Interest rates: no need for rise

August 20th, 2014 No Comments By Ian Wade

British high street 300x180 Interest rates: no need for riseThanks to supermarket price wars and sales on the high street this summer, there’s been no need for the Bank of England to go ahead with early interest rate rises. Hurrah!

The consumer prices index, or CPI, went from 1.9% to 1.6% last month, which means it is still below the Bank’s 2% target for the seventh month on the trot.

The Office for National Statistics reckon this is down to a third month of falling food costs, which is due to the supermarkets scrambling for what customers they can get with all manner of discounts and offers.

The July RPI figure, which they use to set next year’s regulated rail fares, came in at 2.5%, which hopefully is good news for commuters expecting a massive price increase in the new year.

The City was a bit freaked out by the drop in CPI. Experts said the lack of evidence of inflation would stay the hand of the Monetary Policy Committee from a first rate since 2007.

There’ll no doubt be more exciting news like that when the Bank publishes the minutes of its August meeting, but otherwise that’s all quite optimistic news isn’t it?

Please say it is.

pensioner 242x300 You can benefit from next years pension changes even if youre retiring nowThey don’t make old people like they use to do they? Once upon a time they were all hunched over and angry, and now they’ve all got tracksuits and dancing lessons.

Either way, if you’re old and planning to collect your pension next year, you’ll have more options than ever to take your cash and run. If you’re retiring this week, you can also benefit from the new rules that are coming in next year.

There’s a relaxation in pension rules from next April, which means it is easier for old people to take their entire pot in cash (income tax pending, naturally). If you’re retiring before April you can still take advantage if you rest your cash in a ‘capped drawdown’ scheme until next year.

What’s that when it’s at home?

Well, capped drawdown pays out income from a pension based on the GAD rate set by the Government Actuary’s Department (GAD) and at the moment, allows retirees to take 150% of the equivalent annuity rate.

A company called Hargreaves Lansdown has launched a simplified capped drawdown plan called ‘retirement bridge’ (don’t worry, there’s not many steps for you to walk up) which provides you codgers access to your money, with a 25% tax-free lump sum and access to income if you need it (that’ll be taxed though).

Tom McPhail, head of pensions research at Hargreaves Lansdown, said there were many people retiring who want to take advantage of next year’s flexibility, but didn’t want to buy a pricey drawdown product or short-term annuity.

“There are relatively few ways for people to access some, or all, of their pension now,’ he said. “Insurers have come up with temporary solutions [such as short-term annuities] but in the main you need to go through an independent financial adviser and the costs of doing that are not insignificant.”

“I am quite concerned that a lot of people are hitting retirement today who are not being offered this option,” he said. “They think their options are either annuity or [full] drawdown, which will be complex and expensive. There are a huge number of people just treading water who are not sure what their options are. Some people do need to access the money… and others are waiting to see what happens and are reluctant to commit until they know what the rules are.”

Check the charges though – if you have a smaller pension, drawdown might not be the thing for you.

You should check your pension contracts before moving your money around though. Some older pensions have guarantees that can offer good annuity rates or the ability to take more than 25% tax-free cash, which you might lose if you move your money.

Always check your old policies before doing anything and phone up your provider and ask them if you can have the tax-free cash and leave the balance of your pension in scheme.

Npower lose both customers and cash

August 15th, 2014 2 Comments By Ian Wade

npower logo Npower lose both customers and cashNpower has shed 62,000 of household customers in the last year.

That’s a bit careless.

The troubled energy supplier also reported a 38% drop in profit for the first six months of the year.

Profit before tax and interest payments on debt fell to £109m, or about £14 per customer, from £176m last year, npower said.

Understandably, the firm is spending more on improving its customer service, while costs of the government’s energy efficiency scheme have risen.

There’s also a worry that coal and gas stations may be shut down as low wholesale prices are making them run at a loss.

Npower also blamed the mild weather and one-off factors for the drop in profits to 2.27bn euros (£1.8bn), which is a little bit daft seeing as it is actually Summer and it is supposed to be the time people tend to lay off the radiator action.

They have until the end of the month to sort out its billing problems or it will be forced to stop all telephone sales to new customers. Apparently, their challenge for its customer services is to ‘become a more human interface while remaining compliant’.

Well, using language like ‘interface’ and ‘compliant’ is really going to help there, pal.

wonga ladies 300x282 Payday loans companies not entirely honest shockPayday lenders and credit services must do more to make sure they aren’t misleading customers.

The Financial Conduct Authority (FCA), who took over supervision of the consumer credit market, has looked into 1,500 promotions being offered by various lenders and debt managers and general hoodlums, and has opened 227 cases into promotions that looked a bit iffy.

Unsurprisingly, payday lenders aren’t particularly hot on such things as the facts, and hoodwink customers with puppets and other nonsense, while sneaking through completely unreasonable risk warnings or representative APRs.

Rules state that all promotions must be clear, fair and not misleading for consumers.

Various promotions that did not meet the new regulations include nefarious sponsored links, when someone Googles ‘debt help’ and is lead off to a magical world only to be mislead.

General advertising arsery where loans weren’t entirely clear about their rates and credit also got a shoeing.

Clive Adamson, who is a director of supervision at the FCA, said: “It is important that all firms ensure financial promotions are fair, clear and not misleading so that customers are able to make informed decisions.”

“We are disappointed to see standards fall short of what we expect, particularly in the consumer credit space, four months from when we took over regulation.”

“We believe that firms in this sector can do more to ensure financial promotions meet the standards we would expect and will continue to monitor performance in this area.”

While the firms are all “Yes, we’re sorry. It won’t happen again”, the regulator plans to continue monitoring them and have words should anyone fall breach again.

We’ll see.

Legal  General Legal & General go it alone: what now for the Association of British Insurers?The future of the Association of British Insurers is an uncertain one after one of the main players in it – Legal & General – decided to go solo. L&G decided that it would be in the best interests of shareholders and policyholders if they cancelled their membership.

A few weeks ago, the company said that they wanted the trade body to be “a more forward-looking organisation”, so it isn’t too much of a surprise.

Nigel Wilson, Legal & General’s chief exec, said: “Our public policy work increasingly involves sharing commercial aspects of our business with government, which, for very obvious reasons, not least competition law, we cannot share with competitors.”

“We believe that, increasingly, engagement with government, regulators, quangos and other external bodies will be on a case-by-case basis going forward.”

The ABI have been having a rough time lately as it is, with the insurance industry looking at huge regulatory changes, which include reforms in the last Budget which promised structural changes to the insurance sector.

For the time being, Admiral and Allianz have no plans to ditch the ABI, and it looks like Axa will be sticking with it for the foreseeable future. Aviva and Prudential haven’t given their thoughts on the matter, but if Legal & General start making serious money and having more freedom, are we going to see the insurance equivalent of a Premier League breakaway where they can all start calling the shots more frequently?

Would that be good for consumers? It could go either way.

Tax credit crisis as claimants miss deadline

August 11th, 2014 No Comments By Ian Wade

tax credits 300x221 Tax credit crisis as claimants miss deadlineA load of people have failed to renew their tax credit claims, and now face a world of palaver as they could be cancelled.

According to figures from the HM Revenue and Customs (HMRC), some 455,000 claimants haven’t renewed their claims, even though the deadline for renewals was delayed after strike action buggered things up.

A three-day walkout by Public and Commercial Services union (PCS) members, meant that the deadline was pushed back by a week.

Households up and down the UK rely on tax credit payments, helping families and the like with basic needs and childcare.

Claimaints who do bother, can now also do it online thanks to a new service from HMRC.

Approximately three million people did renew in time for the deadline, and while the 455,000 who didn’t do it in time, this is lower than the 650,000 who were tardy last year.

If the deadline has completely passed you by, get in touch with the UK Tax Authority sharpish.

grandparent 225x300 Pensions likely to be cashed in after new rules, claim taxmen The taxman reckons a third of the workers who retire with private pensions next year, will cash in their pot immediately.

Due to new rules introduced in March’s Budget, retirees are allowed to dip into their pension savings at normal tax rates.

Of the 400,000 retirees, HM Revenue & Customs is expecting approximately 130,000 will do it.

After the quarter of a pension pot which can be accessed tax free, from next April, workers will pay their normal income tax rate on further cash released, instead of the 55% tax that is currently charged if someone aged over 55 stops work.

This crystal balls thinking also suggest that due to George Osborne’s shaking up of the system,  the Treasury look set to gain around £3.8 billion over the next five years.

It’s expected these changes will lead to fewer people using their pot to buy an annuity, which pays out a guaranteed yearly income once they’ve retired.

An annuity tends to last for the rest of a retiree’s life and acts as an insurance against the possibility of them outliving their savings.

Although annuities haven’t had the best press of late, what with sinking rates and people not being arsed to find the best deal for themselves.

A man named Paul Green, speaking for Saga, said that a survey it had recently carried out among 2,400 over-50s about the new pension freedom found that one in six (15%) of those still working plan to cash in their full pension pot.

“It is vital that people are properly advised about the tax implications of withdrawing more than 25 per cent of their pension pot before they do something that they may live to regret.”

Take heed of his wise words, or you may as well run into traffic now, dear reader.

goldengirls 241x300 Boost your pension by 258% with this one clever trick No, it’s not a dodgy Facebook ad – it’s TRUE. People in their 50s and 60s can stand to triple their pension pot by joining new company pension schemes and boosting their contributions.

Many older people don’t bother with new pension schemes, thinking that they’re too old to get the benefits. But new pension reforms mean that they can up their contributions by 258% in just a few years and take out all their money without paying any tax. Woohoo!

Here’s how it works. In the last 2 years companies started automatically putting their employees on a pension scheme. Once you’re enrolled, your contributions are deducted from your payslip, your employer contributes something and you get tax relief from the government.

But people who were over 50 tended not to bother with it. WRONG.

If you do it, under the new reforms you can take all your wonga out of these schemes when you retire, rather than bothering with boring, stifling annuities.

Here’s the maths. (Theoretically.)

If you earn £24,000 a year this year, make an increase in contributions in 2018, and get a small pay rise every year – and there is a rate of 5 per cent annual growth – a 55-year-old could make £14,134 by the age of 65.

So get on it, silver foxes! That cruise ship buffet is waiting…

Insolvent arrangements on the up

July 30th, 2014 No Comments By Ian Wade

cash 300x225 Insolvent arrangements on the upMore and more people are becoming insolvent in England and Wales, ringing alarm bells about how households will cope when interest rates rise.

There were 27,029 personal insolvencies in the second quarter, a 5.1% rise on a year earlier.

This was mainly due to a 20% jump in the amount of people entering into individual voluntary arrangements (IVAs) to a new record high of 14,571 according to the Insolvency Service.

While some people, who know about this sort of thing, reckon it was showing that creditors were more confident about recovering debts, others claim it was evidence that families were on the brink after years of low wage increases (if any) and jolly government cuts.

Bev Budsworth, from The Debt Advisor confirms this: “Aside from all the talk of economic recovery, it’s clear that people are really struggling,”

“The acid test will be when the Bank of England starts to raise its base rate and people’s mortgage payments follow suit.”

She went on to say that hundreds of thousands of people were barely making debt repayments, as interest rates are still at 0.5%. Financial markets are likely to price in a rate hike before 2014 is up, due to economic growth.

Yet Matthew Chadwick, who is a business restructuring partner at BDO, thinks that with the economy looking healthier, those with bad debts were now more under pressure to pay them back, and so further gloom is ahead.

“A continuing rise in the number of personal insolvencies in the next 12-18 months is therefore likely. Today’s rise in individual voluntary arrangements is typical at our position in the economic cycle and need not be cause for alarm.”

Maybe not alarm, but not the best of news for families literally trying to get their financial head above the water.

Lloyds TSB 300x180 Lloyds Bank fined for being despicable arseholesLloyds Bank have been thrown a £218 million fine after ripping off taxpayers who helped it out.

The taxpayers had thrown the bank a lifeline to the tune of £25 billion when it was close to collapse.

Most of the fine was for short-changing the Bank of England which, at the height of the financial crisis, was helping to keep the firm afloat, the ungrateful arseholes.

Both British and US regulators demanded the massive cash penalty for what even the bank admitted was “extremely serious” rate rigging.

Lloyds had been taking advantage of taxpayer-backed funding schemes, but traders rigged rates on which a fee for using the lifeline was based.

Unsurprisingly, several of Lloyds’ staff have been suspended, and there’s talk of bonuses being rescinded.

And is if that wasn’t enough, the Serious Fraud Office is going to widen its investigation into 12 individual bankers to include Lloyds.

Bank of England Governor Mark Carney was all seriousface, saying: “Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct.”

Andrew Tyrie MP, chairman of the Treasury Committee, said: “The banks were manipulating Libor (the rate banks charge each other for lending money ) and the Repo rate, deceiving the Bank of England in its taxpayer-backed support scheme. This settlement is part of the much needed clean-up. Implementing the Commission’s proposals will be another.”

There’s been more than £2 billion paid by banks to regulators over their deceit and manipulation, including £290 million by Barclays and £390 million by RBS.

What a bunch of shitheels.

PayPal toy with being a payday loan company?

July 24th, 2014 1 Comment By Mof Gimmers

paypal PayPal toy with being a payday loan company?PayPal – a company that people don’t exactly trust or like – have announced that they are going to start offering cash advances to small businesses in the UK. If you can’t get a loan, then PayPal want to ‘help’.

Of course, everyone’s problems with PayPal are well documented, but so too is the general irritation with loan companies and banks. It is basically getting a consumer to pick which illness they’d like.

The PayPal Working Capital fund will launch in the UK later in the year, but has been giving out loans in the USA since last September. And people are taking them up on the offer. Thus far, they’ve made £82m worth of advances to American firms.

They say they will provide “funding in minutes” after approvals and all that… but no credit check.  A one-off fee is required on the advance (like interest) and the fee you can receive is based entirely on sales history from the PayPal account, the amount of money being advanced and the schedule of repayment.

Businesses will pay back what they owe with a share of sales made using PayPal, so if you don’t sell anything on a given day, PayPal get nothing.

In America, there’s been glitches – a number of customers have noted that unauthorised payments have been taken out of their PayPal account as repayments, with PayPal clearing business accounts without much fanfare or explanation.

Would you trust PayPal to sort you out with a loan? Or are they no better or worse than any other loan company?

Student loans system in a right palaver

July 23rd, 2014 1 Comment By Ian Wade

student Student loans system in a right palaverMPs are calling for an urgent review of the student loans system, after it transpired that 45% of student loans will never be repaid.

It’s estimated that 45p in every pound shelled, the taxpayer won’t ever get back.

Under the current system, students can borrow to cover the full cost of £9,000-a-year tuition fees, and do not have to start paying back their loans until they have finished studying and are earning above £21,000 a year, and any outstanding debt is written off after 30 years.

However the sheer amount of students defaulting on their debt (ie: they haven’t got jobs or even if they have, they’re not paying enough), and the system looks in crisis as it will soon become financially unviable.

Originally, the government has projected that 28% of loans would have to be written off, but ministers have been continually shouting “HIGHER!”

The number has been revised because economists have downgraded their predictions of how much graduates are likely to earn in the future.

The National Audit Office predicts that student debt will increase from £46 billion in 2013 to about £330 billion by 2044.

Meanwhile, the Student Loans Company is supposed to have 98.5 per cent of borrowers in a repayment channel – which means they are either repaying on time or not earning enough to repay, but they’re allowed to include people in that total, even if they don’t have any information on them.

The Institute of Fiscal Studies has predicted that the average student will now leave university with about £44,000 of debt, in 2014 prices, compared to about £25,000 under the old system.

Although the lowest earners will pay back less, far fewer graduates will pay off their debt in full by the age of 40, and almost three quarters will never earn enough to pay back their loans in full.

Tuition fees are higher in England than in any other public university system on Earth, and when you throw in other expenses, the cost of studenting in England in general was the third highest in the world.

THE WORLD!

pensions 300x187 Osborne reveals new pension plans (not his, sadly)New rules for private pensions have been announced, allowing the retired greater freedom to fritter away their cash.

The rules were launched by Trouble-haired chancellor George Osborne, following his announcement earlier this year when he scrapped a rule forcing people to buy an annuity, and thus freaked out insurers the land over.

Osborne is keen to allow people to tap into the cash they set aside during their working life by reducing tax penalties imposed on those who withdraw their savings in a lump sum.

On Monday, the government confirmed its intention to go ahead with such plans, seen as the biggest reform of pensions in a generation, and added details to its proposals following a consultation with industry, employers and consumer groups.

Osborne said: ”It’s right to support hard working people that have taken the long-term decision to save for their future and I’m pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive,”

“The government believes that the overall impact … is likely to be limited,” it said. “It is expected that there will still be a strong continuing demand for high-quality fixed-income assets, including government and corporate bonds.”

It all sounds quite good, but there are worries that the changes will allow pensioners to piss away all their savings while giddy in the first flush of freedom. Osborne, with his legendary charm, has rejected this idea.

It was all panic when Osborne first announced the shake-up earlier this year, it hit the share value of firms like Legal and General, Aviva and Standard Life who run annuities businesses. The shares have since recovered slightly, but remain below their pre-announcement levels.

The finance ministry said that after consultation, the industry estimated that only 10-20 percent of people in defined-benefit pension schemes would transfer out of them. Some pension schemes might need to hold more liquid assets as a result, however.

A summary of the consultation said the financial guidance provided to retirees would be provided independently and funded by a levy on regulated financial services firms.

All good news for anyone with a pension then. Oh.

payfriendz 300x300 Payfriendz allows you to, yes! Rob your enemies!Payfriendz allows you to do just that – pay your friends.

The new app allows you to transfer money via instant messaging, and goes beyond the current methods of other payment apps (Paym, PayPal, Barclays Pingit, etc) that don’t go beyond offering transactions.

It’s all very genius-sounding, and you wonder why it hasn’t been thought of before.

With an instant messaging network users can chat with their friends and talk about money matters without awkwardness or having to resort to threats.

Users can send and request money as quick as a chat message.

Money can also be spent comfortably via an integrated virtual MasterCard on online stores such as Amazon .

And as it works like a digital wallet Payfriendz makes it easy to split restaurant bills, collect money for a gift or share flat share expenses. Jolly!

That is if you actually have money to transfer, it doesn’t yet offer any tips on how to respond to “Pay your rent or all your shit is going into the skip out front sunshine”.

Let’s enjoy one of their promotional ads with the extremely irritating ‘Kimmy’!

“Ice cream” indeed. She’s clearly off to her dealer.

Deathwatch: Wonga puppets

July 15th, 2014 No Comments By Ian Wade

Wonga+TV+advert 300x199 Deathwatch: Wonga puppetsWonga, the unethical and dodgy payday lending company, is having an image overhaul.

They’re planning to ditch the “cuddly” puppets too. Which plays havoc somewhat with the definition of cuddly, but there you go. They’re off.

Incoming Wonga chairman Andy Haste, former chairman of insurance giant RSA, has said he didn’t want Wonga to be associated with ‘anything which inadvertently attracts children’.

Which is a relief, because the only children who’d be attracted to those puppets are the sort that need counselling.

Mr Haste added that he wants Wonga to become more ‘customer focused’ and change its business operations, even if that means it makes less money in the near term.

It’s all part of the government’s attempt to put a cap on lending and stop these asshats from rinsing the vulnerable for all they’re worth.  As of July 1, lenders must put ‘risk warnings’ on television adverts. They are also banned from rolling over loans more than twice and must check potential customers can afford to take out debt before giving them loans.

The Wonga news comes weeks after Wonga said it had agreed with regulators that it would pay £2.6 million in compensation after chasing struggling customers with fake legal letters to pressurise them into paying up. Classy.

Mr Haste said the company, must review rates, fees and charges and no longer be seen as targeting ‘the young and the vulnerable’. We can assume they’ll have to stop sponsoring Newcastle United then?

He said: “Wonga is a company that needs to go through significant change if it is to have a sustainable future. Some serious mistakes have been made. The company admitted those mistakes and it has apologised for those mistakes. Wonga has understandably faced a lot of criticism and I know that we need to repair our reputation and regain our right to be an accepted part of the financial services sector.”

Which is all waffle as you can imagine, but ultimately the godawful pensioner puppets are no more. Now if we can convince Dolmio and Compare The Market that the puppet thing isn’t working, we can have a lovely big bonfire.