Past Articles for January, 2010

Consumer watchdog Which? has responded to the recently-outlined proposals by the Financial Services Authority (FSA) indicating that those in mortgage arrears will be treated more equitably by industry practitioners.

Chief executive with the company Peter Vicary-Smith welcomed the move, saying that the firm is “pleased” with the FSA’s decision to “at last take action”.

“It’s shameful that some lenders have been hitting their struggling customers with excessive arrears charges,” he continued.

However, he did not feel that the demands were sufficient and asked the FSA to name the firms it is involved in disputes with in order to provide judges hearing repossession cases with all the necessary facts.

“The FSA must do more to protect consumers who face the threat of losing their home,” Mr Vicary-Smith went on to remark.

Commenting on the FSA’s plans, director of the mortgage sector with the organisation Lesley Titcomb noted that creditors must be aware of their obligations when clients fall into further debt and acknowledge that this is not a chance to drive revenue.

By Sarah Adie

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Recently-published figures revealing a 20 per cent drop in the amount of money spent on mortgage repayments each month between 2008 and 2009 has prompted one industry expert to ask whether people should be saving this extra cash or settling debts.

David Kuo, director of The Motley Fool - a firm dedicated to changing attitudes about and interaction with money - noted that the statistics from Woolwich of Barclays means that homeowners are now £110 better off every month.

He observed that some are using this extra money to pay off debts, which is “quite laudable”, but for those that are happy with their expenditure, investing the cash could be a good idea.

Opting for a “stock market tracker” or similar could mean that, after 25 years, the average Briton “would be £150,000 better off”, Mr Kuo continued.

The figures from Woolwich also revealed that the average monthly mortgage repayment stands at £497, compared to £607 recorded in December 2008.

By Sarah Adie

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Those in debt may benefit from switching to a different bank account in order to take advantage of better deals, a move that has been described as “much simpler than most people realise”.

James Daley, money editor at consumer watchdog Which?, made this observation, stating that the company is “disappointed” that fewer people are willing to make the transfer.

“Banks are required to have a switching department these days,” he said, noting that this helps smooth out the process.

He added: “79 per cent of people that we asked who had switched their accounts said that they had found it ‘very’ or ‘fairly’ easy.”

Furthermore, Mr Daley remarked that it is unsurprising that few Britons trust financial institutions after the turmoil of the last couple of years, with charges hurting accounts and savings being put at risk.

He was commenting after research from Which? revealed that 68 per cent of UK consumers will probably change bank accounts as a result of poor customer service.

By Sarah Adie

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Elderly people struggling with debt management issues may like to make use of a new equity release scheme being piloted by Just Retirement and the Joseph Rowntree Foundation.

It is to be brought into the London districts of Maidstone, Islington, Chelsea and Kensington, aimed at over-65s keen to release cash from their properties.

Andrea Rozario, director-general of Ship - the equity release trade organisation - said that this initiative “bodes well” for the industry in 2010, as there are a lot of “asset rich but cash poor” people in the UK who will profit from it.

“The equity release sector plays a vital role in improving the standard of living for older consumers,” she continued, adding that participants in the pilot will “gain the benefit of staying in their homes longer”.

This comes after the Consumer Credit Counselling Service introduced a similar fee-free service to help older people, having experienced a steady climb in the average age of those looking for debt assistance.

By Sarah Adie

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Those considering taking out homeowner loans may be buoyed by the news that mortgages are becoming more affordable.

This is according to the latest survey from Woolwich, the mortgage arm of Barclays, which found that the average monthly payment is now £497, a drop from £607 recorded in December 2008.

Head of mortgages at Barclays Andy Gray noted that for millions of households, this reduction in payments has been the “sliver lining to the recession”.

“For them, it’s a chance to save in a way they might not have been able to before, or overpay their mortgage and cut years from its life,” he said.

Those in London experienced the greatest drop, where the amount of take-home pay spent on mortgages fell by 23 per cent.

These results follow recent predictions from Timothy Lambert of Ducalian, who observed that mortgages are likely to become more affordable as the country comes out of recession.

By Sarah Adie

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The suggestions set forth by the Financial Services Authority (FSA) to better protect those with mortgage arrears have been described as “very reasonable” by an industry expert.

According to Ray Boulger, senior technical manager at John Charcol, the proposals from the organisation - that monthly charges will not be permitted if repayment schedules are in place and being kept to - help by not putting additional pressure on those in debt.

He noted that it is likely this recommendation will be actioned as it has been accepted by the Council of Mortgage Lenders and any objections voiced would come from creditors themselves.

However, Mr Boulger did say that the FSA’s comments regarding repossessions - that they must remain a last resort - will have little impact, as those in the industry “want repossessions to be a last resort anyway, because [they] are bad news for lenders, just as they are bad news for borrowers”.

By Sarah Adie

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Britons have been advised to monitor their credit ratings, as this will help them ascertain the likelihood of being accepted for financial products.

Head of loans and debt at moneysupermarket.com Tim Moss described credit scores as “the must-have item for 2010″, noting that there are ways for people to make sure these are “as attractive as possible to lenders”.

The organisation has just launched a credit monitoring and identity theft channel that will allow users to track their credit profiles, as well as offering credit reporting and identity theft product comparisons.

“Consumers should remember that being turned down for credit is likely to have a negative impact on your overall credit rating,” Mr Moss said, adding that the tool will help people “find what they need”.

Meanwhile, the Consumer Credit Counselling Service recently introduced a new equity release programme to help older Britons avoid repossession and improve their quality of life.

By Sarah Adie

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Those in debt may find their problems exacerbated by the rising cost of living, with big climbs being seen in petrol and food.

According to the Daily Mail’s latest index, these hikes are taking place despite the fact that supermarkets pledged to make price cuts in January.

The survey revealed that a shopping basket with 37 items of basic necessity - such as bread, pasta, rice, cereal, meat products and dairy - came to £53.63, a jump of 7.5 per cent over the year.

It was also found that unleaded petrol is 30 per cent more expensive than 12 months ago, while the publication predicted that record energy bills will soon be received by the public because of the recent cold snap.

This forecast comes after uSwitch.com revealed that rising fuel bills are driving more people into debt, with 13 per cent more clients have to reach arrears arrangements with their suppliers in the third quarter of 2009.

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Britons are exercising more caution about their spending habits as a result of the recession, it has been claimed.

Findings from PayPal’s latest report - Online Retail: The New Consumer Demands - conducted by The Future Laboratory, revealed that 19 per cent plan to monitor expenditure, while 54 per cent are more interested in bargain hunting now.

Commenting on the fact that 58 per cent are increasingly cost-conscious, marketing director of PayPal UK Mark Hodson noted that such a shift in attitude is unsurprising.

“Although we’re technically out of recession, it’s going to be some time before consumers start feeling better off,” he said.

The survey also found that 17 per cent of people are more inclined to save for purchases than use credit cards, which they would have done before the crunch.

However, recent research from the Post Office indicated that people are turning to credit card debt for everyday items such as groceries more and more.

By Sarah Adie

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UK adults have been warned by an industry expert to beware of a “scorpion’s tail of debt”, even as the country lifts itself out of the recession.

The Consumer Credit Counselling Service’s (CCCS’s) chairman Malcolm Hurlston noted that, although the growth being seen in gross domestic product signifies that Britain has “turned a corner”, the impact this is to have on citizens’ lives “will be slow”.

“There are still hundreds of thousands of people wondering how they are going to pay their bills over the next year,” he said.

Figures from the CCCS show that calls to its helpline increased by 25 per cent in 2009, with 86,573 enquiries taken in the fourth quarter, facts which prompted Mr Hurlston to assert that government support and positive lender attitudes must continue.

His comments come in the wake of findings from the Nielsen-British Retail Consortium Consumer Confidence Survey, which showed that people are increasingly concerned about debt levels, with 29 per cent intending to settle arrears.

By Sarah Adie

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