News: Pension regulator can't keep up with cases

Ombudsman laments lack of resources; consultation on insurance costs; Sainsbury's Bank drops loyalty points; warnings over profits on web sales
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The Independent Online

David Laverick, the Pensions Ombudsman, admitted he was "particularly embarrassed" by the scarcity of resources and blamed the Department for Work and Pensions (DWP) for failing to help.

In his annual report for the 12 months to the end of March, Mr Laverick expressed his discomfort at having to lambast tardy pension providers in their disputes with customers when his own department was behind with its administration. Despite repeated requests for financial help and resources - more desk space, better computers and more staff - there had "not been any progress".

The Pensions Ombudsman deals with complaints made by workers about their pensions and the companies that run them.

This year's report highlighted a record 3,930 complaints, with most focusing on the cost of pension transfers (12.5 per cent), the benefit calculations made by companies (12 per cent) and mis-selling concerns (11 per cent).

Although the Ombudsman managed to adjudicate in 20 per cent more cases than the previous 12 months, a backlog of 1,700 still blocks the in-tray.

The DWP said it was assessing whether it could find Mr Laverick some extra help.

Critical-illness review

The level of cover provided by critical illness policies could drop in the wake of proposals to change the way in which the insurance is sold.

A review of the cover, which pays out a fixed sum on diagnosis of a serious medical condition such as a heart attack or cancer, will be three-pronged, said the Association of British Insurers (ABI).

It will explore the need for insurers to tighten definitions of individual illnesses for payout pur- poses; the possibility of "two-tier" cancer cover, where a cheaper option would be offered, paying out only where the cancer was restricted to a specific part of the body; and better consumer understanding of exactly what is being purchased.

The consultation will invite views from consumer groups, the Financial Services Authority, the Financial Ombudsman, financial advisers and ABI members.

"These proposals will help ensure that this type of cover continues to be available at an affordable price," said Nick Kirwan, chairman of the ABI's critical illness working party.

The cover is changing in the wake of medical advances that have led to illnesses being discovered earlier, prompting swifter claims by policyholders. Because they are paying greater sums than anticipated, insurers have been pushed into raising critical- illness premiums.

The consultation hopes to find a consensus on the best way to keep costs down while offering consumers as much choice as possible. But the cancer proposal is likely to provoke controversy, and could be difficult to implement. Macmillan Cancer Relief called it a "backward step".

In the neck for Nectar

Sainsbury's Bank has dealt a blow to the Nectar loyalty points scheme by freezing it out of its new credit card offer.

The supermarket bank's new card has abandoned the Nectar points earned on purchases, as well as dropping the 0.25 per cent cashback offer also available from purchases (see Best Buys on page 22). Instead, new customers will be offered discount vouchers that can only be spent in store.

Sainsbury's Bank has followed Barclaycard, a founder member of Nectar, and Vodafone in turning its back on the reward points network. The supermarket itself remains a Nectar member.

"Sainsbury's Bank has become the latest in a long line of credit card providers to no longer offer either loyalty points or a cashback scheme on a new card," said Samantha Owens, head of research at financial analyst Moneyfacts.

"It is now becoming difficult for customers to find a card that offers them the kind of benefits that were common a year ago."

The cost to providers of 0 per cent card deals and bad debt write-offs is to blame, she added.

A Nectar spokeswoman said the Sainsbury's loss was not a disappointment as American Express was now the official card for the scheme.

Taxman eyes auctions

Users of internet auction sites who regularly sell goods for a profit could end up on the taxman's radar.

The Inland Revenue has warned that "the same tax rules apply to internet trading as to any other" and stressed that anybody making liable gains has an obligation to declare them.

You can make £8,500 worth of capital gains each year, free of any tax. But any income over this must be declared.

The Revenue's reminder follows feverish trading of tickets for this summer's Ashes cricket series. Last week, tickets were selling on eBay for nearly £800.

Consultants from the Centre for Economics and Business Research have suggested that the average UK household could increase its wealth by as much as £3,000 by selling unwanted goods online.

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