Weekly Money: Round-up of the personal finance stories you may have missed 26-30 January

The Big Six energy firms’ profit margins will climb from £105 to £114 per customer on a dual-fuel tariff over the next 12 months, predicts watchdog Ofgem (Getty Images)

The stories we noticed this week: energy company profits climbing despite price cuts; fewer insolvencies; home insurance down; 2m in line for credit card compensation; tax return deadline; more pension protection for consumers.

30 January

The Big Six energy firms’ profit margins will climb from £105 to £114 per customer on a dual-fuel tariff over the next 12 months, predicts watchdog Ofgem. It’s increased its estimate by £9 since November despite the announcement of reductions in gas prices announced by all the energy companies in the last couple of weeks.

The bigger profits will be driven by “significant declines in expected future wholesale costs”, the energy watchdog said.

Richard Lloyd, Which? executive director said: “Consumers will be questioning why their energy bills haven’t been slashed further at a time of rising profits and falling wholesale prices. Energy Secretary Ed Davey said: “People want to see bigger savings on their energy bills – not bigger profits going to the big six.”

But the energy industry hit back by questioning the reliability of Ofgem’s predictions. Lawrence Slade, chief executive of Energy UK, said: “Research shows that Ofgem’s reports, time and again, have proven to be unreliable.”

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Good news from the Insolvency Service: the number of people going bust last year was the lowest annual figure recorded in nine years. There were 99,196 cases recorded in 2014, according to official figures.

The total, made up of bankruptcies, debt relief orders and individual voluntary arrangements, is a 1.8 per cent fall on the number of personal insolvencies recorded in 2013. But the news shouldn’t make authorities complacent about the plight of struggling people, a debt charity warned.

Mike O’Connor of StepChange said: “Many people are living on the edge financially and, given the kinds of income shock people face, we may see increased levels of insolvency in the future.”

29 January

Some good news for a change: the cost of home insurance is falling. The average annual buildings and contents policy was £291, or £5.60 a week in 2014. That was down 3 per cent over the year, according to the Association of British Insurers premium tracker.

Meanwhile the cost of buildings insurance dropped by 6 per cent over the year and contents insurance fell 5 per cent. It’s a reminder that if your insurer hasn’t offered you a lower premium at renewal, it’s almost certainly worth getting a quote from a rival to save money.

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The number of companies fined for failing to enrol their staff in a pension scheme is increasing, according to the Pensions Regulator.

Some 166 employers were handed a fixed penalty of £400 each in the last three months of 2014, while only three had been fined before that. The fines were made under the auto-enrolment rules, which force about 1.3 million employers to provide workers with a pension scheme.

Bosses need to plan ahead, warned Charles Counsell of the regulator. “My message to all employers is that failing to declare within five months of your staging date means you risk being fined.”

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A quarter of parents of young drivers are illegally ‘fronting’ a car insurance policy to save money, reckons GoCompare.

But the practice of insuring a child’s car in your own name invalidates a policy and could land in court those who try to fool insurers into charging lower premiums.

“Fronting’ will be uncovered if parents have to claim on the policy,” warns Matt Oliver of GoCompare. “Parents may end up in court and unable to get insurance in the future.”

28 January

Some two million people could be in line for compensation for being sold credit card cover they didn’t need, the Financial Conduct Authority revealed yesterday.

One of the main features of the products was insurance to cover fraudulent use if a card was lost or stolen. But this was unnecessary because the card issuers are usually responsible for any transactions after the cards are reported lost or stolen.

Compensation would be for around £25 per year for products sold by AIB Group (trading as First Trust Bank in Northern Ireland and Allied Irish Bank in Britain), Barclays Bank, Capital One, Clydesdale Bank, HSBC Bank, Lloyds Bank, Northern Bank (trading as Danske Bank), Santander, Tesco Personal Finance, the Co-operative Bank, and the Royal Bank of Scotland.

Eligible customers will get a letter from AI Scheme Limited in the next few weeks and will be able to vote on the scheme in April or May. The watchdog warned consumers to avoid claims management companies when seeking compensation.”

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From today consumers will be able to complain about rogue claims management companies and get compensation for being badly treated. The Legal Ombudsman is urging consumers to get in touch if they’ve received poor service and have already complained to the firm without success.

It has powers to order compensation, make firms reimburse costs or to provide other forms of suitable redress where it finds there has been poor service.

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The tax return deadline is midnight on 31 January - Saturday night - and those who file late will automatically receive a £100 fine.

An estimated two million people are yet to file their returns, according to HM Revenue & Customs.

The automatic penalty of £100 for filing a late return is charged even if you don’t owe any tax and then, after three months, a £10 daily charge kicks in up to a maximum of £900, followed by further penalties at six months and 12 months.

Delaying means you could owe up to £1,600 in penalties even if you don’t owe any tax.

Help and advice is available from the self-assessment helpline on 0300 200 3310.

27 January

The City Watchdog has told pension firms to ask consumers more questions to help protect them from making a mistake when new pension freedoms come into force in April.

Companies will be required to ask about health and lifestyle choices or marital status, to protect consumers who do not take up the government’s offer of the Pension Wise guidance guarantee service.

Pension firms will then have to give consumers risk warnings, such as the tax implications of whatever decision they make without consultation. The move will amount to a “second line of defence” for the new freedoms.

Christopher Woolard, director of strategy and competition at the Financial Conduct Authority said: “The decisions consumers make about what to do with their pension pot are important and in some instances these choices are irreversible. We want to ensure that people have the help they need to make those choices.”

Pensions expert Ros Altmann said: “At long last! Having called for this for years I’m delighted. Now the industry needs to rise to this challenge.”

The new rules will come into effect on 6 April.

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The financial ombudsman received nearly 75,000 new complaints during October, November and December 2014, its latest report reveals.

The majority in the quarter were about mis-sold payment protection insurance with current accounts the second most-complained about financial product in the period.

However just 64 per cent of PPI complaints were upheld. The highest number of complaints - 85 per cent - were upheld about card protection insurance. The next highest area was payday loans, with 69 per cent of complaints upheld by the ombudsman during the last three months of the year.

26 January

More than 21 million adults in Britain don’t have a household budget, while a further six million have a budget but don’t stick to it. That’s according to new findings published today by the debt charity StepChange to mark the start of Debt Awareness Week.

Budgeting is key to getting control of your finances – without it, we’re all at risk of being one payday away from financial disaster. And it starts with dealing with bills immediately, the charity says, pointing out that those who fail to open bills are often left feeling worried or helpless.

Mike O’Connor, chief executive of StepChange, said: “Many people are living on the edge of their financial means and even a small reduction in income or increase in living costs can tip them into problem debt. It is crucial that people do not feel scared or embarrassed by having a money problem, but instead take positive steps to bring their finances under control.”

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Is it right to lie to car insurers to cut premiums? More than half of us believe that falsifying personal details to get a cheaper deal is fair game, according to insurance technology provider SSP.

But if you do so it could invalidate any claim you may need to subsequently make. “It’s a dangerous myth that tweaking the details on your motor insurance is an easy way trim down bills,” warned Adrian Coupland at SSP. “Consumers who play with their personal data are at risk of serious financial and legal consequences when making a claim.”

He added that fraudsters’ actions increase premiums for honest folk. “On it average adds an additional £50 to the cost of each policy,” he said.

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The amount of extra tax collected by HM Revenue & Customs in its new campaign against tax avoidance by the “mass affluent” has jumped 60 per cent in the last year, reckons law firm Pinsent Masons. Its analysis of HMRC data suggests the tax authorities’ “Affluent Unit” collected £137.2m in additional tax from investigations in 2013/14, up from £85.7m in 2012/13.