How to save yourself a fortune with a few key questions

Consumers can avoid unexpectedly large bills by doing a bit of homework. Kate Hughes explains exactly what you should ask.

Lawyers who hoodwink unsuspecting clients over their bills have been told to come clean, after the Legal Ombudsman this week reported that cost is the single most common cause of complaints about the profession. Up to 25 per cent of all its investigations involve costs – either when a consumer felt they had been overcharged or were confused or surprised by unexpectedly hefty bills.

In a bid to curb the trend, the ombudsman has published a guide for consumers taking on legal advice, focusing on the right questions to ask to help reduce the chances of any nasty surprises when the final bill comes in. They include: "Will I be charged for a consultation?", "How do you cost your services?", and "What is a fixed fee, and what does it cover?"

The guide is available at www.legalombudsman.org.uk.

But consumers face a barrage of complex and confusing billing information from all sorts of services, so exactly what questions should you ask to save you from a huge charge you didn't expect?

Lettings agents and tenancy agreements

The sky-high cost of renting a home is much discussed right now, but the mind-boggling number of fees that lettings agents are seemingly able to invent as they see fit can also leave tenants with bills they simply didn't anticipate and can't afford.

Often having already stung the landlord for finders' fees and commission, some property agents will turn their attention to charging tenants checking in fees, checking out fees, inventory fees, insurance fees and all sorts of others on top of the run-of-the-mill "admin" and credit check costs.

Think tank the Resolution Foundation has called for lettings agents to be regulated in the same way as estate agents, after its research recently found upfront costs of £2,000 or more, administrative fees varying from £95 to £375 and a lack of transparency around charges. Just two of the 25 letting agents it researched displayed the costs of renting on their websites and many people only discovered charges after they had decided to rent a property, it warned.

Prospective tenants should ask what costs are covered by the landlord and tenant, and demand a written breakdown of the costs associated with the entire agreement process, specifically all fees involved in securing the tenancy, including moving in, and the process and costs associated with moving out.

Accounting

The Institute of Chartered Accountants in England and Wales (ICAEW) recommends researching between three and sixfirms before making up your mind.

Although fees can vary depending on your location, time is usually billed by the hour. Confirm what the charge is, whether there is a free consultation andif they invoice quarterlyor annually.

"It is worth asking for an assured fixed fee for the first year, as many accountancy firms will do this," says Clive Lewis, Head of Enterprise for the ICAEW. "Ask about ways to pay as lots ofaccountants prefer clients to pay by standing order." If so, a discount is fairlycommonplace.

You should review your accountants' charges every three years, but it's your own records that will make the most difference to the amount you'll pay, Mr Lewis adds, as the better they are the less time you'll spent unravelling them. Likewise, the more straightforward your requirement, the cheaper the final bill will be. More information is available at www.icaew.com

Building services

"No matter what the project size, it is critical that homeowners make as many checks as possible," says Mark Dendy of property consultant Cluttons.

"Often good builders come via word-of-mouth, but if this isn't the case, make sure you see references and evidence of trade insurance. Check for membership of a trade organisation such as the Federation of Master Builders."

Key questions should include: How long have you been trading? What specific experience of this type of work do you have? Can you provide a detailed quote in writing breaking down labour and material costs? Do you offer insurance-backed guarantees? When can you start work, do you foresee any delays? Are you registered for VAT, and if so, what is your VAT number? How do you expect me to pay?

The Government's Trustmark scheme has beendeveloped to help consumers avoid cowboy traders and the Building Costs Information Service ( www.bcis.co.uk) offers information on what various building jobs should cost.

The final quote should include a detailed list of all the work involved, the date it is due to be completed, hours of working, and security considerations among others, but a written contract is far better, and standard paperwork can be downloaded from www.fmb.org.uk.

Financial Advice

Right now, financial advisers either charge customers directly for the advice they offer, or they receive commission from the product provider.

From 2013, new regulations means advisers can no longer be paid by commission, and a clear pricing structure must be made known to the client from the very beginning and agreed with them before any chargeable services are provided.

This could be based on the time spent, the taskitself or an agreed retainer, so again it's important to agree what this fee will be based on and what exactly it covers, says Karen Barrett, chief executive of the professional advice website unbiased.co.uk.

"Talking to a few different advisers can really help you understand what options there are available and the costs for differing levels of advice, and firms must have a 'menu' detailing their charges and services," she adds.

"The fees and the structure for payment will vary, but charges should always be fair. The initial meeting can often be at the expense of the adviser, but check this before committing to it."

In addition to the suitability of products, the qualifications the adviser holds, and how they will operate under the new rules, ask how much the advice will cost, how the fees are charged and what you will get for that cost, what ongoing services will be provided, how the fees should be paid and when during the process you'll be charged.

Meanwhile, Which? also suggests enquiring about any ongoing costs and whether different fee options, such as paying a fixed or hourly fee is possible, with the pros and cons of each.

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