This week: debt managers slammed; copycat websites warning; 'minimum payment' dangers; more 'last bank in town' closures; bank account scam nets £23.6m
Some debt management firms are making people’s money problems worse by selling them unsuitable products and services that make it harder to pay off debt, the City Watchdog has warned. In one extreme case one desperate debtor was recommend a payment plan which would have taken her 125 years to pay off.
The watchdog the quality of the advice provided by some fee-charging debt management firms was unacceptably low. For instance they’re supposed to tell vulnerable people about free advice but one told a customer that free advisers were “owned by the banks” and that the customer would have “to do all the work themselves”.
'Free-to-customer' firms were slightly better but still need to improve, the regulator said.
National Trading Standards has issued fresh warnings about copycat websites after swooping on five suspected people in London and the home counties behind a website that charged people a premium price for a service they should get free through the official gov.uk website.
The unofficial site had generated more than 500 consumer complaints from people who had been duped into paying £100 for a fake service.
You should use the official gov.uk website for government services, such as renewing driving licences, European Health Insurance Cards or passports. Don’t simply google the service you want as you’ll almost certainly be directed to a fake site.
If you come across a dodgy site, report it to Citizens Advice by calling 03454 040506.
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Ofgem yesterday demanded fair treatment for people using prepayment meters to pay for their energy. The watchdog reported that some suppliers charge up to £180 for installing a meter and £160 for removing it but called on firms to remove the charges.
Philip Cullum at Ofgem pointed out: “Charges and costs for using a prepayment meter fall on those less able to afford them.”
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The insurance industry has warned the government not to rush through plans to create a secondary annuity market. The Association of British Insurers has welcomed the reforms in principle but has warned that there must be adequate protection for consumers.
Dr Yvonne Braun of the ABI said: “We urge the government not to rush through these proposals for 2016. Allowing more time will ensure an appropriate regulatory regime can be developed.”
If you just paid the minimum amount off a credit card balance of £2,000, how long do you think it would take to clear the debt? It would take an incredible 34 years! Don’t worry if you didn’t know the answer, only one in a hundred people does.
More than a third reckon the debt would be paid off in five years or less, while almost two-thirds think it would be 15 years, tops. The figures published in a study by TotallyMoney.com show how little anyone understands about credit card debt and interest.
Asked how much they’d be charged in interest if only paying off the minimum amount a third reckon it would be £499 or less. In fact the total would be considerably £3,983. The lesson? Pay as much off your credit card as you can as soon as you can.
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It doesn’t get easier as you get older. More than one in five pensioners far they will run out of money in as they spend savings to keep up their lifestyle, warns MetLife.
Its research suggests the average pensioner household income is a relatively comfortable £22,740. But More than half have some form of debt – with two out of five owing money on credit cards while 16 per cent are still paying off mortgages.
Dominic Grinstead of MetLife, said: “It should act as a wake-up call for those planning to take advantage of pension freedoms.”
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Banking group RBS - which owns NatWest - closed 149 branches last year and is closing 99 in 2015.
As well as shutting the last bank in town in Lancashire’s Knott End, as we reported yesterday, its plan to close 11 branches in Wales will similarly leave Corwen and Llangollen without a single bank, HSBC recently closed their two branches in the towns.
Villagers of Knott End-on-Sea in Lancashire are up-in-arms at news that the last bank in their community, a branch of state-owned NatWest, will close its doors for ever on 15 September. But, ironically, five years ago the branch was featured in a NatWest TV ad that promised to keep branches open if they were the last in town.
It went back on that pledge in April 2014 and has now said: “We are working to ensure there are a number of alternative ways for people in the area to continue to bank with us.”
However, experience has shown that in every village or town across the country where the last bank has closed down, local shops have quickly followed.
More people are saving adequately for their retirement, according to a report published today. Scottish Widows says 56 per cent of us are now saving enough. But that still means 44 per cent are failing to prepare properly for the future.
The study also shows a wide gulf between what people think they’ll need to live on in retirement compared to how much they’re saving now. “Confusion remains around how actions today translate into money tomorrow, with many people having unrealistic expectations about what their income in retirement might be,” warned Ian Naismith, retirement expert at Scottish Widows.
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Hargreaves Lansdown has introduced launches a new Retirement Planning Service to help investors cope with pension freedoms. It reckons 120,000 people a year will sign up for it, despite the fact people can get free guidance from the government’s Pension Wise service.
The firm said its service will cost a flat fee of £478.80 (£395 plus VAT), while industry advice fees for retirement income recommendations start at around £1,000.
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The government gateway to the online self-assessment website has been down since Monday. Mike Crellin of UHY Hacker Young said: “These failures cast doubt on whether HMRC IT systems are robust enough.”
Fraudsters have fleeced people of £23.6m in the past year by tricking them into transferring cash into dodgy bank accounts. Now Neighbourhood Watch is hoping its army of 173,000 volunteers can help crack down on the crooks and help people avoid becoming victims.
The fraud works by the criminal calling and pretending to be from a bank. The scamster convinces the victim that fraud has been detected on their account and that they have to move their money into a so-called “safe account” or risk losing their savings.
The felons have a range of tricks to trick people such as “spoofing” the telephone number on the person’s caller ID display so that it matches their bank’s number, or referring to genuine account information which they have fraudulently obtained elsewhere.
If you think you may be a victim, contact your bank immediately and report it to the police through Action Fraud on 0300 123 2040.
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Almost half of arguments on holiday are finance related, reckons FairFX. The main money gripes, according to its research, are: spending too much, being stingy, borrowing money, lending money and whose round it was at the bar. Men are twice as likely to fall out over whose round it is! However it seems youngster are much more carefree with under 24s unlikely to argue about money at all.
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Kensington and Chelsea in London is Britain’s most expensive place to buy property, a Halifax report suggests. To buy one square metre of a home would set you back £11,635. That’s six times the national average price of £2,033. Aberdare in South Wales is the cheapest with one square metre costing £910 on average.
There’s a gender divide when it comes to tax planning. Women are less than half as likely as men to try and reduce payments, reckons Prudential. Only seven per cent of women did anything to cut their tax bill in the past year, compared with 19 per cent of men. Some fail to find the time while others are unaware of the opportunities.
Many older homeowners are being penalised because they’re over-65 by being turned down for the best mortgage deals. The warning’s from Saga which said people are stuck in uncompetitive mortgage deals and unable to move to a better deal simply because of what it says is an an arbitrary age limit.
“It’s simply wrong that on the one hand people are having to adapt their plans to work for longer,” said Saga’s Paul Green. “Financial institutions need to change. Lending decisions should not be based on somebody celebrating a birthday; it should be about an individual’s ability to pay.”
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Ofcom made it easier to change broadband providers from Saturday 20 June, but more than four million broadband users, and customers of other telecoms services like mobile and pay TV, won’t benefit from the new rules, uSwitch warns.
That’s because the new rules don’t apply to mobile, pay TV or Virgin Media’s broadband network. “Industry-wide changes are needed to have far more of an impact,” said Ewan Taylor-Gibson of uSwitch.
“The price difference between the cheapest and most expensive broadband deals on the market right now is £120 per year, so we’re not talking about small change.”
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American Express cardmembers who registered for Amex Offers, through which they received credits when they spent at stores including Shell and Boots, have just a few days to use them at the participating retailers. The offers expire on 28 June.