expressed concern as to whether results have been especially selected to cast the insurer in as favourable a light as possible.

Chairman of the panel, former Scottish Widows boss Mike Ross, said: “Firms should present a balanced assessment of what customers think, with no cherry picking and should have a comparison of their performance against the industry average.

“Companies should be honest about their areas of weakness and show what action they are taking to address these weaknesses.”

Tags: service.Many major insurers, insurer, consumer, widows boss mike, finance, mike ross, action

Halifax launches new fixed-rate deal

Mortgage provider Halifax made its new 25-year fixed-rate deal available today.

This represents a response from lenders to Gordon Brown’s call for long-term fixed-rate mortgages as a way of alleviating home buyers being priced out of the market. Halifax’s new deal will lock in the holder’s interest rate until 2032.

The provider will be counting on customers gambling on further interest rate rises, as its rate of 6.39 per cent is much higher than the majority of variable rate deals, which are in line with the current base rate of 5.75 per cent.

A spokesman for Halifax said that the new mortgage “means homeowners can balance the security of a fixed interest rate with a range of flexible features built into the product”.

The provider added that it hoped to “radically change the consumer’s view of longer-term products”.

The Bank of England decided today to leave the base rate as it is for this month.

It has risen five times since last August, however, and most industry analysts predict further rises before the year is out.

Tags: month, view, Floating interest rate, consumer, spokesman, response, longer-term products, range

Hips introduced today

Home insurance packs (Hips) are introduced today across England and Wales.

The Office of Fair Trading (OFT) also warned estate agents yesterday that it would get tough on those who were found in breach of the new regulations.

The packs are now mandatory on the sale of all four-bedrooms or more homes, with all other houses to be covered as the policy is rolled out in future months.

A ban can now be imposed by the OFT on any estate agent found to be in breach of the new Hips regulations, after the issuing of a Warning Order first.

Head of consumer protection of the OFT Mike Haley said that “it is important that agents are aware of their obligations and the possible consequences if they fail to comply.

“If an agent fails to comply, this could trigger an investigation into an agent’s fitness to continue estate agency work.”

Originally drafted in June 2006, the legislation has suffered many setbacks, including facing a parliamentary vote to decide whether Hips be scrapped, and also being delayed from its original introduction date on 1st June this year.

Tags: sale, england and wales, vote, office of fair trading, protection

Insurance cover could become fairer

New regulations and changes to the law could result in greater fairness for consumers that have various types of health insurance cover, as it means that there will be less of a chance of the insurance company being able to deny the claim.

In the past a number of insurance companies have been slated for denying claims from policyholders because of information that was or was not given at the time that the policy was taken out, leaving the policyholder with no way to claim on his or her policy.

Plans have been proposed by the Law Commission, which looks at the way that laws are applied in cases such as these, and if everything goes through successfully it means that insurance companies will not be able to refuse to payout on a claim because of lack of information provided when the policy was taken out by the claimant. Life and critical illness insurance policyholders may benefit the most, as the level of denied claims in these areas is quite high.

One spokesman from the Law Commission stated: ‘We have sought to bring insurance law up-to-date to reflect the reasonable expectations of insurers, policyholders and intermediaries. Our overriding objective has been to achieve fairness between both parties to an insurance contract, while recognising different levels of information about the insured risk and different bargaining strengths.’

However, insurance companies plan to fight against the changes. According to an official from the Association of British Insurers: ‘In effect, our members are operating to these standards anyway and are not forcing claimants to go to the Ombudsman needlessly. Many insurers have already made clear that they will not decline critical illness or life claims when the information that was not disclosed has nothing to do with the final claim.’

Tom Smith
26th July 2007

Tags: policy, companies, consumer, health, holders, changes, Insurance

AIFA responds to government proposals

Recently the government announced its intentions to crackdown when it came to Independent Financial Advisers to ensure that consumers were receiving sounds advice based on their needs rather than on which lender would be the IFA the most money in commission.

The government stated that financial adviser services would become more standardized and that those wishing to operate as independent advisers would have to seek payment for the advice from the customer and not from the lenders that he or she recommends.

The European Commission has also put forward a green paper that recommends a single, standardized European market.

Chris Cummings from the Association of Independent Financial Advisers stated: “The EU should be mindful that the UK retail financial distribution market is unique because the majority of business in retail financial products is arranged through intermediaries. The delivery of this advice, according to Deloitte research, has the potential to improve the wealth of low to medium income earners in the UK from £38bn to £78bn even if only 10% were to optimise fully the advice given.”

He added: “We support the Commission’s views that there must be a rigorous and thorough analysis before introducing any new regulations, which takes into account both the benefits and the cost to firms and consumers, and the impact on the market. There are many reasons why consumers are naturally restricted from using cross border financial services such as language, taxation, social welfare and currency. The Commission must consider these issues before seeking to force standardisation that will not benefit consumers.”

A letter that has been signed by a number of industry professionals has been signed and sent to the commission to urge officials to improve their knowledge of consumer demand before any action is taken on this issue.

Tom Smith
24th July 2007

Tags: financial, consumer, save, ifa, advisers, earn, independent, invest

CML chief: Housing market to come off boil

The director general of the Council of Mortgage Lenders (CML), Michael Coogan, has claimed that house price inflation will cool off dramatically next year.

Speaking to Reuters, he said that prices seem likely to record their smallest increase in a decade, at maybe just two to three per cent, partially due to rises in interest rates.

The Bank of England set the new base rate at 5.75 per cent two weeks ago – the fifth rise in a year – and many analysts predict further increases in coming months.

Mr Coogan counselled against fears of a slump in prices: “I don’t believe there will be a crash. But clearly a slowdown is more likely”, he said, pointing to the still robust economy as a bulwark against forced house sales.

He added that “we’ve already seen on the consumer credit side that loans have been reduced and people are looking to repay their credit card and other debts… That trend is likely to continue.”

The prospect of a dramatic slowdown seems distant, however: Figures released by the Department of Communities and Local Government today show still-strong inflation, with annual house price rises remaining in the double percentage figures: inflation in prices stood at 10.9 per cent in May, against 11.3 per cent the previous month.

The figures also showed regional variations – with inflation particularly strong in London, Scotland and Northern Ireland.

http://uk.reuters.com/article/personalFinanceNews/idUKNOA64267220070716?rpc=401&
http://business.timesonline.co.uk/tol/business/economics/article2083427.ece

Tags: cml, price inflation, consumer, price, I don't believe, crash, ece

Beware of credit card costs

Britain’s top 20 credit cards use 12 different ways to calculate interest, meaning that ‘cheap’ credit cards could cost more than you may think.

According to Which?, the APR (annual percentage rate) figure may not be the best way to compare cards, but it adds that this could be just one way in which firms are duping consumers.

“People believe that APRs are a dependable way of comparing credit cards, but our research shows that APR cannot to be relied upon for true credit card comparisons,” said Alena Kozakova, principal economist at the consumer watchdog.

“Two people who have two different credit cards with the same APR and who use their credit card in the same way, could be paying very different levels of interest.”

In the Which? calculations, people paying off the same amount of money with identical spending could pay 43 per cent more in interest on cards charging 15.9 per cent depending on how the interest is calculated and when it is charged, while the best 15.9 per cent card can also work out cheaper than cards charging 11.9 per cent.

Which? has now complained to the Office of Fair Trading (OFT) and Ms Kozakov added: “Consumers have to be able to make meaningful comparisons on the basis of APR. We are calling on the OFT to standardise interest calculation methods so that consumers can compare like for like.”

Tags: calculation methods, rate, figure, Daskaloff credit card rating system, oft, cent, United States, consumer

Millions not claiming unfair charges

Millions of people who have been stung by unfair bank charges are yet to claim their money back.

That is according to Which? after it carried out research that found almost two thirds of people have not even tried to get their hands on the money which is rightfully theirs.

Which? asked 2,200 consumers if they had attempted to claim the money back and many said they had not, however, of those who did, a massive 85 per cent said that they were successful.

The consumer champion reckons that this figure would be closer to 100 per cent if people were more persistent after initially being denied a reimbursement by their bank.

“Claiming back unfair bank charges is a simple process that won’t take up hours of your time,” claimed Emma Bandey, personal finance campaigner for Which?

“If your bank does not co-operate, you should refer the case to the Financial Ombudsman Service (FOS) as so far the banks have chosen to settle all cases referred to FOS.”

The most popular reason for not claiming back the charges is fear of what the bank’s reaction may be.

Many consumers are concerned that their bank may close their account and demand full repayment of any overdraft or loan.

A large number of those who have claimed their money back have not been pleased with their bank’s attitude.

In total, 25 per cent of those asked said that their bank was unhelpful and unresponsive with many having to chase them for a response.

Tags: Financial Services Authority, response, Financial Ombudsman Service, consumer, loan, unfair bank charges, money back.That, overdraft

PPI market faces scrutiny

The Office of Fair Trading (OFT) has decided to refer the UK payment protection insurance (PPI) market to the Competition Commission (CC).

A public consultation was held following an original proposition by the OFT for the referral back in October.

Businesses, consumer organisations and trade associations were asked to give their views on the market and the responses confirmed the OFT’s prior concerns.

“Our examination of the evidence presented to date gives us reasonable grounds to suspect that there are features of this market which restrict competition to the detriment of consumers,” said John Fingleton, chief executive of the OFT.

“Despite some evidence of a degree of consumer satisfaction with aspects of the product, the evidence as a whole suggests consumers get a poor deal.”

The organisation says that the CC can now carry out a thorough investigation of the market, offering the chance for a solution to be reached.

The Financial Services Authority is currently working to remedy some of the problems present in the market in terms of selling practices. However, the OFT feels that this alone will not fix the current problems.

Those of you considering a loan may find that you are better off getting PPI, but should shop around for the best deal.

Tags: evidence, detriment, consumer, commission, United Kingdom, trading, consumers, public consultation

Potential PPI refund

Consumers could save themselves large sums of money by seeking a better deal on their payment protection insurance (PPI) for a personal loan.

That is according to the Post Office, which says some borrowers may find that they could save thousands of pounds.

The firm points out that PPI that is sold alongside a loan is normally added to the total sum of the amount borrowed, meaning the consumer will pay interest on the insurance.

Customers are now being urged to challenge their lender and could find that they receive a refund for the interest charged.

“The refund could be substantial, so people shouldn’t miss out,” said Claire Oldstein, head of communications at the Post Office.

“Banks and loan providers are in an ideal position to sell insurance with their loans, but customers should challenge them to find out what the true cost of their payment protection is.

“By comparing this to standalone policies, customers can see for themselves that better value deals are available,” she added.

The Post Office has recently called for an open PPI market in response to an investigation by the Office of Fair Trading.

The organisation wants it to be mandatory that consumers are told by lenders that they can get better or cheaper policies by shopping around.

Tags: consumer, payment, Financial Services Authority, total sum, head, organisation

Debt problems to continue in 2007?

The Citizens Advice Bureau has voiced concerns that 2007 will lead to more debt for consumers.

The warning comes on the back of figures released by the British Bankers’ Association which show that mortgage lending rose during December 2006.

Statistics show that there was a £5.8 billion increase during December, slightly down on the record £6.7 billion growth seen in November, but still very high.

Citizens Advice says that during 2006, housing debt was one of the fastest growing problem areas and the figures from the BBA mean that this trend may well continue.

“The increase in loans and overdraft borrowing reflects the evidence from Citizens Advice bureaux that debt enquiries continue to rise in 2007 and will exceed the 1.4 million debt enquires we dealt with in the last financial year,” said Sue Edwards, senior policy officer at Citizens Advice.

BBA’s data also shows that credit card lending fell in 2006, in stark contrast to the huge growth seen in 2005. However, Ms Edwards does not believe that this is anything to get too excited about.

“The decrease in credit card borrowing simply indicates that people are borrowing in different ways,” she stated.

Consumer debt, which includes credit cards and other unsecured personal loans, was the biggest problem area for people seeking help from Citizens Advice.

Tags: housing, consumers, senior policy officer, ms edwards, consumer, year, Sue Edwards