This week: rogue debt managers; nuisance calls out of control; cash loses popularity; the companies we dread calling; Wonga tries to reinvent itself; pension scammers out in force; retirement shortfall warning
Three debt management firms have been making struggling customers pay 90 per cent of their monthly payments in fees. It meant only 10p in the pound of their repayment went towards clearing their debt.
The Financial Conduct Authority yesterday stopped the firms from doing any more business and warned clients of Sterling Financial Security, Haydon Associates and Clear View Finance that they may be left with a debt larger than they expect, even if they have been paying into a plan for some time. The City Watchdog is reviewing the authorisation of all firms providing debt adjusting or debt counselling.
Joanna Elson, chief executive of the Money Advice Trust, said: “It is shocking that nine in every ten pounds that people have handed over to these firms has been taken in fees rather than being used to pay down their debts. It isn’t right for people who have taken the brave step of tackling their debts to be treated this way. It shows the dangers of turning to profit-driven debt management companies if you are struggling financially.”
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Around a million of us have had a serious family argument after a loved-one has passed away with no will in place, reckons Macmillan Cancer Support. Of those that said that they’d had a family feud over a will, nearly a fifth said that it had gone on to break up the family.
Martin Lewis of MoneySaving-Expert said: “Not having a will can heap financial stress onto grief. If you have assets, it’s important to decide what you want to happen to them. If you don’t, your money and assets could be locked away with your loved ones unable to access them – causing all types of problems. Making a will doesn’t have to be expensive, but it does need to get done.”
Nuisance calls are getting out of control with 86 per cent people reporting receiving one in a four week period earlier this year, according to Ofcom research. Those who received nuisance calls got an average of ten in the four week period, but one ten in got more than 20 calls.
These types of calls and messages risk causing severe stress and anxiety for vulnerable people,” warned StepChange Debt Charity’s Head of Policy Peter Tutton.
“The current methods of dealing with these potentially harmful calls are clearly ineffective. We must now see more action from government and regulators. The Telephone Preference Service should be made an opt-out service for all households. But we also need the Financial Conduct Authority to impose a ban on the unsolicited real time promotion of high-cost credit products.”
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Cash is losing popularity, according to the Payments Council. Its figures show that the total number of cash payments made by consumers, businesses and financial firms in the UK fell to 48 per cent last year, from 52 per cent in 2013, the first time that ‘non-cash’ payments have topped those made with cash. However cash remains the most popular way to pay among consumers, who used it for more than half of all their transactions in 2014 suggesting that it’s not yet on its way out.
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BT, TalkTalk and Scottish Power are the companies we dread calling. A new customer satisfaction survey from Which? Has them ranked bottom. The broadband and energy sectors fared worst overall with consumers frustrated by long waiting times, poor staff knowledge and lengthy phone menus.
BT, TalkTalk and Scottish Power all scored an overall rating of just one star while Ovo Energy, NFU Mutual, Zen Internet and First Direct all scored five stars. “The worst offenders must raise their game by answering the phone quicker and improving staff training,” said Which? executive director, Richard Lloyd.
Britain’s biggest payday lender, Wonga, is trying to reinvent itself. It has ditched the annoying puppets and launched a new campaign featuring what it calls “hard-working people”. Its new ad, first broadcast at prime-time last night, features footage of ordinary people at work, including cafeteria workers, farmers and dental nurses.
The company is apologetic about its past. “It is clear that the puppets were inappropriate,” said Tara Kneafsey, the latest chief executive of the high-cost lender. It says it has even been considering ditching its Wonga brand but Chris Bibby, its marketing and brand director, said it would have been “wrong to whitewash it and pretend to be someone else”.
Wonga became synonymous with the worst excesses of the payday lending industry, with its annual percentage rate of 5,853 per cent and stories of vulnerable people being forced into unaffordable debt.
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The tax authorities are getting much tougher on those who deliberately try to avoid paying tax. More than 6,000 defaulters were referred to a special HMRC monitoring unit in tax year 2014/15, up 30 per cent on the previous year. The figures were published in response to a Freedom of Information request submitted by accountancy firm Baker Tilly.
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Credit-card users are turning their backs on banks and heading for retailers, according to uSwitch. Its survey of 7,000 customers found that John Lewis has become the favourite credit-card brand, closely followed by Tesco Bank, Sainsbury’s Bank and M&S Bank. Customers say that retailers offer better customer service, better value for money and are more trustworthy.
The top rated housing policy that would benefit young people came from the Liberal Democrats. The Halifax analysed proposals by the political parties to weigh up which ones would be of most benefit to those aged between 20 and 45.
Its Generation Rent report published today says the most important issue was increasing the housing supply. It concluded the top policy was a LibDem proposal to increase supply by giving greater powers to local authorities to tackle empty homes.
Craig McKinlay, of the Halifax, said: “All political parties acknowledged that more needs to be done to help first-time buyers. However, this now needs to translate into concrete plans during the next Parliament.”
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If you’re planning a half-term getaway, Asda Money is holding a currency sale from today until Friday. It’s promising “even better rates” on euros, dollars (American, Canadian and Australian) and Turkish lira. The deal runs until 8am on Friday at money.asda.com/travel-money/
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Fraudsters and crooks have been out in force trying to fleece people out of their cash in the wake of the new pension freedoms that came into force last month. The warning has come from a Which? report that shows that a third of older people who have not yet retired have been contacted about “potentially dodgy” pension products.
People should be wary of anyone who contacts them out of the blue offering help with pension planning. Look out for tell-tale phrases such as “one-off opportunities”, “free pension review” or “legal loopholes”.
Report a scam to Action Fraud on 0300 123 2040 or call the Pensions Advisory Service on 0845 601 2923.
Most of us are nowhere near the retirement we aspire to. Research published today by Aegon reveals that just 7 per cent of the UK population is on track.
People want to retire at 63 and hope to retire on £42,000 a year, despite the fact that it would require a savings pot of more than £1m, more than the new pension lifetime allowance.
David Beattie, managing director, Aegon UK Direct said: “It is deeply worrying that as a nation we’re still failing to prepare for our futures, despite the big changes made to pensions in recent years.
“There’s a huge disconnect between the amount people have saved and the retirement income they want in retirement.”
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Three-quarters of people reckon the cost of paying for lending fees is stopping them getting on or moving up the housing ladder. A survey for the Yorkshire building society found 75 per cent of people who want to buy were being put off by upfront fees.
So the mutual has today launched a range of fee-free house purchase mortgages offering £1,000 cashback and a free valuation to ease the problems, with interest rates starting from 2.19 per cent for a three-year fixed rate
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Pre-election jitters hit the property market and led to the average price dropping for the first time in five years at this time of year, according to RightMove. Now those fears are gone, prices should start climbing again, says Miles Shipside, Rightmove director and housing analyst.
“Election uncertainty and the threats of financial penalties to landlords and those with properties valued at over £2m put a brake on the market. Their removal gives a reason for a rebound in activity and prices.”Reuse content