More news about unscrupulous payday loan companies today. The Financial Ombudsman has revealed that complaints about these firms rocketed by 178 per cent in the year to March.
That is despite the fact that new controls on lenders were brought in by the regulator several months earlier. There were 3,216 complaints about short-term loans in 2015/16, compared to 1,157 the year before. But Payment Protection Insurance remained the most complained-about financial product. There were 188,712 complaints about PPI over the year, a drop of 8 per cent on 2014/15.
In a welcome move for pension-holders, the Financial Conduct Authority has proposed that for existing contract-based personal pensions, including workplace personal pensions, exit charges will be capped at 1 per cent of the value of a member’s pot. Firms will not be able to apply any exit charge for personal pension contracts entered into after proposed new rules come into force.
Christopher Woolard, director of strategy and competition at the FCA, said: ‘Together with the ban on exit fees in future contracts, we are proposing a 1 per cent cap on exit charges in existing contracts to ensure people can access their pension pots without being deterred by charges. This is an important step so people feel able to access their pension savings should they wish to.’
Energy bills
Energy prices are set to rise with the temperature as 16 fixed dual fuel tariffs come to an end next week, which will see affected household’s annual energy bills rise by £132.43 a year, on average.
Price comparison site Gocompare.com says that of the 16 tariffs coming to an end, 12 will result in a customer being automatically rolled onto a standard variable tariff that is more expensive than the fixed deal they currently have, unless they shop around for a new tariff. While customers on these expiring tariffs can expect an average annual rise of £132.43, in some regions this can be considerably higher.
There are some instances where the fixed deal a customer is currently on is more expensive than their supplier’s standard variable tariff. This means that when their fixed deal expires, customers could actually see a reduction in their annual energy bill. However, on average customers on these tariffs will only see a 3.9 per cent (£44.56) reduction to their energy bills, which is a small amount when compared to the £207 they could save by switching provider.
Pensions
The Government has been warned that a plan to cut pension benefits to help save Tata Steel’s UK operations could take ministers down a ‘dangerous path’. Former pensions minister Steve Webb urged caution over ‘rushed changes’ he said could have implications for workers ‘well beyond the steel industry’.
A £485 million pension deficit has been deterring potential buyers of Tata. Ministers are considering changing the measure used for British Steel pension increases to cut its liabilities.
Meanwhile, The Times reports that Retail Acquisitions had done little due diligence on BHS’s pension scheme only a few weeks before the retailer was sold. Chris Martin, chairman of the BHS pension fund trustees, told a joint committee of MPs investigating the collapse of the department store chain that he had raised concerns after meeting the Retail Acquisitions consortium led by Dominic Chappell, a thrice-bankrupt former racing driver, about three weeks before BHS was sold for £1 by Sir Philip Green’s family last year.
BHS slumped into administration last month, putting about 11,000 jobs at risk and leaving a big pension hole.
Victims of fraud
Banks could block customers from claiming money back if they are a victim of fraud and it is found they had substandard online security, according to sources at the Financial Times.
Under proposals being discussed by Britain’s big banks, the Government, Bank of England and GCHQ, customers could be frozen out of banking services and unable to claim compensation if their account has been hacked, even if they’ve lost their life savings. Any changes would take several years to put in place according to bankers and would happen in stages.
Housing trends
Homebuyers in London borrowed £7.1 billion for house purchases in the first quarter of 2016, up 6 per cent quarter-on-quarter and 41 per cent on a year ago. They took out 21,400 loans, according to the Council of Mortgage Lenders.
Paul Smee, director general of the CML, said: ‘The usual seasonal dip in lending in the first quarter of the year didn’t seem to impact London as strongly as the UK overall, mainly due to a strong uptick in home-mover activity. Remortgage lending also performed well resulting in the highest first quarter remortgage levels in the capital since 2009.’
In other housing news, England has more than 203,000 long-term empty homes which, according to research by the property crowdfunding platform Property Partner, have an estimated value of over £38 billion. In London alone, there were 20,915 homes sitting idle for over six months in 2015 – that is almost £12.4 billion worth of empty property in a city facing an extreme housing shortage.
Credit checks
Thousands of Brits are in the dark about when they’ll be credit checked for life events and financial products, according to a study from Amigo. The research revealed being credit checked for a job, monthly insurance instalments and renting a flat are among the top things consumers are not aware they’ll be credit checked for.
More seriously, 18 per cent didn’t know they would be credit checked when applying for a credit card, meaning they’re potentially hindering their chances of getting one. This was closely followed by submitting a mortgage application and a securing a personal loan.
Savings
Diligent savers who might well have turned to bonus savings accounts to get a little extra will be disappointed by the latest research by Moneyfacts.co.uk, which reveals that bonus accounts are steadily vanishing from the savings market.
Bonus savings accounts came under scrutiny last year when the Financial Conduct Authority criticised banks for not clearly informing customers when the bonus rate expired on their account. The city watchdog also suggested that savings providers needed to make it easier for consumers to compare bonus deals with other accounts.
Since the study was published in January 2015, a number of banks and building societies have withdrawn their bonus accounts from the market. As a result, there are now only 25 savings deals on the market that have a bonus element, down from 29 a year ago and 37 two years ago.
Meanwhile, research by Alliance Trust Savings has found the single biggest long-term financial worry among retail investors is that their savings will not be enough to see them through retirement.
In a survey of more than 1,000 retail investors, Alliance Trust Savings asked what is your single biggest worry about your long-term financial future? Nearly a quarter said not having enough money, while a further fifth said their health and funding care. The risk of high inflation impacting savings was a major concern for 9 per cent of respondents, while 6 per cent feared government meddling in the form of further changes to pensions or taxation. A lucky 8 per cent had no concerns at all about their financial future.
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