Weekly Money: the stories we noticed 14-18 September

The personal finance news you may have missed this week

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The Independent Online

Pensioners pay £17.5bn income tax; Santander raises current account fee by 150%; Councils forced to sell 113,000 houses through Tory plans; 24 fixed energy tariffs end; 2 million switch accounts

18 September

Pensioners in the UK pay more than £17.5bn in income tax every year, according to Prudential.

The insurer’s analysis of the most recently available Office for National Statistics data on income and tax shows that in the 2012-13 tax year, over-65s paid an average of £3,258 each in tax. Collectively this accounts for 11 per cent of the £157bn total income tax paid for the tax year. However, the figures also show that the average tax bill for over-65s in the UK is £2,300 lower than that for under-65s.

Stan Russell, retirement income expert at Prudential, said: “These figures show that just because someone has retired from work doesn’t mean they have retired from paying tax, so taking into account the impact on retirement income is an important part of planning for a comfortable retirement.”

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A German challenger bank has launched in the UK, operating online only and offering savings bonds and a Euro transfer service. Fidor is the first retail bank to launch in the UK since 2010 and already has 100,000 customers in Germany.

The newcomer’s banking model is based around its online community, where users are financially rewarded for giving and receiving knowledgeable financial advice, as well as evaluating and reviewing financial products and services they are interested in.

Over the next few months Fidor plans to introduce a current account, debit card and corporate account, as well as integrating third-party services such as peer-to-peer lending, crowdfunding and multi-currency investments.

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Nine million UK renters say they will never be able to afford their own home, according to research by the Post Office. A survey of renters found that would-be buyers expect to be an average of 36-years-old before they take their first steps on the property ladder – compared with 35 last year.

Raising a deposit is perceived as the biggest barrier to getting a foot on the property ladder with renters estimating it will take them eight-and-a-half years to save enough for a deposit, with one in ten (10 per cent) expecting to save for more than a decade. However, one in four prospective home buyers (28 per cent) claim they will never be able to afford a deposit unless their circumstances dramatically change through a better paid job or cash windfall.

John Willcock, head of mortgages at Post Office Money, said: “It is clear that there is still a long way to go to inspire confidence in the first time buyers’ market, with nine million feeling they won’t ever be able to buy their own property.”

17 September

Local authorities could be forced to sell off 113,000 council homes under Government plans. It could mean Kensington and Chelsea being forced to flog off a staggering 97 per cent of their housing stock.

The council house sell-off will be forced by the Government's controversial plans to extend the Right to Buy scheme, according to analysis from housing charity Shelter.

The extension of the scheme to housing association tenants was a key commitment in the Conservative's election manifesto. “The government needs to scrap this proposal and start helping the millions of ordinary families struggling with sky high housing costs,” said Campbell Robb, Shelter’s chief executive.

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Southern Water has been named the worst-performing water company when it comes to dealing with written customer complaints for the third successive year. The water watchdog said the firm must do better and “intensify its efforts to move into line with other companies”.

Meanwhile South East Water was the only water-only company to receive more complaints than the industry average. Tony Smith of the Consumer Council for Water, said: “The gulf between the best and worst performers remains unacceptable.”

The watchdog has challenged firms to get more things ‘right first time’ for customers. However there was a 13.4 per cent fall in written customer complaints over the year.

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More than 200,000 people have chosen to access their pension cash following the pension freedoms that came into force in April. Some 204,581 accessed their pensions between April and June, compared with just 95,000 during the same period in 2014, according to the Financial Conduct Authority.

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OMG or ATM? We’re more likely to understand text message jargon than financial terms, according to new research from the Nationwide.

While four out of five adults know that LOL is short for “Laugh out loud”, only three in five know that Isa stands for Individual Savings Account, More than three-quarters of us know that OMG is “Oh my God”, but less than two-thirds know that ATM stands for Automated Teller Machine.

It’s clearly time to get more financially-informed. “A lack of understanding of text speak is not going to cost you financially, but not knowing financial terms will,” warned Andrew Baddeley-Chappel of the Nationwide.

16 September

More than two million current account customers have change accounts using the seven-day Switch Service since its launch two years ago today. But the number of people switching fell slightly in the last 12 months so a new multi-million pound awareness-raising campaign to tell people about the scheme will launch on Friday.

The service cut the length of time it takes to switch accounts from up to 30 working days to just seven. All payments are automatically moved to the new account and customers are guaranteed not to be left out of pocket if anything goes wrong with the service,

Economic Secretary to the Treasury, Harriett Baldwin, said the new awareness campaign “will help make sure that the service can continue to help customers hold their banks to account by allowing them to vote with their feet”.

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However competition is thriving in the current account market-place with Tesco Bank yesterday pledging to scrap a £5 monthly fee charged to its current account customers. Its move comes a day after Santander announced a 150 per cent increase in charges on its 123 current account.

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Energy and telecoms providers are the companies rated among the lowest when it comes to customer service. The latest Which? annual survey of the UK’s 100 biggest brands published today reveals, rather unsurprisingly, that ScottishPower was ranked the lowest with a customer score of just 59 per cent, just behind Npower which scored a not-much-better 61 per cent.

Meanwhile, joining the two energy giants at the top of the list of shame, were telecoms companies BT (which scored a poor 63 per cent), TalkTalk (64 per cent), Vodafone (66 per cent) and EE (68 per cent).

Lush came top with 89 per cent. Other champions of customer service included First Direct (86 per cent), Lakeland (84 per cent) and The Body Shop, John Lewis and Waitrose (all 83 per cent).

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If you’re on a fixed tariff, it’s time to check your deal or face being caught out by a huge jump in the price of heating and lighting your home.

Households could face energy price rises of up to £151.13 as some 24 dual fuel tariffs come to an end at the end of this month, reckons GoCompare.

British Gas, Co-operative Energy, Extra Energy, First:Utility, iSupply, M&S Energy and Scottish Power all have tariffs expiring on Wednesday 30 September, at which point customers who do nothing will be rolled onto their supplier’s more expensive standard variable tariff.

Worst hit could be the customers on Extra Energy’s ValuePlus Fixed Price Sept 2015 v1 tariff. They will face a £186.08 hike in the cost of their annual gas and electricity bill - an increase of a fifth - when their fixed term ends if they fail to switch to a better deal.

15 September

Santander will increase charges on its 123 account from £24 to £60 a year from 11 January. It’s also introducing a cap on the cashback new customers can earn on the 123 credit card.

Around three million people have signed up for the account, which allows savers to earn up to 3 per cent interest on balances of up to £20,000. The bank blamed the increase on the rising cost of banking.

But Nicolas Frankcom of uSwitch said: “An almost threefold increase in fees is a huge kick in the teeth for Santander 123 customers. Many will feel cheated by Santander moving the goalposts, and those drawn in by tempting cashback offers will have to spend more on household bills just to break even.”

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Some 404,000 savers will see the interest rate on their National Savings & Investments Direct Isa slashed by a sixth to 1.25 per cent from 16 November.

The 0.25 per cent cut has been introduced “to ensure that we continue to strike a balance between the needs of our savers, taxpayers and the stability of the broader financial services sector,” said NS&I.

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Almost half of us have suffered from health conditions because of money problems in the last five years, warns the Fairbanking Foundation. Its research shows finance woes caused stress for a third and contributed to depression for just over a fifth.

Nearly one in five faced insomnia because of money problems while one in 20 say it actually made them physically sick. More worryingly money worries also caused millions of people to either lose their jobs or fall out with partners and friends. You can get free help with money problems through debt charity Step Change by calling 0800 138 1111.

14 September

Your energy firm might be offering other customers a better deal and not telling you about it. Suppliers must mention on your bills and annual statement what its cheapest openly-available deal is.

But if it’s offered a better deal through a collective switch - when thousands of consumers group together to negotiate a keener price - it’s not compelled to tell you about it.

Independent supplier First Utility claims the collective deals can work out up to £230 a year cheaper than a supplier’s official “cheapest” deal.

First Utility boss Darren Braham said: “Suppliers must show their cheapest tariff to all customers on the bill, but not if it’s a collective switch - despite that fact that this is often the cheapest. That does not make sense.”

* * *

The Champions League returns this week with Arsenal, Chelsea, Manchester City and Manchester United all involved, but if you want to watch it on telly you’ll need BT Sport.

But what’s the best way to buy it? You can get it on Sky, Virgin or from BT itself, of course, but to help you work out which package is most cost-effective for you check out www.moneysupermarket.com/broadband/sports-events/

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Fancy learning more about finance for free? The digital station Share Radio is broadcasting the Open University’s Managing My Money course.

The eight-week course includes two 25-minute episodes per week, each with an online test. After the final test, students receive a Statement of Participation certificate from the Open University.

The course starts afresh each fortnight with the next start date 21 September although you can download the podcasts at any time. You can listen on digital or online at shareradio.co.uk.

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