Some 16,000 struggling people have had their efforts to repay their debts thrown into confusion after a Cheshire debt manager was closed down by the City Watchdog.
Customers of fee-charging debt adviser PDHL have been advised to seek free impartial advice to sort out their wrecked repayment plans
The Financial Conduct Authority withdrew the firm’s licence after discovering it had been giving customers unsuitable repayment plans. “Poor debt advice can lead to consumers trying to make payments they cannot afford, which is particularly serious for those in vulnerable circumstances,” said the watchdog’s Jonathan Davidson.
Mike O’Connor of the debt charity StepChange, said: “Free independent advice is in place to ensure that people affected by firms exiting the market have somewhere to turn for help. We are ready to provide a safe harbour.”
Call the Money Advice Service on 0300 330 2222 for details of free debt advisers.
* * *
Two thirds of us are concerned about our financial future with the average person spending two hours a day worrying about money, warns Beagle Street. Its research shows that less than half of us have life insurance, with many mistakenly thinking it’s too expensive.
* * *
Gas and electricity prices are to be temporarily capped for the UK’s four million poorest households on pre-payment meters.
Meanwhile a new database of customers who haven’t switched in three years will be made available to rival suppliers and comparison sites to encourage them to contact consumers paying over the odds for their energy.
The plans have been announced this morning by the Competition and Markets Authority after a two year investigation into the energy market.
But Doug Stewart, chief executive of independent supplier Green Energy is concerned about the growing problem of nuisance calls. “Bombarding potential customers with phone calls or direct mail will almost certainly switch them off the idea of changing energy company,” he warned.
One in six of us is living with problem debt, reckons the Money Advice Service. It warns that younger adults, larger families and single parents are particularly at risk. Young adults are worse off with one in four 25 to 34-year-olds, living with debt problems.
If you have a child, you’re 50 per cent more likely to end up in debt problems, while if you rent instead of owning a property you are twice as likely to be over-indebted.
Households in Sandwell in the West Midlands and parts of the South Wales Valleys are the most likely to be over-burdened, with debt according to the research.
* * *
Consumer debt judgments reached a post-crisis peak last year, according to Registry Trust. A judgment is proof of unmanaged debt.
There were 734,205 County Court Judgements against consumers in England and Wales during 2015, four per cent higher than 2014 and the highest for any year since 2008.
* * *
HM Revenue and Customs has shut down a tax avoidance scheme used by banking giants UBS and Deutsche Bank to avoid around £135m in tax.
Under the dodgy scheme bankers were given their bonuses in shares in specially created companies, to avoid PAYE and National Insurance Contributions.
After the Supreme Court outlawed the schemes HMRC will now chase 27 other companies using them to avoid £30m in tax. Financial Secretary to the Treasury, David Gauke said: “We expect banks and their employees to pay their fair share of tax.”
* * *
More than 400,000 people switched energy supplier last month, a rise of 55 per cent over the previous month, according to Energy UK.
Despite being designed for short-term convenient borrowing, credit cards have become dangerous long term debts for millions of people, a debt charity warns today.
StepChange wants regulators to step in and clean up the credit card industry. The charity says more than 200,000 people contacted it for help with £1.7bn of credit card debt in the last year, with the average person owing nearly £8,500. In the last five years it has helped people struggling with £8.6bn on credit cards.
It says the Financial Conduct Authority should consider forcing lenders to increase minimum monthly payments from 1 per cent of the debt to 2 per cent. Payments could also be fixed to help people pay off their debt more quickly.
“Minimum repayments are too low and must be set at a level that ensures both responsible lending and borrowing,” said Mike O’Connor, chief executive of StepChange. “The FCA must commit to direct action that will prevent credit cards from becoming long term debts.”
* * *
Cash Isa rates currently being offered are among the worst on record, reckons Moneyfacts. Five years ago, the top easy access Isa rate was 3.15 per cent. Six months ago, it was 1.51 per cent, but now it is the 1.41 per cent offered by Virgin Money’s E-Isa.
Meanwhile someone locking into a five-year fixed Isa five years ago could have got a rate of 4.3 per cent. But if they are want a similar deal now, the top rate currently is 2.6 per cent, from the State Bank of India, which requires a minimum £15,000.
Been offered a free trial of slimming pills or super-looking discount on beauty treatments? It’s likely to be a way to trick you into unknowingly agreeing to a series of payments to be taken from your debit or credit card.
Known as continuous payment authorities they’re used for buying products online such as e-book subscriptions or video streaming.
But more than 2 million people have had difficulty cancelling the subscriptions, warns Citizens Advice.
Details of the ongoing payments can be hidden within terms and conditions. Sellers often sneakily get hold of card details by asking people to pay for postage or packaging.
Four in five of those who had a problem didn’t realise they had signed up to the payments until money was taken from their accounts. A typical payment was around £80 but some lost hundreds of pounds because they didn’t cancel quickly. People should be told the exact amount they will have to pay when they are signing up to recurring payments, said the charity.
* * *
Consumer group Which? has today joined the campaign for the Government to set up a “pensions dashboard” system, to allow savers to see all their retirement and savings pots information in one place.
The Financial Conduct Authority has said it will work with the Government to develop a pensions dashboard. But Which? says the Government should make a public commitment to its creation and a timeline for it to be introduced in the Budget on 16 March “to help people secure a better retirement income”.
The financial services industry supported the call. “Consumers need clear information available in easily manageable chunks that they can access when and how they choose,” said Laurence Baxter of the Chartered Insurance Institute.
* * *
A long-awaited report into the retail banking industry has been delayed by the Competition and Markets Authority to give it more time to decide what measures it might take.
The three-month delay will push the investigation into its fourth year with a final deadline now set for August. Details of the watchdog’s planned remedies, which had been due last month, will not now be published until May.
The delay angered the consumer group Which?. “This inquiry is now looking like a lost opportunity to deliver better banking for consumers,” warned Which? executive director, Richard Lloyd.
However, the regulator published a number of new possible recommendations. In the current account market, it had been focusing particularly on unauthorised overdrafts. Yesterday it suggested banks could do more to warn people that they are about to go overdrawn.
Problem debt is getting worse for women. A worrying repot out today reveals that 69 per cent of women rely on credit to pay for their day-to-day life while a quarter borrow to pay for essential living costs such as rent, food or heating.
The dangerous scale of the debt is revealed by the fact that one in 10 women who use debt owe more than £10,000, leaving them vulnerable to a cycle of debt, and mental and physical health problems.
Four out of five women with debt say it has had a negative impact on their lives. Two-thirds said their physical and mental health has suffered while debt worries have impacted their relationship with family and friends or has stopped them from getting a job because of a poor credit history.
“The stress caused by spiralling debt is affecting every aspect of women’s lives,” warns the report from Debt Advisory Centre.
A new body which hopes to break the "devastating" link between mental illness and money problems has been set up with a £2m donation from MoneySavingExpert Martin Lewis.
The Money and Mental Health Policy Institute will work with banks, lenders, regulators and health service providers to help people with mental health problems protect themselves from financial difficulties and get out of debt.
“It’s time to treat mental health like any other financial issue,” said Mr Lewis. “For example, you could set up a voluntary register of people, who, if their spending patterns are unusual, perhaps due to a bipolar spending spree, have their credit card cut off until a nominated trusted friend agrees it can be reactivated.
“This is the type of thing we want to research, and work with lenders to test.”
Five UK charities hope to take on traditional investment from tomorrow, by launching a way for investors to back small businesses needing money to expand and benefit their communities in rural Africa, Asia and Latin America.
The charities involved are Christian Aid, Traidcraft, Practical Action, Twin and Challenges Worldwide and they’ve launched an online platform known as Access to Capital for Rural Enterprises to link small businesses overseas with British financial backers.
“We can bridge the gap between investors who want to make a difference and SMEs which have great potential to grow,” said Joanna Heywood of Christian Aid.