More compensation payouts to be issued by Halifax

High Street banking giant, Halifax, has recently admitted that it may have to pay out more compensation to customers over a mix up with its mortgage rates. Earlier this year the lender identified around 600,000 customers who may be eligible for compensation over confusion about mortgage rates, about half of whom ended up receiving compensation payouts. The lender has now stated that there could be another 250,000 people who may be eligible with around half of them expected to actually receive compensation.

The compensation that the lender pays out could be up to £4500 per person based on a mortgage of £150,000 where the borrower has been affected for three years. The payouts will equate to either 1 percent of the mortgage interest for each year that the borrower has been affected or will be a fixed compensation payout. With tens of thousands of borrowers potentially set to receive compensation, Halifax could have another huge bill on its hands.

The confusion has arisen over Halifax increased the cap on its standard variable rate mortgages from 2 percent above the Bank of England base rate to 3 percent above. The UK’s financial regulator, the Financial Services Authority, expressed concern that wording on documentation may have led borrowers to believe that they would receive advance warning of any such changes. Halifax subsequently came to an agreement with the FSA over paying compensation to customers who were affected.

A Halifax official said: “In February 2011, we agreed a voluntary agreement with the FSA in relation to a customer contact and goodwill payment programme with specific Halifax mortgage customers. We have subsequently identified a further group of customers that are eligible for inclusion within the programme. We are now in the process of writing to these borrowers explaining what this means for them.”

Tags: year, Mortgages, standard, compensation payouts, payout, uk, Mortgage loan

More people see benefits of private medical insurance

People are increasingly recognising the benefits of private medical insurance (PMI) and more employers are starting to take out policies for their staff, says the Association of British Insurers (ABI).

According to ABI’s figures, more than six million people are now covered by either personal or corporate PMI with a further 1.14 million covered through Healthcare Trust arrangements.

Research conducted by BUPA shows that in the first quarter of 2008 sales of individual PMI policies were up by 20 per cent on the same period last year.

Private health care allows patients a quicker and higher standard of service than the NHS, according to ABI spokesperson Jonathan French.

Employers are also increasingly seeing the advantages of providing PMI for their workers, such as helping them to back to work more quickly after an illness.

“There’s also the argument [that ] in an increasingly competitive labour market, employers are using add-ons, like offering private medical insurance to ensure that they can recruit and retain the best quality staff,” added Mr French.

Tags: offering, market, standard, private health care, Labour economics, Financial economics, competitive labour market, Business Finance

Travellers need to remember European Health Insurance Card

Travellers need to remember to take their European Health Insurance Card (EHIC) with them when they go to Europe, warn insurance experts.

According to the AA, the card, previously known as the E111 form, offers health insurance which is always a “good idea” when travelling.

Ian Crowder, public relations manager for the AA, said that the EHIC is a reciprocal agreement with the NHS should allow holidaymakers to receive treatment in EU countries free or at low cost should it be required.

“[However], depending where you are may depend on the standard of service you get,” he added.

Research from gapyear.com states that a quarter of those who go travelling do so uninsured or underinsured which can put their parents’ homes and financial security at risk.

Up to 230,000 people take a gap year between the ages of 18-24 who have an average spend between £3-4,000.

A further 90,000 people take a gap year between the ages of 25 and 35 and spend an average sum between £6-9,000.

Tags: risk, security, financial security, Ian Crowder, eu countries, Gap, standard, nhs

Wedding insurance “more commonplace”

It is becoming easier and “more commonplace” for couples to take out wedding insurance, according to a spokesman for Debenhams.

More people are now aware of the availability of wedding insurance products whereas previously it was difficult to find a provider.

However, although it is easier to find, some couples spend so much on the big day they get to a point where they will not spend anything else says Dan Tremain, product development manager for Debenhams.

“They’re spending tens of thousands of pounds but they won’t spend fifty quid to insure the £20,000 effectively,” he said.

Research by Debenhams also revealed that the number of wedding cancellations is on the rise.

Illness among close relatives is the most likely reason for calling off the big day while cancellations have increased by almost half over the past 12 months.

Debenhams are expected to launch wedding insurance with £30,000 cancellation cover as standard. A more exclusive option should also be available with cover worth £70,000.

Tags: Department store, cancellation, wedding, option, business, exclusive option, standard

Building societies ‘offer best value’

Building societies are offering a better standard of service in most areas than banks, according to new research.

As well as providing higher service standards, the study also claims that building societies’ mortgages and savings, on average, represent better value than those offered by banks.

The research has been carried out independently for the Building Societies Association (BSA), a trade body which represents all of the UK’s 59 building societies.

Speaking at the Association’s annual lunch last Thursday, BSA chairman Iain Cornish said: “Building society savers and borrowers are significantly more satisfied with the services which they receive from building societies, than are customers of banks.

“The whole building society model is more transparent, simpler, more prudent and more trusted and we simply do not have the same motivation as banks to take massive risk positions in pursuit of profits for shareholders.”

Pointing to two recent reports published by a price comparison site, Mr Cornish claimed that building societies offered 70 per cent of the UK’s best value mortgages and 70 per cent of the best-paying savings products in the last 18 months.

Mr Cornish is also chief executive of the Yorkshire Building Society.

Tags: Iain Cornish, Trustee Savings Bank, societies, new research, building, standard, Mr Cornish, Yorkshire Building Society

Take steps to minimise flood damage, insurer urges

Flooding is becoming a greater and greater risk in many parts of the country.

This summer, parts of Yorkshire, Lincolnshire and Gloucestershire were swamped by flood waters for days, causing millions of pounds worth of damage and even claiming lives.

The cost to the insurance industry was around £3 billion, and while many insurers have voiced their reluctance to continue to insure some properties while government spending on flood defences is at its current levels, industry body the Association of British Insurers (ABI) is reviewing the principles of practice in the area.

In the meantime, Cornhill Direct has suggested a number of measures homeowners can take to minimise the damage flooding causes if and when it strikes again.

Homeowners should prepare a “flood pack”, including a torch, first aid kit, blankets, warm clothes and fresh water, and move property from lower floors upstairs where possible.

Cornhill also recommends keeping your insurance documents and radio dry, so that you can listen to public announcements.

Spokesperson Mark Bishop said: “The continued widespread availability of flood insurance depends on sustained government investment to bring flood defences up to an adequate standard.

“Householders should follow our advice which will help to minimise the damage of a flood and help those affected to recover as soon as possible.”

Tags: minimise, standard, Householders, move, insurance industry, current levels, Government spending, Lincolnshire

Data loss puts thousands at risk

Thousands of Standard Life customers could be at risk of identity theft after their personal details were lost.

The details of around fifteen thousand Standard Life customers were being sent on CD from HM Revenue and Customs to the Standard Life headquarters in Edinburgh. This is a routine process carried out by HMRC. However, the courier lost the CD on this occasion, and it never arrived at the company’s headquarters.

Officials from Standard Life and HMRC are now warning customers to be vigilant. The data related to pensions customers, and amongst the information about each consumers was their National Insurance number, their names, their dates of birth, and their pension plan numbers. The CD was sent and lost around a month ago state officials. Reports also claim that a second CD with consumer information has gone missing, but it is not yet known which company this second CD was meant to go to.

The customers at risk have now been sent letters from Standard Life and HMRC. However, this is almost five weeks following the loss of the data, which has resulted in criticism.

One customer expressed her concern over the delay in notifying customers of the breach of security, stating: “This happened at the end of September and it is a month before notification. They are saying that addresses were not on there, but if someone has your surname and date of birth it is not that difficult to track you down.”

An official from Standard Life stated: “We have no evidence that the disc has fallen into third party hands and we have also been closely monitoring all the accounts and have seen no indications of any suspicious activity.”

Mark Wright
8th November 2007

Tags: personal, security, disc, information, stolen, lost, standard, data, life

Local financial firms more suitable than big banks

The standard of service and level of understanding offered by smaller building societies makes them more user-friendly than their larger counterparts, it has been suggested.

According to the Building Societies Association (BSA), the fact that regionalised companies will have a better knowledge of local markets is clearly to their advantage.

Commenting on the differences between the types, Adrian Coles, the director-general of the BSA said: “We’ve got a really good mixture in the building society sector, but if you’re locally based you really do understand the local market better than the branch manager of a national institution.”

He added: “What are the incentives? High levels of service, better levels of service than banks, understanding of local markets which they’re clearly good at, tailor-made products [and] knowing their customers.”

Recent BSA statistics reveal that 15 million adults have building society saving accounts with the 59 different institutions across the country.

Tags: Adrian Coles, sector, director general, level, business

Mortgage Reality About To Bite

The next three months will see many thousands of homeowners come face to face with reality as their cheap fixed rate deals come to an end.

The deals were taken out in August and September 2005 when the Bank’s base rate had fallen to 4.5%. At that time you could get a two-year fixed rate mortgage with an interest rate as low as 4.24%.

If borrowers do nothing and let their mortgage slip onto the lender’s standard variable rate (SVR) then if they’re on an average £130,000 mortgage they will see their repayments go up by up to £290 a month.

Looking for a new fixed rate deal is not going to make them feel any better as the lowest fixed rates are now at around 5.6% and come with huge arrangement fees attached. Even those, therefore, could add £110 to the repayments from a 4.24% rate.

When you switch providers you will have to pay an exit fee to your previous lender, together with valuation and legal fees concerning your new mortgage. These could easily get near to £1,000 on a £130,000 loan, but this will still work out much cheaper than sliding onto the SVR.

One of the most attractive products due to end soon is Halifax’s two-year fixed deal at 4.29%, which expires on 30 September. There are about 30,000 customers on this deal. If they don’t take any action they will end up on the bank’s SVR of 7.75%. On a £130,000 loan monthly payments will go up from £707 a month to £981 – an increase of £274. Another popular one is Alliance & Leicester’s 4.28%, ending on 31 October. A&L’s SVR is under review, but is likely to go up to 7.89% before then. Repayments will go up from £706 a month to £993 – up £287. A&L also has a rate of 4.24%, ending at the same time. In this case the repayment rise will be £290.

Experts suggest that anyone with a mortgage deal ending in the next few months should start looking around for a new deal now, but should steel themselves in the expectation of paying a lot more than they are now.

There are other good two-year old deals that are ending soon, such as Northern Rock’s 4.69% on 31 August, Cheltenham & Gloucester’s 4.39% on 30 September and Abbey’s 4.59% on 2 November.

Halifax is offering a range of remortgages only to existing customers. One is a two-year fix at 5.89%. Anyone moving onto it from 4.29% will see their repayments rise to £829 a month from £707 on a £130,000 loan, and will still have to pay the £849 arrangement fee.

Britannia has a good looking two-year deal at 5.69%, accompanied by a fee of £999. That’s £813 a month on a £130,000 loan and costs £20,511 over the two years. If an A&L borrower on 4.28% were to switch to the Britannia deal they would save £180 a month and £2,500 over two years rather than stay on the A&L SVR.

Tom Smith
25th September 2007

Tags: standard, discounted, introductory, variable, offer, rates, fixed, Mortgages

Holidaying Britons need ‘comprehensive insurance packages’

Holidaymakers planning to take their car overseas this summer should make sure they are comprehensively covered, M&S Money claims.

The group believes that with the holiday season gearing up to get into full swing, motorists need to make sure their insurance packages cover them to drive in the EU.

M&S Money’s figures show that last year over two-fifths of Britons had no idea whether they were insured to drive in Europe.

The group claims that while a quarter of other policies in the market charge extra for the addition of cover in the EU, M&S insurance includes full policy cover in the EU as standard.

Its policies also include breakdown cover as standard for both the UK and Europe, with only one in ten packages from other insurers including this.

Steve Price, insurance manager for M&S, said: “It’s important to be aware of what’s required for driving in Europe as you may be caught out quite easily.”

He added: “Just as important is making sure you’re covered, which is why we designed M&S car insurance to enable people to carry on with their holiday or get home safely if there’s a problem with their car.”

Tags: addition, Vehicle insurance, Types of insurance, standard, policy cover, M&S car insurance

Mortgage bills set to soar for former fixed rate customers

Recent reports indicate that a million mortgage payers in the UK could soon see their mortgage repayments shoot up by over thirty percent in some cases, as their fixed rate deal comes to its end.

It is thought that consumers that took out a fixed rate deal several years ago for two or three years are going to have a shock, as their mortgage repayments soar to hundreds of pounds more per month as a result of the four interest rate rises enforced by the Bank of England over the past year.

Many consumers took out low rate fixed rate mortgages a few years ago, but these are now set to come to the end of their term, which means that those mortgage holders now have to face the financial pinch of all four interest rate rises in one fell swoop.

Although consumers could switch to another fixed rate deal once their previous one expires, it will be at a much higher rate than their previous one, which means that they will still have to pay out a small fortune each month in additional repayments.

Some industry professionals feel that the million or so people that are set to see their repayments soar over the next year may find it a real struggle to cope because of the amount by which their repayments will rise. It is likely that these customer took out a fixed rate at around 4.5 percent a couple of years ago, and the most favourable rates on fixed rate mortgages now are around 5.5 percent. And with interest rates set to rise again in the coming months this could rise yet again.

One banking analyst stated: ‘For some customers we see a 25-30% increase in interest payments.’

He also stated that those people that had to struggle with repayments in order to get onto the property ladder may now find that repayments are totally unmanageable because of the number of interest rate rises that have been applied since they took out their initial loan.

Tom Smith
19th June 2007

Tags: increase, Loans, fixed, incentive, Mortgages, cost, rate

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: standard, profits, ing direct, ING, executive, exit fees.A spokesman, Lindsay