Sneaky credit card fees; generation debt warning; renters penalised over energy tariffs; new crash for cash warning; 660,000 leave the Big Six; Torquay is insolvency capital
Consumers could get back money they have lost with any of the 42 financial firms the Financial Services Compensation Scheme has recently declared in default.
“Anyone who believes that they may be owed money as a result of their dealings with any of these firms should get in touch, as we may be able to help you,” says Mark Oakes of the FSCS. To make a claim with FSCS, contact its Customer Services Team on 0800 678 1100 or 020 7741 4100 or email them at email@example.com
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Should homeowners be worried about potential interest rate rises? Not necessarily, says Simon Checkley of mortgage broker Private Finance. He believes rates are unlikely to increase dramatically enough to have a major impact on a large proportion of homeowners.
“Even if rates were to rise by as much as 2 per cent, typical borrowers would still only be looking at paying a relatively small amount more each month,” he said.
For example someone borrowing £160,000 a 2 year tracker at 1.25 per cent now would repay £621 a month. If rates climbed 2 per cent, the monthly commitment would only climb £159 to £780 while a more likely 0.5 per cent increase would only mean finding an extra £30 a month.
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However, in new research published by the Building Societies Association more than half of borrowers say they will struggle or fall behind with mortgage payments when interest rates rise. “There are at least 1.85 million homeowners that have never experienced an interest rate rise,” points out Paul Broadhead of the BSA.
He says those concerned about rate rises should start thinking about how they will manage the increased costs. Tighter household budgeting can help.
Today’s 17-24 year olds are facing becoming a generation mired in problem debt. The charity Citizens Advice warns that unsecured borrowing is exploding among young people leaving many trapped in a disastrous debt spiral.
The number of debt issues that forced young people to turn to the charity for help has soared by more than a fifth in the last year.
Meanwhile official data shows young people now have an average unsecured debt of £12,215 – triple the amount before the financial crash, when it stood at £3,988 in 2006.
The majority of the increase in unsecured debt is because of formal loans – like bank and payday loans – and borrowing from friends and family.
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Renters are being forced to splash out an estimated extra £161m a year – an average £339 each – because landlords are denying them the right to switch energy supplier.
A new campaign launched today hopes to force landlords to play fair with tenants by letting them take advantage of cheaper tariffs. To help renters reduce sky-high energy bills uSwitch has called for an end to misleading contract terms and training for landlords.
Research by the comparison site revealed that 13 per cent of landlords admit denying private tenants their right to switch energy supplier. Meanwhile 19 per cent of landlords with three or more properties have prevented a tenant from switching.
Ann Robinson of uSwitch said: “Landlords who unfairly refuse tenants their right to switch are standing in the way of more affordable energy for millions of homes.”
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Crash for cash scams have taken a sinister turn with villains demanding money from their victims at the scene of an accident. Crooks drive in front of people and slam on their brakes to make victims bash into them. They then beef up subsequent insurance claims with bogus whiplash injuries. But some crooks have begun forcing victims to hand over cash there and then “to avoid an insurance claim”.
Tom Gardiner, head of fraud at Aviva, said: “Motorists are left intimidated and that they have no choice to comply.” But anyone threatened after an accident should call the police and not hand over cash.
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There’s a gender gap among retired folk who return to work: men choose to do so but women are forced to because of financial worries, says Scottish Widows.
We’re turning our backs on the Big Six energy giants and moving to cheaper independent suppliers instead. New data from Cornwall Energy shows that independents now hold 13.4 per cent of the market, a 50 per cent rise over the year from 9 per cent last year.
First Utility continues to be the fastest-growing and now holds 4 per cent of the dual fuel market with 765,000 households. The Big Six firms - British Gas, EDF, E.on, NPower, Scottish Power and SSE - have effectively lost 660,000 customers in the last 12 months.
Robert Buckley of Cornwall Energy said: “The independents collectively now hold the fourth largest share of energy accounts in the market - truly breaking the stranglehold of the incumbents.”
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Has your home proved to be the best investment you’ve ever made? Those who bought in the last decade could have seen greater increase in prices if they bought a flat.
New figures from the Halifax show the average flat has climbed 60 per cent since 2005, compared with 38 per cent for all properties, Interestingly detached homes had the smallest increase at 21 per cent.
Flats have risen faster mainly because of rapid price increases in London where flats account for 49 per cent of the overall property market compared with the UK average of 17 per cent.
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Where are you most likely to go bust? On the English Riviera, reckons Experian. More specifically its new research suggests Torquay is Britain’s insolvency hotspot.
The location for the classic 70s sitcom Fawlty Towers saw an average of 16 out of every 10,000 households became insolvent in the second quarter of 2015. However the overall number of insolvencies is falling across the UK.
But there’s good news ahead for financially struggling people facing predatory creditors; from next month it will be harder for them to force you to go bankrupt. At the same time, if you decide to become insolvent, it’ll get easier and cheaper.
We’re often misled by ‘0 per cent’ balance transfer credit card offers and only one in 20 of us actually understands the true cost after being fooled by sneaky fees, according to Which? research published today.
The consumer group has urged the City watchdog to take a closer look at the offers after its research revealed that seven in ten people wrongly thought the transfer was completely free, even though they were shown the fee.
It estimates that consumers pay around £334m in balance transfer fees each year, often because they mistakenly pick the wrong card, which often proves to be an expensive mistake.
In its study a third picked the card with the lowest APR, even though it had a higher balance transfer fee. The decision would leave with them with a card that would have cost them three times as much.
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In what seems an extraordinarily timely move Halifax has today launched a new credit card offering 0 per cent interest for up to 20 months, with no transfer fee. The 20 Month Balance Transfer Card offers the longest interest free period without a balance transfer fee, the Lloyds-owned bank claims although, in truth, it just replaces its own similar 18 Month 0 per cent Balance Transfer card which also had no balance transfer fee ,
However the go-to rate - charged after the promotional period ends - is 18.9 per cent. While that’s pretty standard for credit cards, there are much cheaper deals available on the market, although not with such a long interest-free period.
It may pay to get a cheaper rate card now, for longer-term savings. In fact the Halifax has a card charging just 6.4 per cent.
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The energy industry will be forced to sweat for another six months to find out what action, if any, will be taken against it by the Competition and Markets Authority.
The CMA was due to announce the results of its investigation into competition failings among gas and electricity suppliers towards the end of December with the expectation that it would force suppliers to make bills clear and tariffs easier to compare understand.
But it has now extended the deadline by up to six months because of the high number of responses it had after publishing its provisional findings in July.
Its provisional decisions and remedies are now set to be published in January 2016, with its final decision revealed in April.
One in five people have little or no idea about the state of their finances, according to research from SunLife.
The study, which asked more than 3,000 people about their budgeting habits, found that younger people are more likely to budget than older people, with 57 per cent of 18 to24-year-olds saying they budget formally compared to just 32 per cent of over 65s.
Dean Lamble, managing director of SunLife, said living through a recession could be the reason younger people are budgeting more than their parents’ and grandparents’ generations. “The continuing rise in the cost of attending university and buying your first home could also be forcing more young people to keep a very close eye on their finances,” he said.
Renters are less likely to have a cushion of savings or protection products to protect them against financial shocks, according to Aviva’s latest Family Finances Report.
A quarter (25 per cent) of families living in the private rented sector do not have any savings or investments, equating to almost 650,000 people that may struggle to cope with any unexpected expenses. In contrast, just 11 per cent of home-owning families with a mortgage don’t have savings or investments.
Just one in five families who rent privately have life insurance, compared to 25 per cent who own their home outright and 48 per cent who own their home with a mortgage.
Louise Colley, managing director of protection at Aviva, said: “Renters might not have a mortgage to pay, but they still have financial obligations like bills and monthly rent. Not having a savings cushion in place means unexpected costs could make day-to-day living a struggle, while a lack of income protection could be disastrous should they become ill and unable to work.”
Downton’s ‘halo effect’ means that buying a house close to one of Britain's many stately homes can cost, on average, £41,000 more than in neighbouring areas.
Research from Halifax found the average house price in an area with a stately home was £319,203 in May 2015, compared to an average of £277,990 elsewhere.
Homes close to Kenwood House in Hampstead Heath currently command the highest premium of £770,023 (120 per cent) in cash terms, followed by Ham House in Richmond-upon-Thames (£513,918 or 116 per cent) and Ightham Mote in Sevenoaks (£231,230 or 82 per cent).
Martin Ellis, housing economist at Halifax, said: “Since 2005 the average house price growth in areas close to stately homes has been more than double the national figure. It can cost home buyers, on average, £41,000 extra to live nearby to a stately home compared to neighbouring areas.”Reuse content