The lesser-spotted Ethel Austin store, yesterday

Struggling cut-price fashion retailer Ethel Austin has sunk further into the mire with the news that administrators MCR are closing 114 stores by the end of the week, with the loss of over 1,000 jobs.

469 distribution and head office staff were also laid off earlier in the month. A spokesman for MCR said that the chain’s remaining 162 stores would continue to operate as usual while he looked for a buyer for the rest of the business as a going concern.

But the question as to how many companies really need to go into administration is continuing to be asked. Private Eye recently reported on the financial fall out from the collapse of Woolworths in late 2008, highlighting a major conflict of interest.

The Eye claim that when Woolies got into trouble, their chief executive Steve Johnson hatched a plan to prevent administration by selling the stores to a “turnaround specialist” company, Hilco. This plan was rejected by Woolworth’s banks’ advisor, Deloitte and the banks duly put Woolies into administration. The administrators who got the job of grinding Woolworths into the dirt? That would be Deloitte.

The recent publication of the Woolworths administration report shows that the banks were repaid everything they were owed in full and Deloitte’s three partners and their staff got £9.3 million for their hard work. Even poor Hilco got a piece of the tragic action, pocketing £8.44 million as advisors to the administrators.

Oh, but what of the thousands of staff who lost their jobs over the Christmas 2008? They received the bare legal minimum statutory redundancy pay, averaging a week’s wages per year of service. Ouch.

We wanted to print out a picture of John Utaka!

Oh dear, poor Portsmouth FC. Their team are rooted to the bottom of the Premier League, the players have had to wait for their wages to be paid on a couple of recent occasions and the club faces a winding up order from Her Majesty’s Revenue & Customs over unpaid taxes.

Now those beleaguered supporters are unable to access up-to-date information about the comings and goings of their players during the transfer window, along with a list of their diabolical on the pitch results.

That’s because, according to Sky Sports News, the club appear to have been unable to pay their website service provider and as a result, the club’s official site has disappeared. Could things get even worse and Pompey become the first Premier League club to go out of business? What would that ‘superfan’ with the big hat and the bell do then?

It’s funny but if we strap our ‘gloomy’ lens on to our knackered old camera and look into the viewfinder, all we see is a big sign with “Jessops Prospects” scrawled on it.

That’s our unusual and somewhat creepy of telling you that things just got a little worse for the troubled chain of camera specialists. They’ve quietly announced that they’re going into voluntary liquidation, but are reassuring customers that there’s nothing to worry about. Got that?

Here’s what the Business Link website tells us about voluntary liquidation…

“Voluntary liquidation involves dissolving all of a company’s assets, paying off employees in accordance with redundancy law and closing the business down.

It is usually only considered when all other options have failed (eg when no one is interested in buying the business or taking over its management).

There can be quite substantial expenses involved, and so voluntary liquidation is unlikely to provide the best returns for business owners who are looking to raise cash.”

But Jessops have said that their voluntary liquidation is a mere formality, as part of the process leading to the company being de-listed from the Stock Exchange. And not in any way a precursor to them collapsing in a heap of toxic debt. Oh no.

Speaking about the voluntary liquidation, a Jessops spokesdude said “It has no effect whatsoever on the high street shops which continue to operate as before and will continue to do so.” Many more millions of pounds of losses and the closure of loads more stores then?

Ah, our knackered old camera has packed up altogether. Wonder where we should go to get a new one…

[Thanks to HotUKDeals member actionman123]

Some charges, yesterday

Breaking news from the Supreme Court of all things that are good, right and justiceful is that the banks have WON their appeal in the test case relating to unauthorised overdraft charges.

Diana Ross Lord Phillips is the Supreme Court judge who has handed down the ruling that could shut the door on a flood of refunds to millions of customers of bibblions of pounds. Yes, bibblions.

The ruling means that the Office Of Fair Trading will now not be granted immediate power to scrutinise the fairness of overdraft fees. Had the banks lost, the OFT’s subsequent report would almost certainly have lead to a deluge of refunds. But in his ruling, Lord Phillips said that bank customers agreed to pay overdraft charges as part of the price of having a current account, so they fell outside the scope of the appropriate regulations.

But all is not necessarily lost for campaigners – Lord Phillips said that the OFT could still try to scrutinise bank charges under other regulations. The OFT have previously said that, in the event of a defeat, they would seek to instigate a full competition commission enquiry in a bid to lower overdraft fees.

Which? chief executive, Peter Vicary-Smith, said:

“This is a bitter blow for the millions of people who have been patiently waiting to get their bank charges back. Not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance. The banks now have no excuse for introducing other fee charges.

“The banks have done everything possible to frustrate the OFT throughout this process. The OFT and the Government should now explore other avenues it can pursue to get a fair deal for consumers.”

Your caring, sharing government are proposing new proposals which they propose will make having a credit card more of a pleasurable experience and less like a series of random, blindfolded fiscal assaults.

Among the proposals they’re proposing include…

• changing the order of priority for credit card repayments, so that the most expensive debts, such as cash advances, are paid off first

• increasing the minimum amount that must be paid off each month to accelerate the overall rate of repayment

• banning the practice of raising borrowers’ credit limits without their prior consent

• restricting or banning increases in interest rates on debts already incurred.

The proposals come on top of legislation that is currently going through Parliament that will outlaw the issuing of unsolicited credit card cheques to customers.

In response, Melanie Johnson, chair of the UK Cards Association stuck up for her members and risked a slew of unsolicited offers to play a pantomime villain this Christmas when she blathered: “We need to be able to demonstrate what impact these would have on consumer choice and the costs to customers of using credit cards. We will be reviewing the evidence and we expect the government to do the same. These proposals risk disadvantaging more customers than they protect.”

The proposed proposals are now being put out to consultation by the Department for Business Innovation and Skills (BIS).

Coming up later on, we’ve got a revolutionary pair of remote-controlled vibrating pants. Now though, it’s Status Quo, with ‘What You’re Proposing’ – take it away boys….

Some money, yesterday

Scores of loanees and credit cards holders could have their debts wiped following a landmark case involving mis-sold PPI (payment protection insurance).

Lynne Thorius of South Shields, Tyne & Wear was sold insurance in 2002 by MBNA that she didn’t want when she took out a credit card with them, and was charged thousands of pounds for it over a six-year period.

When she eventually contacted a claims management company, they told her she could be entitled to wipe the debt and a county court judge agreed earlier this week. Although the ruling doesn’t set a legal precedent, it could lead to a deluge of similar cases where PPI has been mis-sold.

Earlier this week, the Financial Services Authority announced that it wants 185,000 rejected complaints about PPI policies to be reopened and reinvestigated. This follows the revelation that financial companies had been rejecting 60 per cent of the PPI complaints they had received.

Of those rejected complaints, 16 per cent had been escalated to the Financial Ombudsman Service where 80 per cent were then upheld in the customer’s favour. This proves beyond all reasonable doubt that financial companies are all lying, cheating shitehawks.

If you’re having problems with debt, it helps a little to know that you’re not alone.

With high unemployment, there are millions of Brits wondering how to manage their bills, let alone enjoy a few extras like a trip to the cinema.

Here are five steps to coping with your debt:

1. Make a budget and stick to it. This may be the hardest step of all, because this is where the problem is laid bare. Knowing how much money comes in and how much goes out is the first step to getting a handle on debt. You must realize that sticking to a budget can be like sticking to a diet: you endure serious deprivation until you can’t take it anymore and then blow it all with one trip to the store. Therefore, you should include a few, selected, “carrots” in your budget (fancy coffee once a week, getting your hair done, etc.) to help you deal with the enormous “stick” of ongoing, severe financial problems.

2. Be honest about “needs” and”wants.” Again, it’s a matter of personal honesty and also knowing which of your particular wants can be reasonably incorporated into your budget. For example, buying a new car is probably unreasonable, but buying a new pair of trainers so you can walk in the park regularly is probably reasonable.

3. Get out of debt and get help doing so. I know what you’re thinking: “Oh, get out of debt! Of course! Why didn’t I think of that? Ninny.” But it’s the huge elephant in the middle of the room that nobody wants to talk about. I’m not talking about borrowing from friends and family. The perils of that situation deserve their own post. But once you know the ugly truth about how much you owe and how much you have coming in, then you’ll have the figures you need to take to legitimate debt help services like the National Debtline. They can help talk you down from the crisis and find someone to help you, and perhaps most importantly of all, will help you stay clear of the the vulture “debt counselors” who scam people who are in serious financial straits.

4. Rethink your attitude toward money. It is extremely hard to have a positive attitude when every day’s mail brings yet another angry creditor demanding payment. But you have to do it. For some people, rather ironically, giving away small amounts of money changes their attitude. Knowing that you gave a few quid to the Salvation Army or the RSPCA often has a profoundly positive effect on attitude. Sure, money is important, but you need to know that you can control it, rather than the other way around.

5. Persist. There is no substitute for this when it comes to getting out of debt. Once you start making progress, however, you’ll be more motivated to stick with it long enough to get your finances back in order. And on that special day when you finally pay off that last creditor, have a cake, or a glass of champagne, knowing that you had a mountain of debt, and that through hard work you conquered it.

Cumulative financial stress does take its toll on the body, and the longer you put off dealing directly with your finances, the longer that stress will continue to take its toll on your mental and physical health and perhaps on your relationships as well. So while the steps themselves can be quite stressful, the upfront investment in some unpleasantness can prevent much more of it in the future.

From Mondays through Thursdays, human beings can be total paragons of responsibility and discipline. But on Fridays, we go out for a laugh, but spend and drink, scream at the top of our lungs, then spend, and spend. But why is it that we do that?

The Pareto principle (also known as the 80-20 rule) states that for many events in life, roughly 80% of the effects come from 20% of the causes. With 5 work days a week, Friday equates to 20% of the work week. So one hypothesis would be that we’re applying 80% of our play time and spending to that momentous evening.

Sure, we should cut ourselves some slack for making it through another week of the daily grind. But keeping the excesses of Friday (that so often ooze into Saturday and Sunday) controlled to some extent will prevent turning next week’s Monday through Thursday into a financial guilt-fest.

How can you be a sociable creature, yet avoid abusing your bank account in the process? Let’s get the “ruining all the fun” one out of the way first, and you can do as you wish with it:

1. You don’t have to go out on weekend nights, do you? You probably have all kinds of things to do at home that you’ve been meaning to get around to for ages. This weekend could be that time. Besides, the drinking and dancing is all fun and games until somebody puts an eye out. The additional benefit: your mother would also stop asking you to apply yourself.

2. If you’re invited to join your more well-off friends for a pricey dinner out, you can tell them you have plans, but will join them later. You’ll get there in time to enjoy some Irish Whiskey Cheesecake, and with luck, they’ll have drunk enough that they’ll forget you weren’t there all along.

3. If it’s customary for each person in your posse to buy a round, go first. Nobody will remember who bought the fourth or fifth round. Don’t shirk your drinking-buddy responsibilities, though. Making your phone buzz and then stepping out to “answer” it when it’s your turn to buy is not cool.

4. Arrange to share cabs if possible, or better yet leave in time to get a train before service stops for the night. Particularly on Friday which is a work day followed by a raucous evening, everyone will understand if you say you’re dog tired and want to beg off rather than continue the pub crawl.

The main thing to remember is that you’re the same person Friday night and Saturday night that you are the other five days of the week, and while soul crushing self-denial isn’t healthy, neither is waking up with a credit card slip for £253.39 at a place you have no recollection of going to.

(image courtesy of yuwietwist)

Are you underwater on your mortgage? According to Nationwide Building Society, you can borrow your way out of your losses. How? With a “125% loan-to-value mortgage”.

Here is how it works.

1. Borrowers must come up with a 5% down payment on their new home.

2. Nationwide lends the other 95% of the cost of the new home.

3. Nationwide then extends the borrower up to an extra 30% of the value of the new home to help offset losses selling the old home.

Interest rates for this program are rather steep, starting at a fixed 6.73% for three years, or 7.48% for five years on the first 95%. If a borrower opts for the extra 30% Nationwide is willing to lend, the interest rates on that will run a fixed 7.23% for three years, or 7.98% for five years. The Bank of England base rate is currently 0.5%.

What could possibly go wrong? In the Sunday Herald, Iain Mcwhirter has a scathing Op-ed piece where he insists such practices will put British citizens right back in the situation of bailing out banks once this all goes bad. He cites historical data of housing prices dropping further as unemployment rises, and points to a projected 3.2 million Brits out of work in 2010.

A spokesperson for Nationwide told Bloomberg that she does not expect there to be high demand for this type of loan, but it will be a way to help out those who “have to move and are taking a hit on the sale of their home”.  And then a few months down the road, taxpayers will be bailing out more bankers yet again.

One of the more vibrant areas of the property market these days is the sale-and-rent-back sector. We’ve all seen the ads for companies that promise to help you clear your debts by buying your house from you then continuing to allow you to live there for a monthly rent.

It sounds like a potential win-win situation if you’re in a bit of a fiscal pickle, but when it comes to an overall victory, the odds are severely stacked against you. Short-term leasing is the biggest concern, and housing charity Shelter are worried that sellers run the risk of eviction shortly after handing over the keys to their home. Not to mention the fact that these companies are taking advantage of the desperate by buying their houses at well below market value in the first place.

But now the Financial Services Authority have come shambling into view, promising to clean up what looks like a pretty mucky business. The only trouble is, all they’ve got is some vague guidelines and a few half-baked promises, with full regulation not due until July 2010. Those crazy bastards!

In a nutshell, if you’re thinking about selling your house then renting it back from one of these companies, don’t. You’ll be leaving yourself wide open to being ripped off. Seek professional advice to find an alternative solution to your money worries.

For more info on the sale-and-rent-back cowboys, check out this excellent piece from lovemoney along with their in-depth investigation from earlier this year.

A bank manager, yesterday.

The latest chapter in the ongoing saga that is the bank charges court case will be written from Tuesday onwards, as seven banks and a building society take what looks like a pointless and ridiculous appeal to the House Of Lords. They’re up against the Office Of Fair Trading, who say the amount of money banks charge customers for going overdrawn or bouncing cheques, up to £38 per charge, is unlawful.

The banks were in ruder health when the whole thing started back in 2003, and with the government currently in control of the RBS and Lloyds, we’re basically seeing two separate arms of government farcically trading blows with each other while the taxpayer looks on, wincing.

The flood of claims by bank customers was stopped in 2007 when the whole sorry farce took itself off to the courts, where the banks have repeatedly lost and then appealed to the next highest court. Don’t think for a minute that the House Of Lords will be their final port of call – there’s still Europe and the intergalactic court of King Zod from the Planet Zarjazz to come yet.

Meanhwhile, Which? are calling for all those involved to help out customers who are suffering financial hardship as a result of these brutal charges. If you can show that you’re struggling with basic living costs, your case against your bank can be fast-tracked.

Credit cards are part of what got the world into this economic mess. But if you’re willing to game the system a little, you can score some free swag by opening a new credit card account.

According to MoneySavingExpert, if you have the discipline to stick to the terms and conditions, you can get a card, take advantage of the extra goodies, pay off the bill in full, then cancel the card. You should also only spend the minimum required to get the extras. That way you’ll be more likely to pay it off quickly.

So, with no further preliminaries, here are three interesting credit card deals that are hot right now:

1. The Play.com credit card. Self-described as “the most entertaining card on the web,” the Play.com card offers you 0% interest on card purchases for nine months from the day your account is opened, and 0% on balance transfers made within 90 days of card activation. If you spend £150 on purchases within 90 days of your account opening, you get 1500 bonus PlayPoints that you can spend on Play.com. If you decide to stick with the Play.com card beyond the 90 day bonus period, you’ll earn PlayPoints that are redeemable for Play.com gift vouchers every time you use your card. The typical APR is 15.9%.

2. The easyJet MasterCard. They have an introductory offer where you spend £250 within the first 90 days of your account opening and get 4,000 easyJet Miles. These are redeemable for easyJet flights of up to £40, including taxes. If you keep your easyJet MasterCard beyond the introductory bonus period, you’ll get 1 easyJet mile for every £1 you spend in the UK, 2 easyJet miles for every £1 you spend in other countries, and 3 easyJet miles for every £1 spent on an easyJet flight. Typical APR with the easyJet MasterCard is 16.9%.

3. The Barclaycard Goldfish Credit Card. When you spend £100 per month for three months from the time your account opens, you’ll receive £30 in extra reward points redeemable at popular high street stores. You’ll pay (typically) 9.9% interest on every purchase and balance transfer you make. Beyond the introductory period, you’ll earn 1 point for every £1 you spend, with no limit.

There are comparatively good credit card offers out there that you can take full advantage of if you spend what is required, collect your points or miles, and then either pay off your balance every month or cancel your card.

[MoneySavingExpert]

What’s your savings account earning these days, 0.001% interest?

That’s quite paltry but like the credit card industry, the best rates go to the newest recruits.

It’s all just marketing, and as business banks need to make money, that money’s got to come from somewhere.

And now that banks can no longer print money by selling your mortgage downstream until it’s nothing but a hazy memory, the loyal customers that have stuck around through thick and thin are left paying for all that lost revenue through high rates, service fees, convenience fees, bum-scratching fees and just about any other kind of fee they can dream up.

If banks are going to be players in the post-20th century economy, why do they still have such high overheads? Even a humble credit union now features appointments worthy of a Frank Lloyd Wright art installation, even when there is a lot less actual hard cash being transacted by us space-hogging humans. Banks should start playing leaner and smarter in the post-apocalyptic economy, especially if they’re getting barrow loads of money from the government.

As for the loyalty thing, banks are businesses, and loyalty is a marketing concept. You can stay with the same bank for decades and they’ll turn you down flat for a loan when you need it most. So why should you be the faithful partner in this fake marriage of customer and bank? Make ‘em work for your business. Let them know you’re going to chase the best deal, and they can match it, or lose a great customer. You could so easily change things by opening a new account somewhere else.

Bitterwallet has little time for debt collection agencies, but there are varying degrees of unpleasantness. Scraping the bottom of this slimy gutter are those companies that deceive and bully people into paying up. A Bitterwallet reader has been in touch, concerned about a letter he received from a sinister sounding organisation:

This morning I got a letter from the Scottish Bureau of Investigation? It was addressed to “The Occupier” and not to me, but I’m named in the letter. It asked “if you are this person, or can provide information on where they can be contacted” then to phone them on an 0870 number about a “personal matter”? It’s signed with a scribble that can’t be read, but there’s no contact name given.

What is this organisation and what do they want from me?? It scared my wife to death, but I won’t call them without knowing what they want.

It’ll be about money. You might owe thousands, you might owe pennies – regardless, the Scottish Bureau of Investigation is a dormant company that doesn’t trade, operated by a debt collection agency called The Lewis Group Ltd. They fish for information and hope to scare people into contacting them, at which point a person unwittingly confirms both their identity and address.

It’s a tactic often employed by The Lewis Group, as advertised on their website:

We champion various collection techniques and activities to ensure optimum results. We house a large library of letters, tested for their effectiveness and collection managers have the ability to swiftly introduce new letters, as required.

There are laws and guidelines governing such correspondence from debt collection agencies; the Administration of Justice Act 1970 states that harassment or “behaviour calculated to subject [an individual] or members of [their] family or household to alarm, distress or humiliation” is illegal.

Sending such documents would also seem to undermine the Office of Fair Trading (OFT) debt collection guidelines which stipulate that debt companies should not undertake “unfair practises” such as:

• leaving out or presenting information in such a way that it creates a false or misleading impression

• not making clear who they are, who they work for, what their role is, what the purpose of the contact is

• asking or instructing debtors to make contact on premium rate telephone numbers

Just last week, OFT reported on another tracing technique, where similar letters are sent to neighbours with a similar address to fish for information on their targets.

What can be done about letters like these? Unless The Lewis Group contact you by name, state the nature of the debt and who they are seeking to recover monies on behalf of, ignore their correspondence – the letter has no legal standing and you’re not required to contact them.

Bitterwallet attempted to speak to The Lewis Group concerning the Scottish Bureau of Investigation. We contacted their head office in Cleckheaton, but were given the Bureau’s direct number in Glasgow. We called the number and reached… The Lewis Group. Upon asking to speak to their PR department, we were transferred back to Cleckheaton where a member of staff refused to either transfer the call to their PR department or provide a contact name.

We called Consumer Direct and talked through the contents of the letter. We were told that since the letter failed to explain its purpose, wasn’t address to an individual and requested contact via a premium rate number, the letter was in breach of OFT guidelines, adding that anyone receiving such a letter should ignore it. For more information you can call Consumer Direct on 08454 04 05 06, or to make an official complaint, contact the Office of Fair Trading at enquiries@oft.gsi.gov.uk.

What ya call a sucka punch

The North East of England is being hit hardest by the negative equity situation caused by the housing price crash. There, approximately 10% of owners owe more than their house is worth. By contrast, in East Anglia and Scotland, the figure is closer to 1%. (the figure is approximately 4.8% in the UK as a whole). According to an Oct. 2008 article in the Telegraph, two million could get caught in the negative equity trap by 2010.

So what should you do if you are in this situation? Do you need to do anything at all? Here is what the Citizens Advice Bureau suggests:

1. If you are still able to make your payments, you should probably wait it out. According to a recent BBC story on the subject, if you can keep up with the payments until the market picks back up, you’ll most likely come out fine.

2.The government recently launched the Homeowners Mortgage Support for borrowers suffering a temporary loss of income. This program can allow you to delay some mortgage payments for up to two years. You’ll still owe the money, plus interest on it, but it is a much less catastrophic arrangement than losing your home. There are a number of qualifications, but two of them are:

• having savings of less than £16,000
• having less than £400,000 outstanding on your mortgage and any other loans secured against your home

3. Contact your local CAB before signing up for any mortgage “rescue” scheme. With some “sell and rent back” arrangements you could end up paying very high rent and even being evicted. Proceed carefully, in other words.

If you have any thoughts or suggestions on the issues regarding buying vs renting in the current climate, please leave your comments below.