This week: guarantor loans warning; British Gas cut prices; women more likely to go bust; Apple Pay hype explodes on UK launch; free pension review scam; fake calls rise; positive signs in savings
More than 2 billion nuisance calls using fake numbers are made every year, reckons Ofcom. Companies use special software to make it seem as if calls are local and bypass call-blocking devices. These so-called spoof calls are designed to hide the fact that they’re actually from an annoying call centre ringing to trick you into buying stuff.
Now Which? has demanded a crackdown on the practice - which particularly preys on older people - and says companies should be forced to present a valid number when making marketing calls, rather than lurking behind a fake one.
“The practice could lead to people becoming a victim of fraud,” warned Richard Lloyd of Which? “We need senior executives to be held responsible if their company makes unlawful sales calls.”
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Friends and relatives of struggling people are being saddled with huge debts after unknowingly signing up to guarantee expensive loan repayments. Citizens Advice’s new report on guarantor loans published today warns the deals can be as harmful as payday loans.
With the loans, which range from £1,000 to £7,500 and have average interest rates of 46.3 per cent, borrowers give the name of a friend or family member to act as a guarantor.
But almost half of those named as such who subsequently contacted the charity had no idea of the extent of their responsibilities or that they would be pursued for the cash if the borrower defaulted or got behind with payments. The report also warns that guarantors are often liable for the debt if a borrower dies.
“Guarantor loans carry huge risks,” warned Gillian Guy of Citizens Advice. “Our evidence shows people are getting involved without being aware of the dangers.”
British Gas will reduce the cost of gas for 6.9 million domestic customers by 5 per cent from 27 August. The cut will save an average customer £35 a year. But critics said the firm is still ripping off consumers with high prices.
Stephen Murray of Moneysupermarket, said the cut “may seem underwhelming compared to how low wholesale prices are”. The wholesale cost of gas has fallen 25 per cent since December. British Gas cut prices by 5 per cent in January following similar or higher reductions by its Big Six rivals. It’s the first to move this time, but the pressure is already on others to go further.
Jonathan Reynolds, Labour’s shadow energy minister, said: “Wholesale energy costs are at a five year low and this still isn’t fully reflected in household bills.” British Gas said its bills don’t just reflect wholesale prices. “There are a range of costs that make up energy bills, some decreasing and others increasing,” said Mark Hodges, the firm’s managing director.
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More than 250,000 of us switched electricity provider in June, Energy UK said yesterday. Some 258,658 households chose a new supplier with 73,490 moving away from the Big Six.
If you want to find out how you can save up to £200 on your energy bill, go to www.goenergyshopping.co.uk
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Teenage girls are getting significantly less financial education than boys, according to ifs University College.
Its report published today reveals that at GCSE level where financial education is compulsory, just 36 per cent of girls currently learn about personal finance, while 45 per cent of boys the same age do. Girls also receive significantly fewer classroom hours studying financial education.
Women are now more likely than men to go bust, official figures show. The personal insolvency rate for women overtook that for men for the first time last year, reported the Insolvency Service covering England and Wales.
The personal insolvency rate per 10,000 adults was 22.2 for women in 2014, but just 21.2 for men. But young women are now almost twice as likely to go bankrupt as young men, warned accountants Moore Stephens as the Insolvency Service data revealed 2,406 women under the age of 25 went insolvent last year, compared to just 1,297 men in the same age group.
Phillip Sykes of R3, said: “Women may be less likely to stick their head in the sand about debt problems; or the figures could reflect that low value debts have a bigger impact on women’s finances than men. Either way it is also a reflection in the under 35 age group, of women’s increasing economic activity.”
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Recent weeks have seen some positive signs in the savings market. Last week best buy one year fixed rates bonds hit their highest level since August 2013 and this week notice accounts have followed suit paying rates not seen since June 2013, says SavingsChampion.co.uk.
“It’s no surprise that notice accounts and fixed rate bonds are on the up, as they are favoured by the challenger banks that are bringing competition back into the savings landscape,” said Susan Hannums of SavingsChampion.
Meanwhile the inflation figures released yesterday that showed that the Consumer Prices Index fell from 0.1 per cent to 0.0 per cent during June mean that all 888 savings accounts currently on the market beat inflation, points out Moneyfacts.
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You can now use an iPhone to spend up to £20 after Apple Pay was launched with a huge amount of marketing hype yesterday. It uses the same kind of contactless technology that millions already use in plastic cards but the firm hopes the apparent inconvenience of retrieving a card from a wallet or purse will encourage people to use their phone instead.
Insurers caught out some 130,000 fraudulent claims last year. That’s equivalent to 350 every day in 2014.
The Association of British Insurers says the industry saved £3.6m a day by exposing insurance cheats which it passed onto honest customers in the form of lower premiums. The average comprehensive motor premium was 5 per cent cheaper in 2014 while the average home contents policy fell 3 per cent.
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If you’ve been offered a free pension review, be wary. Aegon says eight out of 10 requests for overseas pension transfers it receives are scams to defraud savers out of their pension.
Fraudsters have been targeting smaller pensions of around £30,000, promising to carry out a pension review, but their intention is to transfer the money overseas. Once it’s out of the country the victim could lose their savings or face a tax bill of up to 55 per cent when the pension pot is repatriated.
Kate Smith of Aegon UK, said: “The new pension freedoms have given people far greater choice about how they access their pension, but unfortunately this has opened the door for scammers.”
Report any suspicions to Action Fraud by calling 0300 123 2040 or online at actionfraud.police.uk
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Six out of ten vulnerable young people - such as care leavers or young parents - thinks banks are intimidating and unhelpful.
The charity Action for Children says its time banks offered products young people can use and trust. It also called on banks to train staff to understand vulnerable young people.
“If we help them take control of their finances, they have a greater chance of finding a job and creating a stable and happy life,” the charity says.
If you were a policyholder with Standard Life when it demutualised in 2006 you would have been entitled to cash or shares. If you haven’t yet claimed then, you have just a year to do so.
There remain 60,000 people still to claim shares and around 5,000 people still to claim a cash entitlement. Those who held a with-profits policy with Standard Life which started before March 2004 and was in force in October 2005 may be eligible.
Anyone with a valid claim should contact Capita Asset Services on 0345 608 1478. The last date for claims is 9 July 2016.
Good news for those driving abroad: the DVLA has changed the validity of the online code needed to share driving licence details with car hire companies. It’s extended it from the ridiculously-short 72 hours to 21 days, which should be enough to last for most holidays.
“The abolition of the paper counterpart of the British driving licence has caused chaos but extending the validity window of the share driving licence code should help resolve some of the teething problems,” said Hannah Maundrell of money.co.uk. “It means travellers generating the code before they leave the UK will not have to complete the same process again if they don’t hire a car immediately.”
The summer holidays can be an expensive time – especially if you’re a parent. They’ll spend £600 entertaining their kids over the summer break, which is £100 more than they splashed out last year, reckons the Post Office.
Frighteningly a quarter say they will pull out the plastic to pay for attractions and meals out in an effort to keep children entertained. Instead they should have prepared for the extra expense, advises Henk Van Hulle of Post Office Money.
“By planning ahead and setting aside money earlier in the year, parents can avoid being stung by surprise expenses or missing bill payments, and enjoy the holidays free of financial fears.”
However, savvy shoppers will take advantage of free museum entry, cheap train tickets with a Railcard or a range of 2-4-1 deals offered online.