This week: fuel poverty; mortgage affordability woes; identity theft rising; pre-pay meter probe; new PPI scandal; Premium Bond rise; social water tariffs
The scandal of fuel poverty won’t go away. The latest official figures published yesterday revealed that one in 10 are now struggling to afford energy bills. Data from the Department of Energy and Climate Change showed that some 2.35 million homes were in fuel poverty, a fall of just 0.5 per cent on the previous year.
Jenny Saunders of National Energy Action warned: “The cost and suffering caused by fuel poverty is likely to increase in the future without more adequate responses.”
Caroline Adams of the charity Age UK said: “The problem is growing because, while energy prices have risen by around 150 per cent over the last decade, successive governments have failed to take effective action to improve energy efficiency in British homes.”
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Confused about your personal finances? That’s a behavioural problem that hits us all, according to a new study. Think tank the RSA warns that the buzz of excitement from impulse spending is just one behavioural hurdle that undermines financial planning and savings. Another one is the temptation to try and “keep up with the Joneses”.
Paul Dolan, professor at the London School of Economics said: “Being good with money does not come naturally to some people.”
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The amount you can stash away in Premium Bonds is climbing 25 per cent from Monday. It will rise from the current £40,000 limit to £50,000 on 1 June. It’s a timely reminder of the government-backed savings scheme which hands over two £1m jackpots each month to lucky winners.
More than £60m is paid out to 2 million prizewinners each month although the odds of winning any prize are 26,000 to 1.
Almost half of those who planned to buy a property since the introduction of the Government’s new affordability rules last year have failed to do so, reckons Experian.
The main problem seems to be that people aren’t preparing properly for the tougher questions that lenders ask them, leading to many being rejected. Guy Shone from ExplaintheMarket said: “More needs to be done to encourage personal financial planning so that all buyers fully understand the rules of the game – and stand the best chance of securing a property they can afford.”
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Identity theft is rising with 34,151 victims recorded in the first three months of the year, a climb of almost a third, according to fraud prevention service Cifas.
Four-fifths of identity fraud was attempted online with credit cards involved in 14,103 confirmed cases, and bank accounts in 9,349 cases. Detective Chief Superintendent Dave Clark, from City of London Police, said: “Identity fraud is at the heart of much of today’s criminality, acting as a key facilitator for a host of other types of offences. To stop this happening we must all take responsibility for protecting our personal information.”
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The average worker will have earned their first £1m by the time they reach 56 and a half, says Prudential. However, it takes much longer for a woman to reach the landmark earnings figure than a man.
A typical male worker will earn a million by the time they reach 50 and 8 months. But a woman earning an average wage will have to wait until she’s 69 and 7 months old. However, in a positive sign that the unfair gender wage imbalance is beginning to shrink, that landmark age is 9 months younger than it was a year ago.
Is the age of austerity over? Not for the one in 10 workers forced to skip meals to stretch their pay packet until the end of the month. That’s according to a survey from the Post Office which revealed quarter of hard-pressed people are ransacking savings while and putting essentials on credit cards to survive until payday.
Food spending takes the biggest hit as money runs out: two-fifths survive by snapping up reduced goods at the supermarket, while another two-fifths save money by taking lunch to work. John Willcock of Post Office Money said: “A number of people rely on savings, credit cards and overdrafts, highlighting the financial juggling act many of us face.”
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Ofgem is to investigate forced pre-payment meters after new figures suggested more than half a million were installed in the last six years. Energy firms can get a court order to install a pre-pay meter when customers run up debts.
But Citizens Advice reckons pre-pay customers get a “raw deal”, paying £80 a year more on average than direct debit customers. Fuel Poverty Action’s Clare Welton added: “The scale of forced prepayment meter installations is shocking and an appalling indicator of the level of power that the Big Six have over millions of people’s lives.
“We’ve known about the outrage of Big Six home break-ins for years so why has it taken Ofgem so long to investigate this scandal? Households are in fuel bill debt because bills are too high, homes are too drafty and wages and benefits are too low.”
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Britain’s high street banks could be facing a much bigger bill for misselling payment protection insurance than they have planned for. Already the estimated bill to compensate victims of the nation’s biggest-ever financial scandal are close to £25bn, but that figure could soon start to escalate after the City Watchdog warned it was considering new rules on how and why customers should be compensated.
The Financial Conduct Authority admitted it could be forced to introduce the new rules following a landmark court ruling. It could open the door to a landslide of fresh claims for compensation, not only for those why may have had claims turned down in the past but even for those who have already been paid out for being flogged the often useless and expensive insurance.
The latest wrinkle to the scandal centres on alarmingly high commission payments to lenders and advisers. It was revealed in court proceedings that intermediaries were charging almost three-quarters of the cost of cover as their commission. But with many of the commissions hidden from victims, they have not previously formed part of compensation claims or payouts.
Britain’s first personal finance app for the Apple Watch is launched today. The True Potential Investor app allows users of the new gadget to invest and save from their device and is aimed at non-experts. It includes an impulseSave feature which is designed to turn spenders into savers by allowing them to add as little as £1 to savings or pensions by tapping a button on the screen. The app will also be available on other types of devices such as smartphones.
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Today’s the day when we start spending on fun activities. In fact we can afford to start having fun at 9.46am today according to a new study. The research by Living Social found it takes 146 days to pay off rent, bills and other essential expenses before spending on fun activities can begin. When looking at income projected over the course of the calendar year, it means it’s not until 26 May that the good times can start.
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Retirement Advantage is a new company launched today to target older people. It’s been created by a merger between retirement specialist MGM Advantage and equity release firm Stonehaven.
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Borrowers can now get a five-year fixed rate mortgage at two-year prices, reckons Moneyfacts. The rates analysts point out that the cost of the average five-year fixed rate mortgage has shrunk over the past year with many lenders launching their lowest-ever rates. “With the average five-year fixed rate mortgage priced at 3.45 per cent today, it is considerably lower than the average 3.73 per cent two-year fixed rate a year ago,” said the firm’s Charlotte Nelson. “Borrowers coming to the end of their fixed deal or those who are currently sitting on their SVR should consider opting for a new fixed rate now, as rates will inevitably go up at some point in the future. Longer-term fixed rates provide borrowers with extra security, and to be able to secure a five-year fixed deal at two-year prices is unheard of.”
Thousands of British pensioners are facing financial ruin just four weeks into the introduction of new pension freedoms that gave them access to their retirement pots, as wealth manager has warned. Greyfriars Asset Management said people are suffering because of hasty decisions and poor advice. It warns of life savings being swindled or individuals now facing the prospect of huge tax bills because they acted without fully understanding the implications of their actions. Gareth Roberts, head of advice at the firm, said: “Our worst fears appear to be coming true. We are just four weeks into pensions freedoms and already we have been privy to horror stories of life savings being lost in the blink of an eye.” Last week Which? warned that fraudsters and crooks have been out in force trying to fleece people out of their cash in the wake of the new freedoms.
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Nine water companies have recently launched social tariffs to help reduce the cost of bills for low-income customers. There are now 15 firms that do so, including Anglian, Northumbrian, Severn Trent and United Utilities. To find out if you qualify for help get in touch with your water company or go to the water watchdog’s website at ccwater.org.uk
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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 Moneysavingexpert 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.”