moneynet.co.uk

Insolvency 'will surge' due to recession

07 Feb 2009 13:44:53

There will be a "surge" in personal bankruptcies as a result of the recession over the next year, debt experts have said.

According to IVA.co.uk, rates of insolvency could even be on the rise when the recession is over, as trends tend to lag behind movements in the real economy.

The Bank of England has previously said that the recession will only be over in 2010 at the earliest.

Latest data from the Insolvency Service have shown that bankruptcies were already on the up in the UK over the last three months of 2008, towards the beginning of the present recession.

The figures showed an 18.5 per cent annual rise of individual insolvencies.

This total was made up of 19,100 bankruptcies (up 22.2 per cent on the year before) and 10,344 Individual Voluntary Arrangements (up 12.2 per cent).

Andy Davie, spokesperson for IVA.co.uk, said: "Generally insolvency tends to lag about a year behind where the market is, so in a recession we are going to see the surge in bankruptcy probably next year, when it will catch up with people."

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OFT announces loans review

07 Feb 2009 13:43:54

High-interest loans are to be the subject of a new Office of Fair Trading (OFT) investigation.

Growth is predicted for short-term high-interest credit as a result of the present financial crisis - with many customers with patchy credit histories finding themselves shut out from mainstream high street card and loan lending.

The OFT itself suggested that the size of the high cost credit sector could have risen to £35 billion a year.

According to the organisation, the probe will look into the loans' competitiveness, lenders' business models, consumer behaviour and how well borrowers are protected under the current regulatory regime.

John Fingleton, OFT chief executive, said: "Low income consumers struggle to access credit and frequently have to resort to expensive, high interest options, and this has increasingly been an issue during the economic downturn.

"These consumers are vulnerable to exploitation. This study will look at the way this sector works to examine whether they get a fair deal, and whether outcomes in the market might be improved."

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Easy-going Brits 'encourage overseas travel'

07 Feb 2009 13:43:02

Britain's parents are trying to encourage their children to travel, a bank survey has revealed.

According to HSBC, 35 per cent would encourage their children to go travelling.

Another one in four said that they would be happy to see their offspring take some classes or courses overseas.

HSBC released the research to highlight the benefits of its Premier Family Service, a package of services which includes young people's travel protection, children's current accounts and free financial planning.

Brendan Cook at HSBC Wealth Management said: "Parents in the UK value travel and learning from other cultures as one of their highest priorities and want their children to travel extensively to study, work or just enjoy themselves."

He added: "HSBC has recently launched the HSBC Premier Family Service which offers a range of services, including a unique service that offers immediate financial support from a safe pair of hands. The HSBC Premier family service also enables parents to start helping their children to manage their finances."

HSBC also revealed that Britons had a more international outlook than people from other countries.

Around 85 per cent said that they socialised with people from other cultures - ten per cent above average.

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Card cheque ban gets warm welcome

07 Feb 2009 13:41:29

Moneynet.co.uk has welcomed today's news that unsolicited credit card cheques are to be banned.

The raft of new proposals issued by ministers also includes plans to create a new Consumer Advocate to help fight unscrupulous UK lenders in court.

Credit card cheques are commonly attached to statements and offer customers the chance to take out additional borrowing on their card.

However, the "blank cheques" commonly charge higher rates of interest than card use alone.

Commenting on the government's move, Andrew Hagger of Moneynet.co.uk said: "Credit card cheques have wreaked havoc with the finances of unsuspecting credit card customers for years.

"One of the big problems has been that people who are under financial pressure have seen a credit card cheque as an easy way of boosting their bank balance ... Unfortunately they are merely delaying the inevitable and eventually run out of credit, and are then faced with a far larger pile of debt."

Credit card cheques will now have to be specifically requested by customers, if they are to be sent out by providers at all.

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Santander calls on customers to switch bank account

07 Jan 2009 13:47:58

Rates of customer switching between current accounts remain low, Santander said today.

According to the bank, one in five customers do not transfer to a better-value account because they "don't have time" to do so.

This group has doubled in size since Santander conducted the same survey a year ago.

Moreover, the research also showed that 29 per cent of people do not believe switching accounts is "financially advantageous".

This is despite certain products on the market offering attractive in-credit rates to customers.

Emma Walkley, current accounts manager for Abbey and Alliance & Leicester, said: "Our research shows that nearly one in ten say they now keep a larger balance in their current account compared to 12 months ago, so it seems that many British banking customers are missing out on some easy money, as the chances are they will still be with a bank that pays little or no interest on current account balances."

Santander, a Spanish financial services giant, took over Abbey in 2004 and Alliance & Leicester last year.

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Barclays offers credit unions a boost

07 Jan 2009 13:47:07

UK bank Barclays has announced £250,000 of funding for a new community-based credit union project.

The firm said that the money, given to the Association of British Credit Unions (ABCUL) would help boost financial inclusion though helping the group's members to collaborate on "key aspects" of their day-to-day running.

Credit unions work by providing loans and savings in the manner of a traditional high street bank.

However, they tend to be small, community-based and owned and run by their members.

Commenting on the news Mark Lyonette, chief executive of ABCUL, said: "The donation announced today by Barclays will play an important role in helping the sector to grow."

Peter Kelly, head of financial inclusion at Barclays, added: "This is very much part of our strategy to mainstream financial inclusion in the UK.

"Our support will promote the sustainable development of credit unions and will help them bring affordable financial services to more vulnerable consumers."

The project is scheduled to last for ten months.

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Vince Cable criticises Mortgage Rescue Scheme

07 Jan 2009 13:46:12

Vince Cable slammed the government yesterday over its flagship Mortgage Rescue Scheme.

The Liberal Democrat shadow chancellor said that the performance of the programme - this week revealed to have helped just six households by the end of May - was "absolutely pitiful".

Under the terms of the scheme, the government helps people who are struggling with their mortgage payments in the recession to renegotiate their loans.

However, Mr Cable said that there was a repossessions "time bomb" in the UK which the government was doing little to defuse.

He added: "Helping just six families is absolutely pitiful and doesn't even begin to address the scale of the problem. Vast reams of red tape stand in the way of families faced with repossession staying in their own homes.

"Repossession is a ticking time bomb ... the numbers of repossessions are likely to soar in the next two years because of rising unemployment."

Mr Cable also said that the Mortgage Rescue Scheme suffered from "time lags" in the assistance it offered.

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Regulator takes on sale and rent back

07 Jan 2009 13:45:19

The Financial Services Authority is taking on regulatory responsibilities for the sale and rent back sector from today.

According to the watchdog, improved measures aimed at protecting customers from rogue traders are now to be put in place.

Sale and rent back works by a homeowner who is struggling to keep up with their mortgage repayments selling their home for a third party at a reduced price.

They then carry on living in the same property in exchange for rent.

Consumer groups have criticised some buyers for offering prices that are far too low - and for sometimes evicting tenants mere months after the deal is completed.

John Socha at the National Landlords Association commented: "Ethical sale and rent back must be an option for some consumers. It provides flexible tenure and the ability to remain in their property for those who can no longer afford the costs of home ownership.

"In the current economic climate, more and more people will be facing financial difficulty including keeping up their mortgage repayments. Although sale and rent back will not stop repossessions, ethical sale and rent back could be a way for homeowners to remain in their properties but become tenants."

Repossessions in the UK rose from 27,000 in 2007 to 40,000 in 2008 - and are predicted by mortgage lenders to hit 65,000 this year.

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Energy suppliers slammed for poor complaints handling

01 Jan 1970 13:47:54

The energy industry watchdog released a new report today, showing that just one in four people who complain to suppliers are satisfied by the way their problem is handled.

Ofgem said that the "attitude" of staff at the gas and electricity firms was often substandard and that people often had to phone several times to get their issue dealt with.

Overall, npower was found to be the worst-performing firm, gaining a satisfaction rating of just 16 per cent.

Meanwhile, E.ON and Scottish & Southern Energy came in joint first place, scoring 29 per cent.

Reacting to the watchdog's report, Consumer Focus said that the results were "no surprise".

A spokesperson added: "To help combat the high levels of complaints about energy billing the government must also roll-out smart-meters as soon as possible to make bills more accurate.

"In the meantime we would urge consumers who are dissatisfied with the service they receive to vote with their feet and switch supplier."

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Brown outlines credit card cheques ban

01 Jan 1970 13:45:28

The government is to move to outlaw unsolicited credit card cheques in the UK, Gordon Brown has announced.

According to the prime minister, the current system needs more "clarity" and the new proposals will be published in a policy white paper later this week.

Credit card cheques, which offer cardholders who do not have access to other forms of revenue extra credit, have proved controversial among consumer groups recently for their high charges.

The Office of Fair Trading indicated in a report that extra interest derived from the cheques could be costing customers an extra £57 million a year.

Mr Brown was quoted by the Daily Mail as saying: "I think we need new measures to provide clarity for debtors and certainty for creditors."

The government move was subsequently welcomed by consumer group Which?

A spokesman said: "Credit card companies have been able to get away with these irresponsible practices for fair too long."

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