Savers ‘more cautious’

It is not only the credit crunch that is having an impact on consumer confidence, the Newcastle Building Society has said.

A number of factors, including the financial crisis affecting Northern Rock last summer, as well as uncertain stock market performance prior to that, have led to people being more cautious with their savings, according to the company’s senior marketing executive.

Steve Urwin said that these events have led to consumers moving away from investing in high-risk products.

According to research by the building society, savers are more cautious today than they were a year ago, with one in ten preferring to stash their cash under the mattress rather than put it in a savings account.

Building societies often deal with more “naturally cautious” customers, according to Mr Urwin, and the organisation has recently seen greater interest in its fixed rate bonds and Guaranteed Equity Bonds.

“Fixed rate bonds offer a guarantee of rate for a fixed period and GEBs offer stock market linked growth but with absolute capital guarantees,” explained Mr Urwin.

Tags: stock market, organisation, Newcastle Building Society, cautious, credit, executive

UKSIF: People want different things from ethical investments

People are seeking ethical investments so they can influence business practices, the UK Social Investment Forum has said.

Chief executive Penny Shepherd said that consumers are choosing ethical investments not only to make good financial returns, but also to encourage businesses to act more responsibly or because they want to support the development of new solutions for a sustainable lifestyle.

“We are keen that funds are clear about what they do – we support the European transparency guidelines, which a number of the funds have signed up to,” commented Ms Shepherd.

She also advised consumers to approach a financial advisor if they are considering an ethical investment.

This comes just before the launch of the first National Ethical Investment Week (May 18th – 24th), aimed at encouraging people to consider green and ethical investment options.

Google faced questions over how ethical its business operations are at its annual general meeting last week.

Shareholders are concerned over the services the company offers in China, which comply with the Chinese government’s censorship laws, BBC News reported.

Tags: censorship, business, Ethical, sustainable lifestyle."We, executive, business operations, BBC News, Business ethics

Greener cars mean lower tax and insurance, says expert

Drivers of greener vehicles can take advantage of lower tax and insurance costs, which may be especially beneficial under the current credit crisis, the British Insurance Brokers’ Association (BIBA) has said.

Since road tax is based on emissions, owners of green cars will save money compared to other car owners, particularly those who have four-wheel drives.

Insurance is based on risk-based pricing, which is made up of several factors, including a person’s age, experience, the type of car, and the value of the car.

According to Articlesbase, the recent budget introduced an increase in car tax and a 2p rise in fuel costs to come in effect from October 2008, although critics are unsure whether the tax cuts for greener cars will encourage drivers to consider cleaner transport.

However, Graeme Trudgill, technical and corporate affairs executive for BIBA, says: “People recognise that the large four-wheel drive vehicles aren’t so popular and therefore people are now thinking more about buying more environmentally friendly cars like the Toyota Prius.”

Tags: executive, insurance costs, effect, fuel costs, four-wheel drives.Insurance, lower tax, experience, Insurance

Over £9 bn wasted by UK spenders in tax payments

Almost £9.3 billion is wasted by UK consumers through unnecessary tax payments, one financial expert has claimed.

The amount wasted in tax will increase by almost £1.4 billion compared to 2007 shows research from Unbiased.co.uk.

Up to 82 per cent of consumers admit to do nothing to reduce their payments, despite over 34 million people expressing dissatisfaction with the extra costs.

David Elms, chief executive of Unbiased.co.uk, said that tax payers are wasting record sums.

“We estimate that each UK tax payer will waste an average of over £290 in tax payments this year,” he stated.

The findings shows that unnecessary Inheritance Tax (IHT) payments are set to rise by over £360 million in 2008, resulting in a predicted total waste of over £1.9 billion.

This is despite IHT being named the most resented tax by one in five UK adults said the survey.

Further research from the company showed that 70 days of an average consumers annual wage is spent on clearing interest on credit card and loan debts.

Tags: Inheritance tax, executive, Unbiased.co.uk, dissatisfaction, consumers annual wage, uk

Bank customers warned to avoid fee-paying accounts

Bank customers paying fees for packaged accounts are getting very little for their money compared with customers in free accounts, according to new research.

Findings from MoneyExpert revealed that the average credit interest rate on packaged accounts is 2.1 per cent per month, only 0.2 per cent more than the average rate available through free banking.

The average monthly fee of a packaged account is £11.61, with some accounts charging as much as £25 a month.

Sean Gardner, chief executive of MoneyExpert.com, said: “The basics of a typical fee-paying current account are frankly terrible value for money.”

“You don’t have to be a mathematician to see how an average interest rate of just 2.1 per cent compares to free banking if you have to pay a typical fee of £11 for the privilege,” he added.

The figures show that over half of all packaged accounts pay less than 2.5 per cent AER on positive balances.

Meanwhile, financial experts Fool.co.uk said that there are “lots of good offers” on the bank account market due to the effects of the credit crunch.

Tags: financial experts fool.co.uk, Fool.co.uk, fool, free banking, mathematician, executive

Number of drivers caught without insurance ‘doubled’

The number of drivers caught behind the wheel without insurance has doubled over the last year, according one industry expert.

Graeme Trudgill, technical and corporate affairs executive for British Insurance Brokers Association, said in 2007, approximately 150,000 were seized by the police while in 2006 this number was 78,000.

Police now have access to the motor insurance database and the “power to seize uninsured vehicles”, which are both factors helping the authorities to solve other crimes.

“Usually criminals use a vehicle to aid in their criminal activity and it’s quite likely that, being the type of people that they are, they don’t bother to buy insurance, said Mr Trudgill.

According to the Motor Insurers’ Bureau, uninsured driving costs law-abiding motorists in excess of £500m each year or around £30 on their insurance premium.

Uninsured drivers are also responsible for causing an estimated 160 deaths on the road each year in the UK.

Tags: activity, number, executive, Uninsured in the United States, Vehicle insurance, Mr Trudgill

Unpaid bills put pressure on households

Household budgets are being squeezed with millions of bills going unpaid in the last six months, say financial experts.

Findings from MoneyExpert.com reveal that as many as 6.9 million bills have gone unpaid since June last year.

Sean Gardner, chief executive of MoneyExpert.com, said: “For some time we have been waiting to see how the financial squeeze would affect the average household.”

“Nearly seven million unpaid household bills is a fairly conclusive sign that we are feeling the effects,” he added.

Figures showed that out of all the bills, most people are likely to miss paying their council tax, with one in twenty admitting to having paid it late or not all in the past six months.

However, a further 1.39 million people have said they have had difficulty in meeting payments on household bills such as gas and electricity in the second half of 2007.

Meanwhile, additional research from MoneyExpert.com has revealed that up to 2.6 million consumers plan to start the New Year by transferring their credit card debts.

Tags: Budgets, credit, difficulty, unpaid bills, executive, Household, MoneyExpert.com reveal, financial experts

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: mortgage, chief executive, business, fee, United States, borrowers

Bank holds interest rates

The Bank of England has held interest rates at 5.75 per cent for the fourth month in a row.

The decision, announced at noon on Thursday, comes as no surprise with many analysts predicting such a freeze well in advance.

Ongoing uncertainty in world financial markets and the rising price of oil led members of the Bank’s Monetary Policy Committee (MPC) to keep rates at their current peak.

That will mean prolonged misery for many homeowners, struggling to cope with high mortgage payments.

Chief executive of the National Association of Estate Agents (NAEA), Peter Bolton King, was critical.

He said: “I would have hoped that the Bank of England would have considered this month’s rate movement carefully as confidence in the market needs to be restored and a relaxation of interest rates would do just this.

“The last 12 months has been an extremely busy period for the housing market and consumers are crying out for reassurance.”

Tags: consumers, market, committee, confidence, Monetary policy, interest rates

Buy-to-let looking good

There is a continued high demand for rented properties and this is good news for people with a buy-to-let mortgage.

Figures published by Paragon show that rent has increased consistently over the last six months, as more and more people look to rent a home.

The average annual rent in England and Wales in May sat at £10,702, signalling a ten per cent increase of £1,037 compared to November figures when the average was £9,665.

A recent study shows that 63 per cent of residential property investors have seen tenant demand grow or remain stable and, as a result, they are looking to increase their buy-to-let portfolios.

“The private rented sector is buoyant as demand from tenants continues to be strong,” said Nigel Terrington, Paragon’s chief executive.

“Many parts of the community, such as students, migrants, people on housing benefit and first jobbers, rely on rented accommodation for their housing needs, and the sector is set to continue this growth over the next five to ten years.”

Mr Terrington went on to say that negative reports about the buy-to-let market are unfounded and said that affordability is playing a big part in keeping the market buoyant.

“Commentators forecasting a downturn in the buy-to-let market have overlooked the fundamental dynamic of the UK housing market – people need somewhere to live, and for many, house purchase is simply not an option,” he added.

Tags: Private rented sector, Renting, United Kingdom, good news, demand, mortgage, executive, chief executive

London’s homeowners being stung by exit fees

London’s homeowners are being charged as much as £295 in exit fees when financially conscious consumers look to change their mortgage.

Sources at ING Direct claim these exit fees are often up to eight times more expensive than the actual amount spent by the banks in reorganising the finances, with the average exit fee costing the mortgage buyer £187 when all the banks pay out is £35.

Lindsay Sinclair, chief executive of ING Direct, told The Evening Standard that an exit fee which is more than £35 is “just another way to boost profits” for banks and building societies.

“There is very little work involved for the lender when a customer wants to redeem their mortgage. The majority of the paperwork is handled by their solicitor who makes a separate charge for this,” she said.

The Financial Services Authority is apparently looking into the matter but as of yet has not issued a ruling on limiting exit fees.

A spokesman said that if deemed necessary, a poorly behaving lender could be “named and shamed”, adding: “If the cost charged is greater than the actual cost, then it is potentially a breach of the contract and could be unfair.”

Tags: exit fees.A spokesman, executive, profits, ING, standard

Brits losing faith in property

Many Brits are losing their faith in the property market as a way of investing.

That is according to the Standard Life Savings & Investment Index which shows that continually rising interest rates are denting people’s confidence.

Since October 2006 confidence in our homes as a savings vehicle has fallen by 19 per cent and Standard Life says that this is down to recent interest rate rises.

In response to the findings, the firm is calling upon all of us to ensure that we do not invest all of our money into a property without sufficient financial backup.

“With interest rate rises having such an immediate impact on investor confidence, I hope that investors will now consider spreading their investments across a wider range of investment categories and vehicles when planning for their financial futures,” said Trevor Matthews, chief executive of Standard Life Assurance.

The index also revealed that over half (51 per cent) of us are saving for a holiday, while retirement, home improvements and buying a car followed.

Tags: market, October, rising interest rates, Trevor Matthews, Impact, savings

Travel insurance shake-up receives backing

A proposed shake-up in the way that travel insurance is sold to holidaymakers is being backed by a large majority of us.

That is according to the British Insurance Brokers’ Association (Biba), which published a survey on the subject.

Government proposals to revolutionise the market will focus on protecting consumers from travel agents who fail to explain the full details of the policies they sell.

According to the survey, 72 per cent of travel insurance customers were not advised whether terrorism cover was included in their policy.

It is situations like this that have led to widespread support for the government’s plans, with 97 per cent of those asked saying that they agree completely with the proposed crackdown.

“It is essential that consumers are fully protected,” said Biba chief executive Eric Galbraith.

“Travel insurance is vital when we jet off on our holidays and it is the role of the provider to ensure that consumers are both fully covered and understand the limits of their policies.

“Biba brokers and the rest of the regulated industry have been fulfilling this commitment for years and the government’s proposals would ensure that travel agents and tour operators fall into line,” he added.

The research also found that 56 per cent of agents failed to inform customers of how to make a complaint, while only 47 per cent of customers said that they read the small print on their policies.

If you are taking out travel insurance make sure that you take the time to read the small print and ask for clarification on anything which you are unsure of.

Tags: government, revolutionise, british insurance, Eric Galbraith, Travel insurance shake-up

Capital One agrees to PPI fine

credit card company Capital One has agreed to pay a fine to the Financial Services Authority (FSA) over its sale of payment protection insurance (PPI).

The firm has reached a settlement with the authority following its investigation into the whole PPI market.

Capital One says that it has been working proactively with the FSA to ensure that its sales and administration in relation to PPI is brought up to standard.

The card company admits that there were problems in the past but says that it has now rectified these and was able to reach a settlement with the FSA because of the work it had put into addressing the authority’s concerns.

“Capital One values its relationship with its four million customers,” said Sanjiv Yajnik, chief executive officer at Capital One.

“We consistently review our policies and practices and had made a number of significant improvements prior to the FSA’s investigation.

“The FSA has recognised that Capital One co-operated fully throughout the investigation,” he added.

The firm agreed to a fine of £175,000 and it follows the announcement by the Office of Fair Trading earlier this month that the PPI market will be referred to the Competition Commission for further investigation.

If you are considering taking out PPI on any money you are borrowing it is worth while shopping around for the best deal that suits your needs.

Tags: executive, authority, proactively, relation, commission, ppi market, trading, fair

Nationwide is fined

The Nationwide Building Society has received a huge fine after security flaws at the firm were exposed.

A laptop, belonging to a Nationwide employee, was stolen last year, potentially exposing around eleven million customers’ details.

The Financial Services Authority (FSA) says that the bank did not act quickly enough, not launching an investigation until three weeks after the laptop was taken.

The firm even allowed the employee to go away on holiday without asking what information was contained on the hard drive.

In response, the FSA has fined Nationwide for £980,000, even though no money was lost by any customer as a result of the theft.

“We have extensive security procedures in place, but in this isolated incident our systems of control were found wanting,” said Philip Williamson, Nationwide’s chief executive.

“We have made changes to fill the gap and improve our procedures further.”

Both the police and the FSA have said that they believe the laptop was stolen purely for computing reasons and the thieves were probably unaware of the information that it contained.

We can at least ensure that we do our bit to ensure we are banking safely by shredding any unwanted documents which have our details on them.

Tags: money, fine, executive, exposed.A laptop, hard drive