Money News: Credit for the 'financially excluded'

'Shocking' interest rates will gift £37m to doorstep lenders

Doorstep lenders will rake in up to £37m in exorbitant interest payments from some of the UK's poorest families over Christmas, a government-backed body will reveal tomorrow.

Families and individuals who don't have access to cheap high-street credit cards or loans may end up borrowing instead from doorstep lenders at annual percentage rates (APRs) that can reach up to 600 per cent, according to a prediction from the Housing Corporation, which regulates all of England's housing associations.

The estimate is based on some 570,000 "financially excluded" families, with one child, having to repay an average of £137 spent on Christmas presents over 23 weeks at an APR of 497. This is a typical rate levied by the home-credit firms, which target people excluded from high-street credit.

The Housing Corporation recently launched the Money Access programme to persuade housing associations and other social landlords, such as local councils, to help poor residents gain access to affordable credit and other financial services.

Instead of relying on doorstep lenders, residents will be encouraged to open basic bank accounts or go to credit unions, which offer free advice and cheap loans.

"Every parent is under the same pressure to make Christmas special for their children, but if they borrow from doorstep lenders, they risk the roof over their heads in return for a day's happiness," said Jon Rouse, chief executive of the Housing Corporation.

"Social landlords can make a difference by offering a real alternative to doorstep loans at shocking interest rates."

ATM charges: Clarity at the cash machine

Plans to introduce colour-coding at cashpoints to indicate whether or not a fee is charged have been rejected by members of the Link network.

The majority of high-street banks and independent ATM operators argued that red signs for a fee and green for free withdrawals were not "a suitable solution for all", but pledged to look at other ways to create a standardised indicator.

Proposals for red and green stickers had been put forward by the Halifax bank and Nationwide building society. However, a number of members objected to the cost, as well as a potential clash between the red and green signs and their own insignia. Enough was already being done - with signs near to or around the ATMs - to alert users to any charge, Link's governing council said.

Lack of transparency in ATM charges, which usually range from £1.50 to £2, became an issue early this year when the Treasury Select Committee lambasted independent operators for failing to give enough warning.

MPs and consumer groups have been alarmed at the spread of fee-charging ATMs, particularly those in run-down and poor areas where residents don't have the option of free machines.

Since July, a new industry code has demanded that the idling screen clearly inform users that a fee is about to be levied.

Recent checks by Link showed nearly all charging ATMs (98.4 per cent) were abiding by the rules.

Changing providers: Surge in switching, from gas to phones

The number of people choosing to switch their bank, utility, telecoms or insurance provider has risen by more than half since 2000.

Customers are increasingly responding to poor service from companies in six areas of personal finance - gas, electricity, mortgages, current accounts, fixed-line phones and house insurance - by looking for better deals elsewhere, according to the National Consumer Council (NCC).

The biggest rise in switching is in mortgages (up by 158 per cent), the smallest in bank accounts (just 7 per cent), research for the NCC's Active Consumer Index revealed.

"Our findings are a strong warning to those companies that ignore their customers: they'll wave goodbye to them," said NCC chief executive Ed Mayo.

Despite being encouraged by the number of people now prepared to switch, the NCC has also discovered that the most vulnerable - the elderly and those on low incomes - are the least likely to change providers.

"There are still problems. With home insurance, for example, the richest and youngest are twice as likely to switch as the poorest and oldest," added Mr Mayo.

The NCC is now to call on the regulator in each market to take responsibility for promoting the benefits of switching.

Injury claims: A fast-track fight for compensation

The time taken to settle personal injury claims could fall from an average of three years to six months if new proposals are adopted, the Association of British Insurers (ABI) has claimed.

A new compensation process for all claims under £25,000 would get rid of the need for today's lengthy and expensive court proceedings, the trade body said last week. It would involve a simplified claim form with no need for legal advice, and insurers would have to respond within three months.

"Too many people are waiting far too long to get a fair payout," said Stephen Haddrill, the ABI's director-general.

The Government's Compensation Bill hopes to change the "ambulance-chasing" culture under which firms persuade people to pursue claims that are often a waste of time.