This week: mortgage advice worries; Budget move increases car and home insurance costs; current accounts could be best for savings; energy firms accused of overcharging; holiday debt woes; fresh scam warning
A year after tough new rules were introduced to clean up the mortgage market, the City watchdog says in almost two-fifths of cases it reviewed it couldn't work out why advisers and lenders recommended certain loans.
The Financial Conduct Authority’s damning report said some mortgage advisers “were failing to take reasonable steps to obtain sufficient, relevant information about customers’ needs and circumstances before making recommendations.”
Who doesn’t worry about money? If you’re struggling you worry about how you’ll get by while the well-off understandably worry about how to protect and make the most of their assets.
Now it appears even kids are concerned about cash. Almost a third of eight to 15-year olds say they’ve worried about money. Meanwhile three-quarters say they are aware of parents’ concerns about finances. The Halifax survey found that nine out of 10 parents worry about money, which is no surprise. But are we really raising a generation of youngsters who spend their childhood with financial fears?
Giles Martin of the Halifax said: “Parents need to be aware just how much of an impact their own feelings about money can have on their children’s views and habits.”
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The increase in Insurance Premium Tax announced in the emergency Budget could cost households an extra £68 a year, reckons Comparethemarket.
Young drivers will be worst hit. Under 25 year olds already pay £505 more on average than other age groups for car insurance, but premiums will rise £30 in November because of the tax increase..
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SSE, one of the Big Six energy suppliers, yesterday launched the market’s cheapest fixed energy deal in 18 months. The new tariff costs £899 a year based on average energy consumption, with prices fixed for 12 months.
The deal could lead to the start of a new price war between suppliers, suggested uSwitch. The launch came just two days after the BIG Six were accused of overcharging in a damning report from the Competition and Markets Authority.
Looking to buy your first home? Sharing a house rather than renting on your own could help save an extra £134 a month to put towards a deposit.
The figures have been calculated by buy-to-let firm Platinum Property Partners. They reckon that sharing a house can mean almost halving the time it takes to buildup an average first-time buyer’s deposit of £20,600.
Their figures suggest an average house sharer could afford to put away of £308, taking 5.6 years to save up a deposit. Those renting alone can only afford to save £174 a month, meaning it would take them 9.9 years to save up their deposit.
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Paragon Bank is launching a new five year fixed rate savings account paying 3.06 per cent tomorrow, Friday 10 July. You’ll need at least £1,000 to open an account.
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Planning to drive abroad this year? You should check out local laws to ensure you don’t come a cropper, warns Sainsbury’s Bank. “It’s vital drivers brush up on local motoring knowledge and check with their insurer that they are covered overseas.” the bank says.
In France, for instance, it’s compulsory to carry a warning triangle and a breathalyser in the car. Meanwhile in many European countries, a reflective jacket, first aid kit and headlamp converters for driving at night are now required and in Spain, motorists who wear glasses are advised to carry a spare pair with them if it is noted on their licence.
Anyone planning to hire a car should know that driving licence paper counterparts have been replaced with a code that can be generated by the DVLA website, at gov.uk/view-driving-licence
Almost everyone in the country will lose out directly or indirectly through the increase in insurance premium tax that comes into effect in November. Experts reckon it will add around £20 to the average motor policy and £12.50 to a typical home insurance.
Meanwhile, far from benefiting from the introduction of the new £7.20 national living wage, Barnardo’s reckons struggling families will end up £1,200 a year worse off – or £23 a week – because of the tax credit cuts announced in the Budget.
If you’re looking for a decent home for your savings, you should consider a current account, reckons Moneyfacts. While many traditional accounts pay paltry rates of interest on credit balances, savvy savers can actually earn three times more interest using certain current accounts.
Rachel Springall of Moneyfacts points out that a balance of £2,000 could earn £97.80 a year with TSB’s Classic Plus account, while a balance of £20,000 with Santander could earn £592. Meanwhile, RCI Bank UK’s Freedom Savings Account, the best easy access account on offer at the moment, would give savers a paltry £30 and £450 respectively.
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More claims for lost and stolen jewellery were reported in Birmingham last year than anywhere else in the UK, reports Churchill. Birmingham’s Jewellery Quarter is home to Europe’s largest concentration of jewellery businesses and also responsible for producing 40 per cent of the jewellery in the UK.
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How much does it cost to raise a child to the age of 21? The average guess is £50,000 when the actual figure is nearer £229,000. How much would you need to stash in a pension to get an income of £25,000 in retirement? Around £300,000 - yet most people reckon it’s a little as £124,000.
They’re just two of many significant misperceptions about finances, warns Ipsos MORI. Its research points out we need to know the true cost of living if we want to plan properly for our financial futures.
The Big Six energy companies face fresh accusations of profiteering after a damning investigation by the Competition and Markets Authority concluded they had overcharged domestic customers by 5 per cent and small businesses by 14 per cent.
It meant the gas and electricity giants trousered around £1.2bn extra from domestic customers between 2009 and 2013 plus an extra £0.5bn from small firms.
“There are millions of customers paying too much for their energy bills, but they don’t have to,” says Roger Witcomb, Chairman of the CMA’s energy market investigation.
Holiday season means getting into debt for many people. The Money Advice Service reckons a quarter of us runs up £421 of debt while enjoying a summer break. That’s partly because we spend more than we plan to, with the average adult splashing out some £220 extra each holiday.
But many – two out of five - go into the red because they feel they ‘deserve’ a holiday while a fifth do so because they feel obligated to go or honour bound to give their family a break. Planning ahead and budgeting carefully can help spread the cost of a holiday and avoid getting into debt.
“There are plenty of ways that you can avoid paying over the odds for holiday essentials and still have a great time, for example, buying items or exchanging money before you leave the UK,” advises Andy Webb at the Money Advice Service.
Lenders are ramping up their bids to attract first-time buyers. The number of loans aimed at new homeowners that only require a 5 per cent or 10 per cent deposit has soared to 723, its highest level since 2007, reports Moneyfacts. Five years ago there were just 194 such deals.
Meanwhile the average rates for 95 per cent loan-to-value deals have plummeted to the lowest on record, with the average two-year fixed rate now standing at 4.47 per cent.
“Surprisingly, the help-to-Buy doesn’t account for all of these new products, but with the number of deals totalling 437 before the scheme was launched, it is clear that the government’s help-to-buy scheme acted as a catalyst for banks and building societies to get in on the act,” said Charlotte Nelson of Moneyfacts.
Which is the most unfair tax? When asked the question at the weekend almost half picked inheritance tax ahead of other common state-grabs such income tax, capital gains tax and stamp duty. In fact council tax was a distant second in the unpopularity stakes.
Stephen Berry of NFU Mutual, which conducted the research, said: “Inheritance tax is deeply unpopular as people want to be able to pass on as much as they can to their loved ones.”
That’s food for thought for George Osborne ahead of tomorrow’s emergency summer Budget.
If you have vulnerable relatives, friends and neighbours, talk to them this summer about the risk of being scammed. The Financial Ombudsman Service has published new research today warning people over the age of 55 are four times more likely to be caught out by a ‘no-hang up’ scam.
That’s when fraudsters cold call victims and pretend to be from a bank or the police. They tell their victims to call them back, but they stay on the line to fool people into thinking they’ve actually called their bank.
“These are extremely cruel and convincing deceptions and consumers are tricked into believing they are protecting their money, when in fact it is being stolen,” said Caroline Wayman, chief ombudsman.
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Prepay energy customers pay an average £226 more per year than they would on the cheapest online direct debit deals, according to shock analysis by Citizens Advice.
The figures come ahead of the publication tomorrow of details by the Competition and Markets Authority of its major energy industry investigation.
“The CMA investigation provides an opportunity to overhaul the energy industry and make it fairer - giving prepay meter customers a better deal is a crucial part of this,” said Gillian Guy of Citizens Advice.
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A severe shortage of affordable homes in rural areas is pricing out young people and families and could lead to countryside “pensioner pockets, the National Housing Federation warns today.
David Orr, NHF chief executive, said: “Our idealistic view of the English countryside is fast becoming extinct. Workers and families aspiring to live, work and grow up in the countryside can’t find homes they can afford.”