Last week the Competition and Markets Authority (CMA) announced a series of proposals to drive down the costs and improve the transparency of charges for payday loans customers.

The plans include forcing lenders to provide details of their products on accredited comparison websites thus making it easier for new entrants to compete.
It is hoped that this will be a big improvement on the current situation whereby the lenders with the biggest marketing budgets win most business by targeting consumers with daytime TV advertising.

These moves are welcome and are expected to save the estimated 1.8 million payday loan borrowers in the UK around £60 per year.

Money expert Andrew Hagger said: “more still needs to be done to make consumers with an imperfect credit record aware that a payday loan may not be the only option available to them.”

“For example there are a number of specialist credit cards on the market designed to help people repair their credit record by proving they can manage and repay their card balance.”

The main players in this market are Aqua, Luma, Vanquis and more recently Tesco Bank with its Foundation Credit Card.
Hagger added; “The interest rates charged on these ‘non prime’ credit cards range from 28.9% APR to 49.9% APR, a step up from the rates charged for mainstream plastic, but still way cheaper than going down the payday loan route.”

“To put the cost difference into perspective, if you borrowed £400 for 1 month on a card at 39.9% APR and didn’t pay the balance in full when the statement arrives, your interest charge would be £13.55 (or 44 pence per day). Borrow £400 from Wonga for 31 days and you’ll be charged an extra £131.21 – that’s an equivalent of £4.23 per day.”

The government has said it will simplify pension rules so that over-55s will be able to draw tax-free sums from their pension when it suits them.

Under the existing rules, from the age of 55 people can take a 25% tax-free lump sum, but from April, you will no longer have to draw the whole pension pot in one go, instead a series of withdrawals will be permitted.

The first 25% of each sum drawn will be tax-free, with the other 75% taxed at the individual’s marginal rate.

As a result pensions will be able to be used like a bank account, with the customer being able to draw income whenever it suits them. As part of the Pensions Bill, the new rules are expected to be in place for the start of the new tax year on 6 April 2015.

Chancellor George Osborne said: “From next year, people will be able to access as much or as little of their defined contribution pension as they want and pass on their hard-earned pensions to their family tax free.

“For some people, an annuity will be the right choice whereas others might want to take their whole tax-free lump sum and convert the rest to drawdown. We’ve extended the choices even further by offering people the option of taking a number of smaller lump sums, instead of one single big lump sum.”

With just over 10 weeks to go until Christmas, new research shows how consumers are planning to finance their festive costs.

A report from VoucherCodes claims that around a third of people have been worrying about the cost of Christmas since late summer, while one in five say that Christmas debt will be their biggest financial stress come next January.

Half of Brits put some cash away or purchase presents throughout the year to spread the cost of Christmas, rather than leaving it all to the last minute. While some people admit to starting their Christmas shopping before the end of September, around 16 per cent say they have been buying gifts all year round.

A quarter of Brits use vouchers or loyalty points to cut the cost of Christmas essentials, while one in ten proudly admitted to buying gifts in last year’s sales.

A quarter of Brits borrow money to cover Christmas costs, with 17 per cent turning to their plastic for help whilst others use an overdraft or personal loan.

A spokesman for VoucherCodes.co.uk, said: “While the recession may be easing, it’s clear Britons’ mind sets have shifted with many planning ahead to ensure they have the Christmas they want without the monster financial hangover traditionally associated with January. Now’s the time to start making lists of everything you’ll need, from decorations to dinner, so that you can stock up as deals and offers go live.”

UK inflation has dropped sharply to its lowest level in five years.

The figures were much better than experts had predicted as the impact of falling petrol prices helped the CPI measure nudge closer towards the 1 per cent mark.

The latest official statistics showed that Consumer Prices Index inflation tumbled from 1.5 per cent in August to 1.2 per cent in September, a welcome improvement on the 1.4 per cent expected by market analysts.

The Office for National Statistics (ONS) said a combination of falls in transport costs and recreational goods played a major part in driving down the headline figure.

This latest reduction also strengthens the case for the Bank of England’s Monetary Policy Committee to delay its decision to raise interest rates, with a rate hike before the end of 2014 now unlikely.

This latest inflation figure is the lowest recorded since September 2009, when it stood at 1.1 per cent.

The ONS warned that if it wasn’t for much lower food and petrol prices, inflation would be a third higher due to soaring gas and electricity bills.

New research from Moneysupermarket claims that a third of Brits argue with the people they live with about when’s the right time to turn the heating on.

The findings also reveal that one in four people secretly turn the heating up without telling their partner or housemates.

The reason for the in-home heating arguments comes down to the cost, with many people admitting they have argued because they are concerned how much extra it will add to their gas and electricity bills.

It wasn’t surprising therefore that some people said they would rather put on extra layers rather than switch their heating on.

A spokesman for the price comparison site, said: “With a quarter of Brits admitting to arguing about the heating of their home, it’s unsurprising to hear that the main cause for concern lies in the cost. As we approach the winter months, these arguments will no doubt become more frequent.

“The fact that over half of Brits claim that they’d rather put on extra clothing than succumb to putting the heating on and endure high costs, shows the nation is still concerned with the price they pay for their energy.”

Under new rules proposed by the Bank of England people’s savings balances of up to £1 million will be protected in some circumstances.

The proposals are designed to cover money temporarily deposited in an account for up to six months and will include the proceeds from the sale of a property.

The Financial Services Compensation Scheme (FSCS) rules currently mean that a maximum of £85,000 (£170,000 for joint accounts) worth of savings if a bank or building society goes bust.

The new financial limits are expected to come into force by summer 2015.

As part of range of a wider range of moves to improve protection for consumers, people will be able withdraw their money within 24 hours, even if the bank has gone bust.

Within the next five years banks have to split their retail banking business from their investment activities and that the retail arm would have to be independent from the rest of the bank with a separate CEO and board of directors.

Andrew Bailey, deputy governor of the Bank of England said: “Improving the resilience and resolvability of firms has been at the heart of international and domestic reforms since the financial crisis.”

He added: “Ring-fencing will improve banks’ resilience, by protecting them from shocks, and facilitate orderly resolution – both of which are needed for a stable financial system.”

According to specialist insurer Partnership more than 90 per cent of people over the age of 65 have not made any financial arrangements to help cover future long-term care costs.

As well as having no financial plans to pay for care three quarters of people have not discussed the topic with their families.

Earlier this week the Chartered Institute of Personnel and Development and SImplyhealth found that almost a third of companies are giving their staff time off to care for elderly or disabled relatives.

The research also found a lack of awareness around financial products which can be used to finance long-term care. Many over-65s as well as those between 45 and 55 admitted that they hadn’t heard about options such as care annuities.

A spokesman for the insurer, said: “Care is very much on the agenda at the moment but this research highlights that not only have most people into made any plans or spoken to their families, they don’t know what their options are when it comes to paying for care. This is likely to be due to the fact that very few people want to consider the possibility of needing long-term care later in life. Taking to time to consider your options now will pay off in the long run.”

Latest figures from the Financial Conduct Authority reveal that almost 9 out of 10 mortgages were taken out on a fixed rate basis in the first three months of 2014.

The data showed fixed rate mortgage sales increased by 40 per cent between 2012 and 2013, making up 88 per cent of UK mortgage completions in the first quarter of this year.

Unsurprisingly the once popular tracker mortgage is no longer in vogue with the number sold down by almost 50 per cent over the same period.

Repayment mortgages continued to grow, increasing in popularity by 22 per cent between 2012 and 2013, however the much maligned interest-only mortgage has witnessed a decrease in sales of approximately 15 per cent.

The number of mortgages with a loan-to-value ratio of 90 per cent or greater is only marginally up on quarter one of 2013.

Customers of Lloyds Bank, buying a property for the first time or moving home will receive a free iPad when they sign up for a mortgage.

The promotion is open to those who successfully apply for a mortgage between 7 October and 27 November.
With homeowners reportedly taking up to six weeks to get internet installed in their new home, Lloyds says the iPad will help keep their customers in touch during the first few weeks of their move.

A spokesman for Lloyds Bank, said: “Our customers have told us about the inconvenience of being unconnected when moving into a new house.

“By providing customers with a connected iPad, we’re enabling them to complete those domestic necessities very quickly, such as setting up bills, transferring money or simply surfing the internet. This should make the transition of moving into a new house even more enjoyable.”

However, personal finance expert Andrew Hagger warned, that people shouldn’t be swayed by short term gimmicks when making important long term decisions regarding their finances.

“As much as people will want a shiny new iPad, it’s the total cost of the mortgage interest and associated fees that should be the focus when selecting the best home loan,” he said.

The Conservatives have thrown down the gauntlet to its rivals by announcing that it will raise the 40 per cent tax threshold from £41,900 to £50,000 if they win the 2015 General Election

This was the promise made by David Cameron at this week’s Conservative Party Conference, a surprise move viewed by political experts as part of a play for votes ahead of next year’s general election.

Currently UK consumers pay a 20 per cent basic rate of tax on the first £31,865 they earn above the personal allowance and then 40 per cent on earnings up to £150,000.

The pledge is in addition to increasing the tax-free personal allowance from £10,500 to £12,500 by 2020.
Cameron said the personal allowance changes would mean one million of the country’s lowest-paid workers do not have to pay income tax at all.

The announcement comes a day after Chancellor George Osborne said he would freeze working age benefits for two years after the election to save £3bn.

The Prime Minister admitted “The 40p tax rate was only supposed to be paid by the most well off people in our country but in the past couple of decades far too many have been dragged into it.”