Past Articles for October, 2009

Changes to the benefits system may provide much needed help to those debtors with young families.

This is according to Citizens Advice, which noted that - as of Monday (November 2nd) - those who rent their homes and receive child benefits may be entitled to further payments.

Liz Phelps, social policy officer with the organisation, observed that an increasing number of families are finding it difficult to make ends meet and are unable “to afford to pay their essential household bills, including their rent”.

She added that the upcoming revisions to the government rules “could make a huge difference” and recommended that all those in such situations contact their local council or Citizens Advice to find out if they are eligible for assistance.

Earlier this month, debtors were advised by Will Marples of uSwitch.com to consider their options when choosing their energy suppliers, as there are now several smaller companies offering competitive rates.

By Sarah Adie

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The implementation of a new lending code, which is due to come into effect on November 1st, will better protect consumers in their borrowing activities.

This is the opinion of Robert Skinner, chief executive of the Lending Standards Board (LSB), which is overseeing the introduction of the reformed industry standards.

He observed that the LSB will be working towards monitoring and enforcing the code “and take action where lenders fall short of the [its] standards”.

Contained within the upcoming guidelines include rules applying to credit assessment and the use of credit reference agencies and debt collection, as well as the offer of help to those debtors suffering with mental health issues.

It will also cover several elements laid out in the old banking code, while detailing good practice in terms of unsecured loans and lending on credit and charge cards.

In related news, the Financial Services Authority recently unveiled plans to reform the mortgage market in order to service consumers more effectively, by bringing in measures such as affordability tests.

By Sarah Adie

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An increasing number of Britons are turning to credit unions to help them save funds for Christmas expenses because they “offer local people a well-trusted financial solution”.

This is the opinion of Mark Lyonette, chief executive of The Association of British Credit Unions (Abcul), who observed that such options are helpful as borrowers can avoid running up credit card bills or taking out personal loans to pay for the festive season.

Abcul has, over the two years to 2008, witnessed a 15 per cent rise in savings by their members, perhaps as a result of the collapse of Farepak, which saw over 150,000 people lose their money.

Rod Ashley, chief executive of Scotwest Credit Union - which was launched following the Farepak case - remarked that “huge amounts of debts” are run up during Christmas as “thousands of people succumb to the pressures of consumer spending”.

Holiday periods have proven to be an expensive time for families yet again, with research from Egg recently revealing that 77 per cent of those with children admit to spending more than they can afford on activities during times such as Halloween.

By Sarah Adie

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The sell-off of Northern Rock, which looks set to occur following acceptance of restructuring plans by the European Commission, has been applauded as being “good for consumers”.

So the head of personal finance at lovemoney.com Ed Bowsher has said, observing that the building society “has actually been offering some very good deals to consumers” and is currently featuring “some of the best mortgages on the market”.

He went on to suggest that it stands to be “quite competitive” and have “a strong balance sheet”, unlike some other financial institutions, a fact that stands to benefit debtors as good deals may be set out.

Mr Bowsher added that more competition in the market is needed “very desperately” and he welcomed the emergence of a new - and strong - player in the sector.

Under the government’s plans concerning Northern Rock, the establishment is to be divided into a good bank, continuing its economic activities - and a bad one, launched as an asset management company.

By Sarah Adie

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Britons’ lifetime sentences of debt stand to be reduced as a result of changes to credit and store card regulations suggested by the government.

This is the opinion of price comparison website Moneysupermarket.com, which found following an analysis of the proposals that almost 14 years and £2,400 could be stripped from the amount owed by consumers.

Credit cards expert with the organisation Peter Harrison observed that the “lack of understanding” regarding the industry could mean people “end up paying a huge amount of interest”, lengthening their sentences “for years - decades in some cases”.

However, he advised debtors not to wait for the reforms to come into effect, if they are “trapped by payment hierarchy”.

Under the new government code, increases will be seen in the minimum monthly repayment levels, which may encourage borrowers to pay off their arrears in less time, as part of a system intending to better protect consumers.

By Sarah Adie

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Borrowers are turning away from fixed-rate mortgages because they think they are too expensive, it has been suggested.

Responding to figures from John Charcol revealing that such products declined in popularity in September - with variable rates covering almost two-thirds of the market - Ray Boulger of the company observed that “most fixed rates still look too expensive”.

It emerged that 34.3 per cent of debtors opted for fixed rates during that month - constituting the smallest proportion for the year - but Mr Boulger noted that the best rates in the market “have got cheaper … with some real competition” being seen in some sectors.

He went on to say that the majority of John Charcol’s clients have been advised to choose variable rate mortgages.

In related news, the British Bankers’ Association recently indicated that mortgage lending is increasing among the main high street banks, with the number of loans being approved reflecting levels last seen in 2007.

By Sarah Adie

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The Treasury Select Committee has been called upon by the managing director of a price comparison site to work at increasing transparency in the credit search market, following research by the company revealing consumer ignorance of industry operations.

Toby Van Der Meer of Moneysupermarket.com addressed the group of cross-party MPs, asking them “to press for change”, as shopping around for financial products is becoming harder in the face of lower acceptance rates and increased fears of “tarnishing credit scores”.

Recent research by the website revealed that 46 per cent of consumers are unaware that ratings may be affected through multiple credit applications.

“We need to see greater transparency and fairness in the consumer credit market,” Mr Van Der Meer remarked, adding that quotation searches instead of full credit searches should be used by providers.

The move by Mr Van Der Meer comes after the recent launch of an investigation by the committee into the disadvantages created for debtors by credit checks conducted when trying to obtain cards and loan deals.

By Sarah Adie

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Some debtors in the UK may find themselves at a disadvantage if the Financial Services Authority’s Retail Distribution Review (RDR)’s proposals are implemented in 2012, it has been suggested.

While insurance group Aviva believes that rules such as the separation of costs relating to advice and to products will be beneficial in the long term, director of business development with the company Stephen Gay observed that some of the alterations could make it “more difficult for middle Britain to get financial advice”.

He noted that by improving the quality of advice available, the costs of offering such services will also rise and, while some advisors will leave the industry, others who remain “are likely to adopt business models to service fewer and wealthier clients”.

Mr Gay added that public access to financial products “is the biggest and most pressing issue” currently facing the sector.

The FSA’s consultation period is due to come to a close on October 30th. In its documentation, the organisation set out three measures considered essential to improving relationships between consumers and the industry.

These were increasing professional standards, improving transparency and addressing how adviser remuneration can distort outcomes.

By Sarah Adie

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The proposed changes to the pension credit system, due to come in on November 2nd, may be of some assistance to those aged 60 and over who are eligible for pension credit, according to equity release specialist Key Retirement Solutions.

In response to the alterations announced by chancellor Alistair Darling who stated that the time had now come to increase the capital disregard from £6,000, Dean Mirfin of Key Retirement Solutions observed that “this is a greater significant step than many may realise”.

He went on to say that, as a result, more pensioners will be able to consider equity release as a way of managing debt, while leaving “their entitlement to pension credit intact”.

Under the new regulations, capital disregard for pension credit will be increased to £10,000.

Earlier this month, elderly people were advised by Andrew Harrop of Age Concern and Help the Aged to consider working during their retirements in order to boost their incomes and prevent them from falling into debt.

By Sarah Adie

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New proposals have been set out by the government to help regulate the credit industry so as to ensure that consumers are better protected and treated fairly.

A consultation document to that effect has been published today (October 27th), detailing possible alterations to the repayment processes enforced by credit and store card providers.

Among other things, it will look at increasing the minimum monthly repayment levels, in order to encourage borrowers to pay off their debts in less time.

Consumer minister Kevin Brennan observed that it is time card companies “get their act together”, as the “complex and confusing terms and conditions” they have in place can work against the consumer.

He added that although borrowers “have a real responsibility” when it comes to managing their finances, they also retain the right to “clear information” that allows them to do so.

Meanwhile, the Treasury Select Committee has launched an investigation into the disadvantages caused to debtors by credit checks when trying to obtain cards and loan deals.

By Sarah Adie

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