Money News: Call for borrower protection from £57m 'unexpected' costs

A change in the law is needed to protect UK consumers from credit card cheques that cost up to £57m in unforeseen charges, says the Office of Fair Trading (OFT).

The cheques, often sent unsolicited by lenders, allow users to pay for goods or services and rack up the debt on their associated credit card account.

However, the extra costs of using these cheques are "unexpected" for many consumers because of lack of clarity over the charges, the OFT said.

Downsides to the cheques include higher rates of interest than a credit card; a 2 per cent fee per cheque; and no interest-free period from the day of the purchase (unlike those cards that give customers up to 56 days to clear debt interest-free).

Consumers who make purchases with the cheques also miss out on the usual protection against faulty or undelivered goods afforded by credit cards under Section 75 of the Consumer Credit Act.

The lack of information about these important costs and limitations was "unacceptable", the OFT stressed.

It recommended legislation to ensure that these details are made clear and transparent, and that lenders all present them in the same format.

The call came as part of its response to a consultation on credit card cheques ordered in November last year by the Department of Trade and Industry (DTI).

Consumer groups including Which? want lenders' mailshots of unsolicited credit card cheques to be banned.

The DTI consultation closed two weeks ago but no date has been fixed for a decision.

Fuel bills: Powergen's rates up by a quarter

Fuel bills for nearly nine million Powergen customers are to rise by up to 24 per cent, it emerged last week.

From 10 March, electricity bills will go up by 18.4 per cent and gas by 24.4 per cent, the company announced.

Like British Gas, Scottish Power and other suppliers before it, Powergen blamed the huge rises on the surging cost of wholesale gas, which has nearly doubled since January 2005.

Two weeks ago, British Gas and EDF Energy announced they were to hike bills for customers; with the former, it was by 22 per cent for both gas and electricity.

Powergen's price increases will add £122 to the average customer's annual gas bill and £92 to electricity bills, according to research from the online price-comparison service SimplySwitch.com.

"Customers, especially those on low incomes, will feel the pinch," says SimplySwitch's Karen Darby.

"However, there are still some extremely competitive capped-price deals on offer, so it's definitely worth checking to see if switching can help."

Energywatch, the consumer fuel watchdog, recently warned of "almost unbearable pressure" in the fight against "fuel poverty" - where at least 10 per cent of a household's income is eaten up by energy bills.

New bank branches: Halifax in current account chase

The Halifax will open 50 new branches in south-east England in an attempt to take a bigger slice of the current account market.

Its move runs counter to the trend for cheaper telephone and internet banking, and is based on its own research showing that a convenient branch location is "especially important" for current account customers.

Although the accounts aren't particularly profitable in themselves, they are seen as a way to cross-sell other, more lucrative products such as mortgages, personal loans and insurance.

To this end, each new Halifax branch will include mortgage and investment advisers who can sell complex, long-term savings products more easily in person than over the telephone or online.

The expansion, to cost £100m, will also include the relocation of an existing 50 branches to bigger premises in the same towns.

Although a comprehensive list of new bank locations has yet to be drawn up, it will include beefing up the presence in Norwich and two new branches in London's Square Mile.

The Halifax, which already has some 1,000 branches and estate agencies across the UK, is largely focused on the north of England and the Midlands.

New helpline: Impartial advice if you're deep in debt

A pilot telephone helpline offering free advice for consumers struggling with debt has been launched.

The free service, backed by the Government and consumer groups such as Citizens Advice, aims to prevent consumers from unnecessarily paying for advice from debt-management companies, which charge for helping to restructure debts.

"People struggling to pay off debt need access to clear, impartial advice," said Gerry Sutcliffe, the minister for consumer affairs. "Research has shown that many people do not know where to go when they need help."

The service will act as a beacon to attract attention before directing callers elsewhere - to a Citizens Advice bureau for face-to-face advice, say, or to the Consumer Credit Counselling Service for phone help.

Callers to the 0800 980 2800 number will be asked a few questions about their debts and income before being offered advice about where to go next.

Although using a national phone number, the pilot is taking place in Gloucestershire and Yorkshire. If successful, it will be rolled out across England and Wales.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
    Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

    Laughter, but no tears, as Letterman takes his bow after 33 years

    Veteran talkshow host steps down to plaudits from four presidents
    Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

    Hozier's 'blasphemous' song takes Novello award

    Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
    Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

    Join the tequila gold rush

    The spirit has gone from a cheap shot to a multi-billion pound product
    12 best statement wallpapers

    12 best statement wallpapers

    Make an impact and transform a room with a conversation-starting pattern
    Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

    Paul Scholes column

    Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?
    Season's finale brings the end of an era for top coaches and players across the continent

    The end of an era across the continent

    It's time to say farewell to Klopp, Clement, Casillas and Xavi this weekend as they move on to pastures new, reports Pete Jenson
    Bin Laden documents released: Papers reveal his obsession with attacking the US and how his failure to keep up with modern jihad led to Isis

    'Focus on killing American people'

    Released Bin Laden documents reveal obsession with attacking United States
    Life hacks: The innovations of volunteers and medical workers are helping Medécins Sans Frontières save people around the world

    Medécins Sans Frontières's life hacks

    The innovations of volunteers and medical workers around the world are helping the charity save people
    Ireland's same-sex marriage vote: As date looms, the Irish ask - how would God vote?

    Same-sex marriage

    As date looms, the Irish ask - how would God vote?
    The underworld is going freelance: Why The Godfather's Mafia model is no longer viable

    The Mafia is going freelance

    Why the underworld model depicted in The Godfather is no longer viable