Weekly Money

The personal finance stories you might have missed 1 to 5 June

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The Independent Online

This week: comparison site price-fixing probe; boom in cashback mortgages; Lloyds loses bonds buyback case; new BT charge warning; taxman target online sellers; new gold rush; car insurance fears

5 June

Two major price comparison sites are facing a price-fixing probe from the energy regulator Ofgem.  MoneySupermarket and uSwitch both admitted yesterday that they have been asked to provide information to Ofgem for its investigation into whether there has been information sharing on the commission rates charge to energy suppliers.

Laith Khalaf of Hargreaves Lansdown said: “Price comparison websites have been instrumental in helping consumers shop around for the best deal, but any investigation is likely to rock public trust in these services.”

Will Hodson of consumer collective The Big Deal, said: “Commissions are a cost that end up on our bills. If comparison sites have been colluding to fix commissions, that is a scandal.”

 

* * *

In the last year 50 people every hour have been put at risk of losing their home, Shelter warns. New figures published by the charity reveal that more than 8,300 people in England were put at risk of losing their home every week in the last 12 months.

Alison Mohammed of Shelter said: “These staggering figures show just how many people are fighting to keep their families in their homes, after dealing with the double blow of welfare cuts and a drastic shortage of affordable housing.”

 

* * *

Cock-ups and fraud in the tax credits system have been cut to their lowest level since 2003, when tax credit were first introduced, HM Revenue & Customs claimed yesterday. Official statistics estimate that error and fraud has dropped from £2.27bn in 2010-11 to £1.26bn in 2013-14.

Meanwhile taxpayers have been urged to renew their tax credits claim online as soon as possible, or risk having their payments stopped.

 

4 June

There’s been a huge boom in the number of mortgage deals offering cashback to borrowers, soaring to 948 now, more than twice as many as there were four years ago, reckons Moneyfacts.

Lenders hope the bribes will persuade people to take out their loans, but many could be costly mistakes. “The idea of free money may sound appealing but borrowers must consider these deals with caution as they are often accompanied by a slightly higher rate or fee,” warned Charlotte Nelson of Moneyfacts.

 

* * *

Energy firms will soon have to tell you if they offer a better tariff through another brand. Already they must say if they offer a cheaper deal, but Ofgem is forcing suppliers to admit if one of their white label brands has a better option.

From October British Gas, for instance, will have to let its customers know about the deals it offers under the Sainsbury’s Energy brand, while SSE will have to reveal M&S Energy and Ebico tariffs. “It’s important that consumers are given the complete picture about all their supplier’s tariffs,” said Ofgem’s Rachel Fletcher.

 

* * *

Nine out of 10 financial advisers are failing to show fees on their websites, despite a commission ban that forces them to admit how much they charge.

Without knowing fees, it’s difficult to shop around for affordable advice. But of 50 firms reviewed by Candid, only Brewin Dolphin, Hargreaves Lansdown, Investec Wealth & Investment, Sanderson House and Vestra Wealth list charges on their websites.

“When advisers fail to give any indication of potential costs on their websites it suggests their fees and probably high,” warned Justin Modray of Candid Financial Advice.

 

3 June

Thousands of small investors scored a High Court victory over Lloyds Banking Group today after a judge backed bondholders who had fought a controversial buyback attempt by the bank.

Lloyds – which is still 19 per cent owned by the taxpayer - is now facing having to pay an estimated extra £1bn in interest payments in the next few years after losing the case, although it said it plans to appeal the judge’s decision.

The case centred on £8bn-worth of enhanced capital note (ECN) bonds, which were originally known as permanent interest-bearing shares (Pibs) and had been issued by several mutual businesses that the bank snapped up over the years, including Halifax and Cheltenham & Gloucester. They had been mainly bought by pensioners, attracted by very generous annual yields of about 11 per cent.

 

* * *

Here’s a fresh BT charging warning: are you unnecessarily paying to rent a phone handset? The telecoms giant used to rent out home phones years ago but when prices of handsets came down, most simply bought their own and cancelled their rental agreement.

But not all did. Some posters on the Moneysavingexpert website have admitted they’ve unwittingly paid the fee for 20 years, leaving some up to £400 out of pocket. The problem is that if you haven’t cancelled your rental contract, it’ll have continued rolling over on a monthly or quarterly basis ever since.

Check your bills to see if there’s any charge listed under the heading “equipment rental”. If there is, you’ll have to contact BT to cancel. Is there any chance of a refund? It looks unlikely, but you can at least save wasting further money.

 

* * *

Your credit rating could soon be getting a boost because details about household bills are now being included, Experian has revealed.

Because banks use credit reports to decide whether to lend to you, evidence that you can meet monthly repayments – such as paying energy or mobile bills – will boost your chance of getting a loan or mortgage.

 

* * *

Co-operative stores are offering the chance to “Swipe and Win” a grand in their grocery shops until 9 June. Each week, some 20 prizes of £1,000-worth of Co-operative Group vouchers will be handed out, plus they promise hundreds of thousands of “instant win” coupons as well.

 

 

2 June

The Royal Mint hopes to kick-start a new gold rush by offering tiny fractions of the yellow metal from as little as £20. Its new Signature gold service launches today and will allow you to buy gold in “quantities to suit all budgets”.

However you won’t be sent your gold. Instead you’ll have to pay a fee – of 0.5 per cent plus VAT of the value of your holding. That’ll cover the cost of keeping the gold, no matter how small a fraction, in a high-security vault.

 

* * *

If you’ve been flogging stuff on eBay or Gumtree, the tax authorities may be getting in touch. It’s part of HM Revenue & Customs’ latest attempt crack down on tax evasion and they’ll be targeting those they think are trading, rather than just selling on some unwanted items.

“To be trading an individual needs to be found to fall within what is called the ‘badges of trade’,” explained Chas Roy-Chowdhury, head of tax at ACCA. “They would need to be selling goods on a reasonably frequent basis with the intention of realising a profit.”

 

* * *

Mortgage rates for first-time buyers are at their lowest level for three years while the number of loans has doubled, says Moneysupermarket. It says there are now 2,776 first-time mortgage products available, due to the government’s Help to Buy scheme,

 

* * *

If you modify your car it could invalidate your insurance. The rule could even apply to stickers, as a Welsh vicar discovered when her insurer threatened to turn down her claim after it spotted she had covered her vehicle with religious messages. “Insurers have different views on what constitutes a modification so tell them of any changes you make,” advised Matt Oliver of Gocompare.

 

***

Eight fraudsters have been convicted for a dodgy land investment scheme in which 110 people lost £4.3m. Using high-pressure sales techniques they persuaded their victims to buy land at a vastly inflated price, on the false promise of a substantial profit.

They were convicted of various offences including conspiracy to defraud, possessing criminal property, and providing false and misleading information to the City regulator. Judge Leonard described the scheme as a “very substantial and deliberate fraud on the public.”

Scott Crawley was jailed for eight years while Dale Walker, Daniel Forsyth, Brendan Daley, Aaron Petrou, Ross Peters, Adam Hawkins, and Ricky Mitchie had lesser sentences.

 

 

1 June

 

Most workers are oblivious of the recently-introduced pension freedoms or don’t understand them, reckons Towers Watson. Its survey of 5,000 people, published today, revealed 62 per cent are in the dark about the changes.

Also worrying is the fact that, despite the major reforms, only 38 per cent of people have had a conversation about pension in the past year.

Confirming he retirement savings shortfall that pension experts have warned about, the research shows that, on average, employees are saving £1,640 less of their yearly wages than they think they should.

 

***

If you have a credit card with the Halifax you may have been sent a letter recently headed: “A new way to work out your credit card interest rate.” If you simply filed it away, that could prove an expensive mistake.

Why? Because the bank – part of the giant Lloyds group – has linked its charge to the Bank of England base rate. That means when the base rate rises – as it surely will after six years at the same 0.5 per cent level – the cost of credit to you will also rise, quite possibly without you realising, although the bank assures me it will write to people when that happens.

This way of forcing interest rate rises on customers was actually introduced in 2011, although borrowers are yet to be penalised as the base rate is yet to rise. My advice? Find another credit card with clearer and consistent charges. My thanks to Sara Williams of DebtCamel.co.uk for highlighting the move. Do let me know if you discover any similar tricks.

 

***

A woman living in Wirral who bought a Premium Bond back in 2007 has won one of this month’s £1million jackpots. The other winner is a woman living overseas who bought her winning Bond in 2010.

The Wirral winner actually holds £30,000-worth of Premium Bonds while the other has £20,975 invested in the Government-backed prize draw. The amount you can save in Premium Bonds climbed to £50,000 today.

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