Past Articles for March, 2007

Ads featured in regional newspapers, which do not conform to industry standards on credit promotions and could contribute to the debt management problems of some consumers, have been reduced by 31.5 per cent in the last two years, according to the OFT.

This success has been put down to the efforts of the OFT and the Local Authority Trading Standards Services, which formed an enforcement partnership designed to limit the amount of potentially misleading credit advertising.

Alan Williams, senior director of markets and projects services at the OFT, said: “The law requires that credit adverts should be clear, balanced and not misleading.

“Businesses must ensure that consumers receive full and accurate information about the type and cost of the product and services being offered so that consumers are enabled to make informed choices.”

The OFT recently conducted discussions with the Yorkshire-based credit company the One Stop Money Shop with the aim of ensuring their advertising does not contribute to their customers debt management problems.

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Increased levels of borrowing among consumers, coupled with fewer people saving for their retirement, could see the UK heading for mortgage debt management crisis, suggests Dean Mirfin, business development director at Key Retirement Solutions.

An average of £31,000 is owed by those people either in retirement or close to retirement age, a recent survey from the equity release company has demonstrated, according to a report from 24dash.

The news provider quotes associate director of charity Credit Action Chris Tapp as saying: “Unfortunately in this day and age, someone’s hair turning grey is not an indicator of their bank balance being any less in the red.”

“These findings demonstrate the very difficult situation a sizeable number of pensioners find themselves in, trying to cope with debt repayments as well as rising living costs,” he added.

Earlier this week, Citizens Advice moved to highlight the debt management woes of Britain’s former prisoners, many of whom it claimed are have been left “with no homes to go to and penniless”.

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Several hundred millions of pounds are believed to be resting in long-tern unused accounts in the UK and this money could be “reinvested in society” without altering the procedure for reclaiming the relevant cash, the Tresury has suggested.

The so-called unclaimed asset scheme has been detailed in an official document, which is now being consulted upon and has been backed by the Building Societies Association and the British Bankers’ Association.

Economic secretary to the Treasury Ed Balls said: “This is a unique opportunity to provide for worthwhile reinvestment in youth services, financial inclusion and capability, while balancing the financial interests of consumers.”

Last week, Mr Balls described the UK’s debt management and financial exclusion-related issues as a “big challenge” facing the country.

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The charity makes clear that thousands of Brits have faced debt management problems as a result of money being demanded back from them by the government after claims that tax credits were paid in error.

And the issue ought to be addressed at a national level in light of the 10,000 people across England and Wales who approached the charity for debt advice for this reason during the 2005-06 financial year, it has been claimed.

David Harker, chief executive of Citizens Advice, said: “Thousands of families are also being threatened with court action for the recovery of overpayments about which they are still challenging or awaiting explanation, sometimes not even knowing yet the amount due.”

“Urgent change is still needed to help the thousands of families experiencing huge problems with the system [of tax credit payments],” he added.

A new partnership arrangement between Citizens Advice and the Association of British Credit Unions aimed at reducing financial exclusion was announced last week.

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MP for Telford David Wright’s comments came in response to an announcement on the issue from the government, which indicated that more will be done to prevent bailiffs from abusing their powers.

The terms outlined in the proposed tribunals, courts and enforcement bill, would mean debt collection agents could only enter a premises when all other avenues for repayment of credit card debt have been explored and have failed.

“There has been a great deal of confusion about the rights of bailiffs and the rights of householders and, as this mostly affects some of the most vulnerable people in society, it is right that this is cleared up once and for all,” said Mr Wright.

Citizens Advice suggested earlier this month that the proposed bill would lead to an increase in the number of bailiffs allowed to enter homes to recover unpaid credit card debt.

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The minutes from the meeting of the rate-setting committee revealed that only one of nine members in attendance voted for a rise this month, but Global Insight’s Howard Archer maintains that a quarter-point increase could be seen soon.

Currently at 5.25 per cent, any increase in the cost of borrowing would put further pressure on the finances of those facing debt management difficulties and Mr Archer has suggested a “hike to 5.50 per cent remains more likely than not”.

“The minutes are likely to fuel speculation that the Bank of England may be done on raising interest rates,” commented the Global Insight’s UK and European economist.

“Nevertheless…we still expect interest rates to rise by a further 25
basis points to a peak of 5.50 per cent,” he made clear.

Since August last year, a debt management plan has been made more difficult to form for thousands of Brits as a result of three quarter-point rises in the cost of borrowing money.

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The organisation is concerned that new proposals, which are designed to protect people suffering debt management problems from having their home entered by bailiffs, will not be effectively enforced.

A number of Citizens Advice bureaux in England and Wales have been encouraging the thousands of people struggling to find a debt solution to provide evidence of “rogue” tactics employed by bailiffs.

“Regulation must be robust enough to end the years of intimidation, harassment and excessive-charging suffered by vulnerable people at the hands of bailiffs,” said Citizens Advice chief executive David Harker.

It was recently announced that Citizens Advice and the Association of British Credit Unions Limited are to pool resources in an effort to reduce the number of people affected by financial exclusion.

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Measures due to be introduced form part of the tribunals, courts and enforcement bill, which is currently before parliament and aims to ensure the safety of people who are among the “most vulnerable people in our communities”, constitutional affairs minister Vera Baird has announced.

“We have always said forced entry can only be used as a last resort and when all other avenues have been exhausted,” said Ms Baird.

“Today, I’m happy to announce this power will not come into force until those bailiffs who are not crown employees are licensed by an independent regulator,” she continued.

However, it was also revealed that some of those Brits who have accumulated credit card debt could still be vulnerable to having their premises entered if a High Court or County Court ruling is obtained by the bailiff involved.

Last month, the Citizens Advice charity raised concerns that the proposals contained within the tribunals, courts and enforcement bill could put many Brits at an increased risk of having their home entered and their belongings seized.

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With the country’s debt management concerns continuing to mount up, the finance website Fool.co.uk has claimed nine out of ten UK consumers would like the government do more with the money they recive form the taxpayer.

And based on an online survey of close to 2,000 respondents, Fool.co.uk concludes that council tax, stamp duty and inheritance tax are among the most unpopular with British citizens.

“People want to see tangible benefits in return for the money they pay in the form of taxes,” said David Kuo, head of personal finance at Fool.co.uk.

“Nine out of ten people are disappointed that they are not getting value for money. It is a terrible indictment of the government’s wasteful use of tax revenues.”

Continued council tax rises, which can contribute to an individuals debt management problems, is a subject of conversation for 65 per cent of British adults, according to a recent study from unbiased.co.uk.

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People should make sure they are aware of the potential implications of entering into either an Individual Voluntary Arrangement (IVA) or bankruptcy arrangement, suggests James Jones, consumer affairs manager at Experian.

Advice from impartial professionals can prove invaluable in such instances and credit consumers must not enter in to an IVA lightly, Mr Jones continued.

“Bankruptcy and IVA shouldn’t be seen as an easy way out of debt, because there are obviously serious implications,” Mr Jones remarked.

“But, of course, that is the right solution for some people,” he concluded.

Recently published figures from the money education charity Credit Action revealed that around 300 declarations of insolvency are made every day in the UK.

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