Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Weekly Money

Round-up of the personal finance stories you may have missed 20 to 24 April

Simon Read
Friday 24 April 2015 07:44 BST
Comments
Half of parents worry that children will never be able to get on the property ladder without inheritance money, says Shelter.
Half of parents worry that children will never be able to get on the property ladder without inheritance money, says Shelter.

Pension protection warning; new low energy tariff; tax return fines ahead: fraudsters target teenagers; More switch bank accounts, but not enough; car insurance to climb; the stories we noticed this week

24 April

There should be more protection for those taking advantage of the new pension freedoms, a financial capability charity has demanded. The Money Charity points out that if a firm collapses while a consumer is building up their retirement pot, they’ll receive 90 per cent of the fund value under the Financial Services Compensation Scheme.

But, depending on what they do with their cash, they may not benefit from the same financial safety net. While anyone buying an annuity is covered for their entire policy, if they put a lump sum in a savings account, only £85,000 per bank is protected. If they invest in a SIPP or drawdown, there’s even less protection at just £50,000 per banking licence holder.

Michelle Highman, the charity’s chief, said: “The patchwork of protection we currently have is not fit for purpose. With income drawdown now available to a far greater number of people, and pot sizes likely to increase in coming years, a £50,000 protection limit is particularly inadequate. A consumer with £100,000 invested in a drawdown product with a provider that shuts down would lose half of their pension, with dire consequences for them and a larger burden placed on the state.”

* * *

We were £16 better off in March than during the same time last year – an increase of 9.7 per cent, according to Asda. Families now have £185 a week to spend on the things they want rather than the items they need.

* * *

uSwitch has today launched the cheapest dual fuel energy deal in more than four years. At just £876 a year, average customers could save £419 on bills, the website reckons. The new tariff – won by E.on through a collective switch initiative – is available until 27 May.

23 April

More than a million people have switched current accounts in the past year. Figures published today by the Payments Council show that between April 2014 and March 2015 there were 1.14 million switches, up from 1.06 million switches in the previous 12 months.

Does that 7% rise in the number if switchers mean that people are getting wise to the fact that it not only pays to switch to a better bank account, but it’s also much easier than it used to be with guaranteed seven-day switching offered? Experts disagree about what can be read into the figures.

David Mann, head of money at uSwitch, said: “Two things were key in making the seven day switch work – boosting confidence in the switching service and ensuring the market was competitive enough to make switching worth it. These figures show that confidence is up.

“But in recent months we’ve also seen the market heat up. As well as switching incentives of up to £150, current accounts are becoming increasingly attractive thanks to high interest rates and monthly cash rewards.”

But Andrew Hagger of MoneyComms pointed out that most people are still choosing to remain with their existing bank. “The figures show that although more people are voting with their feet and looking for a more suitable banking relationship, the vast majority are refusing to budge from their existing provider despite the array of enticing upfront cash incentives on offer.”

22 April

Anyone who missed the January tax returns deadline has until next Thursday 30 April to get their last year’s forms in or be hit with additional fines. Some 890,000 people missed the cut-off and faced an instant £100 fine.

“Late tax returns have already earned HMRC £89m so far this year,” said Anita Monteith, ICAEW tax manager. “Any latecomers after 30 April could face additional fines of £10 a day. Although £10 doesn’t seem like much, it quickly adds up. The additional fines could reach £900, leaving people with a total bill of £1,000 by the end of July.

“What’s more, anyone who hasn’t complied by then could face an additional penalty – 5 per cent of the tax due or £300, whichever is greater.”

* * *

Two out of five teenagers aged 18 and under have already been targeted by fraudsters trying to obtain their bank or PIN details, with those aged 17-18 the most vulnerable, warned ifs University College.

The financial education charity is urging schools to teach students about the dangers of financial crime. Vice principal Alison Pask said: “Being alert to scams and recognising that criminals rely on consumer ignorance is key to tackling the long-term effects of financial crime.”

* * *

Sign up for a new Co-operative insurance policy to get £50 worth of Co-operative Food vouchers. Until 18 May all new UK customers who buy car or home insurance will be offered the vouchers.

21 April

The mild winter has been good news: it’s led to cuts in the cost of home insurance. The latest British Insurance Premium Index from the AA shows that the average quote for a buildings and contents policy fell by 3.6 per cent in the first three months of the year leaving the average annual policy at £158.66.

“Home premiums are most likely to be affected by extremes of weather and the recent winter has on the whole, been notable for its lack of heavy rain, snow, winds and extreme temperatures,” said Janet Connor, managing director of AA Insurance.

Motor insurance has also got cheaper - falling 1 per cent to an average £530.47 - but there could be price rises ahead, reckons the AA. That’s because the first quarter often sees insurers offering price reductions to build market share at a time when more policies are sold.

* * *

Half of parents worry that children will never be able to get on the property ladder without inheritance money, says Shelter. The charity could be right. It’s research shows that out of those 25-34 year olds who’ve been able to buy, one in six of relied on an inheritance while nearly a third were given money for a deposit.

Campbell Robb, Shelter’s chief, said: “Rather than pumping money into schemes like Help to Buy, which push prices up, politicians should commit to building affordable homes.”

* * *

Nottingham building society’s eSaver Plus Issue 7 pays 1.45 per cent. “It’s the highest paying easy access account on our best buy table since December,” said Anna Bowes of SavingsChampion. But it includes a 0.95 per cent introductory bonus, which will be lost if the balance drops below £5,000.

20 April

EE customers could have got a free portable smartphone charger called a “power bar” by texting to get a code and showing it in store, but the company didn’t anticipate demand leaving the majority of customers disappointed.

The lucky ones were handed a free EE power bar which can be swapped for a fully-charged replacement bar at any EE store – for free and as many times as they like.

All EE, Orange and T-Mobile customers with a 30-day, 12-month, 18-month or 24-month mobile, tablet or broadband plan were offered the power bar for free.

But the company admitted that it would not be able to offer the bar to the bulk of its customers until June.

***

HSBC has launched the first five-year fixed rate mortgage at under 2 per cent. Borrowers up to 60 per cent loan-to-value can get a rate of 1.99 per cent for five years. But the deal comes with a whopping £1,499 fee.

Charlotte Nelson of Moneyfacts said: “This 1.99 per cent deal is the first five-year fixed rate mortgage to be launched below 2 per cent and is the lowest on record that we have seen. This deal is likely to be a popular choice for any borrower with the required 40 per cent deposit.” However, mortgage experts warned that the low rate was just an expensive gimmick.

***

Despite last month’s budget stating UK debt would begin to fall next year, 13 million households believe their situation is going to worsen before it gets better, according to research by Moneysupermarket.

The price comparison site found that of the 33 million adults with existing unsecured borrowing such as credit cards, overdrafts or loans, 13 million will have to take on even more debt to cope this year.

Those aged 18 to 34-year-olds are particularly vulnerable, with almost three-fifths expecting to use credit to cover their costs this year.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in