Past Articles for the Uncategorized Category

Through the new Payments Industry Association, access, innovation and governance in the cheque industry should be improved and benefit customers.

Jonathan May, the Office of Fair Trading’s chairman of the Payment Systems Task Force, which is also involved in the reforms, said: “The creation of the Payments Industry Association is good news for both consumers and businesses.

“The task force welcomes the agreed changes to the cheque clearing system, which will lead to much greater transparency, clarity and consistency for customers.”

Proposed changes the task force wants to see include interest being earned on cheques no later than two working days after being deposited and consumers having access to the funds within four working days.

“Financial institutions will not be able to take money deposited by cheque back out of an account later than six working days after deposit (’guaranteed fate’), unless the payee is a knowing party to fraud. Currently, there is no maximum time limit for fate in the UK,” added the task force.

If implemented in a new banking code in 2008, it should help people better manage their debt by earning interest on cheques sooner.

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In its report, the commission said that competition was stifled at the expense of customers, with unclear charges and restrictions, adding to the likelihood of consumers getting into debt.

“A lack of clarity on charges and unduly complex charging structures and their application, combined with a reluctance among customers to switch providers, are restricting competition in the market for personal current accounts in Northern Ireland,” the commission said.

“These features make it likely that customers incur higher charges and receive lower levels of credit interest than they might expect in a more competitive market.”

Investigations have been taking place for nearly 18 months following a “super-complaint” about banks in Ulster and the debt this could be causing customers.

Chairman of the Competition Commission, Christopher Clarke, said that such practices could set a precedent for other UK banks and result in less choice for consumers.

“Without this competitive pressure from customers, banks are likely to levy higher charges and pay lower rates of interest than might be expected in a more competitive market,” he stated.

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Legal & General’s MoneyMood report claims that the UK is now in a “save” mode

Claire Stracey, the firm’s director of customer marketing, commented: “Our research shows the MoneyMood of the nation has been in ’save’ mode since the beginning of this year as the ’spend’ mood has fallen.

“Perhaps a few determining factors are inflation, a hike in fuel costs to heat our homes and thoughts of Christmas looming and the unexpected rise in interest rates by the Bank of England’s Monetary Policy Committee to 4.75 per cent in August.”

She claims that Britons have been in the mood to save for every month so far this year, except in April.

Ms Stracey added that with an interest rate increase to five per cent likely to occur before the end of the year - and with it the amount of debt to be repaid on loans linked to it - people are to continue to be in the mood to save.

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According to a MoneyExpert report, the average rate of interest paid on packaged bank accounts equates to only 1.5 per cent once charges are considered, well below the Bank of England rate.

While these premium deals claim to offer perks such as insurance offers or travel cash deals, people could be risking debt by paying for packages they never use.

“With monthly fees as much as £25 adding up to an annual fee of £300, customers have to make sure they use the special offers and deals,” warned Sean Gardner, chief executive of MoneyExpert.com.

“Anyone considering taking out a packaged account needs to think carefully about what the special deals are, how much they would cost to buy on their own, how often you would use them and whether that is worth the monthly fee.”

A survey last month revealed that a significant proportion of customers had been automatically “upgraded” to such accounts, such that many must check to ensure that they are getting the best deal available from their bank.

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In the Axa poll, Britons spent £97.3 billion on holiday and new clothing accounted for much of this, even more than tours, excursions and car hire combined.

Britain and Ireland were the most popular destinations, serving as the destination for over two thirds of holidaymakers.

However, Nick Kidd, head of lifestyle protection and household claims at AXA Insurance, warned that without adequate insurance, the debt incurred through a holiday could become even greater.

Commenting on how Britons are enjoying the chance to take a break, Mr Kidd said: “With so much being spent on holidays and travelling abroad, it is now more important than ever to have travel insurance.

“You don’t know what could happen to you whilst on holiday and travel insurance is therefore as important as taking your passport or toothbrush.”

Booking the holiday itself accounted for the largest debt, at £45 billion, followed by spending money, but new clothes for trips also added to the bill.

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The deadline to register with your local council is October 10th and electoral registers are referred to by credit agencies when determining whether to grant someone a loan and at what rate.

“Some organisations will refuse to give you credit or other financial services if your credit report shows that you are not registered to vote at your current address,” said Jill Stevens, director of consumer affairs at Experian.

“This is because they use this information to help check that your name and address is correct.”

In addition to giving you the right to vote at elections, being registered on the electoral roll credit agencies to confirm your residence, an important factor when deciding whether to give a loan.

However, for those who have just moved, Ms Stevens said that credit agencies should be informed of this and other proofs they may accept includes council tax bills and bank statements.

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According to consumer finance website uSwitch.com, 11 per cent of account holders pay a total of £530 million in fees, but a quarter of holders ignore the perks they are paying for.

More worrying still, the website claims that banks could be automatically upgrading people to these charging accounts, with 1.3 million believing this is the case, adding to debt people could be taking on.

Nick White, head of personal finance at uSwitch.com, said: “In effect, packaged accounts are allowing banks to charge customers for the privilege of being cross sold additional financial products.”

Banks are constantly looking for ways to improve their earnings due to record bad debt levels and possible action from the Offie of Fair Trading which would limit earnings.

However, Mr White called for banks to act as responsible lenders and to not automatically “upgrade” free accounts to ones that charge and thus risk pushing people into debt.

Nick White stated: “Persuading customers to take out a packaged account is one thing, but if banks really are automatically upgrading people to a fee paying account it could be described as unethical.”

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Due to increases in balance transfer fees, the cost of switching to an introductory offer of no interest means that “the vast majority of nought per cent balance transfer deals will become largely worthless,” a spokesman from the firm said.

Eddie Nott, deputy chief executive of M&S Money, commented: “You would like to think that nothing could be cheaper than nought per cent interest, however the spread of credit card balance transfer fees has in some cases wiped out much of the benefit of switching.”

According to M&S Money research, balance transfer fees of four per cent can become equivalent rates of 14.5 per cent and thus consumers may actually add to debt by switching to a zero rate offer.

He urged consumers to look at more than just the headline rates and carefully calculate what savings, if any, they can make by switching cards.

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In addition, Liverpool Victoria claims that workers are contributing an annual total of £33 billion in unpaid care and assistance, highlighting the need for both parents and children to start planning for the debt burden of retirement.

“The costs of care are also going up and up, so the financial burden can only get heavier,” added Liverpool Victoria’s Nigel Snell.

“This means it is vital for parents and children to plan ahead and try to make regular savings to fund their future care needs.”

He stated that £33 billion was a “staggering sum” and that this is the equivalent of £4,076 per year of care given freely by adult children.

Mr Snell said that good financial planning was the only way for both parents and children to avoid carrying debt due to care costs.

“Planning for the future of the family is something that everyone needs to do, to ensure that elderly parents can have the best possible care, without their children having to put their own lives on hold,” added Mr Snell.

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The Department of Work and Pensions minister said that there were arguments for further funding of credit unions, which can help people get out of the “nightmare spiral” of debt.

“£100 million should reduce the nightmare spiral of debt that those interest rates cause for so many excluded people,” said Mr Plaskitt.

Credit unions are cooperative unions which help people who may not be able to obtain a loan from conventional methods.

This can help many keep out of debt or stay away from loan sharks, but Mr Plaskitt said that there was more that the government could do to help the financially excluded.

“I am absolutely convinced that we can do more than is currently provided. We need to apply a good deal of imagination and innovation to working out the best way of achieving our aspiration of seeing far fewer people excluded and far more included in financial opportunity in its most basic forms,” added Mr Plaskitt.

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