The snow may be melting in some parts of the country but thousands of customers are still waiting for their online deliveries. The last couple of weeks have undoubtedly made life difficult for online retailers and delivery companies. But it seems that some of them aren't sticking by the law when it comes to consumer rights. Worse still, a number of them appear to think it's acceptable to fob off their customers when they try and find out what's going on.
I did an interview about online delivery problems on TV at the weekend and the programme received dozens of emails and texts from people who'd had problems. One was from a woman who'd ordered over £300 worth of jewellery from an online retailer. The order had gone missing and the jewellery retailer told her it wasn't their problem and that her only option was to claim against the postal service.
Well that's just plain wrong. I spent more time than is probably healthy reading the Distance Selling Regulations on Friday and Saturday but - although there's a lot of information there - it's all quite clear. If an order goes astry it's the retailer's responsibility to replace it or refund the cost (including delivery). And if you decide you no longer want the items you've ordered you can cancel your order at any time up to seven working days from the day after they arrive. There are some exceptions to this (you can't cancel an order if it's been customised or if it's for fresh food or flowers - all sensible stuff).
But even if consumers didn't have such good protection in law, why would the retailer think it's acceptable to tell someone who's spent £300 with them that it's not their problem? Don't they want any repeat business?
I do have some sympathy for some of the retailers that have been put in a very difficult position. In some cases their chosen delivery company has just withdrawn service and refused to deliver in certain areas. The rules of one postal service say that if a parcel goes astray the shop can't lodge a complaint to find out what's happened to it for 14 days.
I'm also aware that some consumers are probably being unreasonable. Does it really matter if some of the presents you've ordered don't arrive on time? Delivery companies aren't miracle workers and it's fair to say that if you can't travel much further than your doorstep it's unlikely they will be able to get anywhere near you. However, that doesn't mean that retailers should ignore what the law says. The rules are clear and they should abide by them and treat their customers fairly.
Wednesday 22 December 2010
Friday 3 December 2010
It's time to simplify gas and electricity deals
The news that Consumer Focus wants OFGEM to investigate complex and confusing gas and electricity deals is to be welcomed. The number of different price tariffs available and the way some of the energy companies present their information does little to help most ordinary consumers get a good deal.
I've been interested in the way energy companies operate ever since the gas and electrcity market was deregulated in 1998. At the time I interviewed a marketing expert who warned about the dangers of confusion or complexity marketing - where companies design and market their deals in a way that will confuse customers.
Twelve years on and what's the evidence that the market is working for consumers? Well, the energy companies would point to the fact that millions of people benefit from cheaper deals as a result of being able to shop around. But many others don't engage in the process or switch without being convinced they'll be better off.
And OFGEM's own research in 2008 showed that over half of people who switched to a new deal did so on the doorstep (and 40% of those ended up on a worse tariff than the one they were originally on).
Consumer Focus's letter makes interesting reading. It includes examples of advertised discounts that are nigh on impossible for many consumers to qualify for, exit fees that customers don't realise they'll end up paying and a baffling array of deals that most ordinary mortals find impossible to compare.
No one's saying that companies should only be allowed to have one tariff or that they shouldn't compete against each other for customers. But gas and electricity are basic commodities - not luxuries - so is it really too much to ask that we can understand the information energy companies produce, work out whether we're on a good deal and, if not, get a better one?
I've been interested in the way energy companies operate ever since the gas and electrcity market was deregulated in 1998. At the time I interviewed a marketing expert who warned about the dangers of confusion or complexity marketing - where companies design and market their deals in a way that will confuse customers.
Twelve years on and what's the evidence that the market is working for consumers? Well, the energy companies would point to the fact that millions of people benefit from cheaper deals as a result of being able to shop around. But many others don't engage in the process or switch without being convinced they'll be better off.
And OFGEM's own research in 2008 showed that over half of people who switched to a new deal did so on the doorstep (and 40% of those ended up on a worse tariff than the one they were originally on).
Consumer Focus's letter makes interesting reading. It includes examples of advertised discounts that are nigh on impossible for many consumers to qualify for, exit fees that customers don't realise they'll end up paying and a baffling array of deals that most ordinary mortals find impossible to compare.
No one's saying that companies should only be allowed to have one tariff or that they shouldn't compete against each other for customers. But gas and electricity are basic commodities - not luxuries - so is it really too much to ask that we can understand the information energy companies produce, work out whether we're on a good deal and, if not, get a better one?
Tuesday 26 October 2010
State pensions and women
Women have been second class citizens for some time when it comes to pensions. Those aren't my words (although I agree with the sentiment) it's what the Pensions Minister Steve Webb said last week at the House of Lords when he was speaking at the launch of a report about women and pensions.
If a flat rate basic state pension is introduced it will be a huge improvement for both men and women - but especially women - in the future. Last year only 45% of women who reached state pension age received the full basic state pension (currently worth £97.65 a week).
The fact is that even after changes introduced by the previous government in April it will be 2025 before 90% of women qualify for a full basic state pension. I know that there are means tested benefits such as the pension credit which top up pensions for those on the lowest incomes, but they're not really the answer.
Introducing a flat rate pension of around £140 a week - which is the figure the government is rumoured to be thinking of - is not without its problems. The main one is whether or not it's affordable but there are others as well, such as how do you 'sell' the idea of paying National Insurance if you don't get an obvious benefit from it?
As soon as you make changes there will always be winners and losers and while it's not a reason to leave things as they are, I do feel for women who are caught up in the current increase in the state pension age and who have had little or no time to prepare. Although the rise in state pension age from 60 to 65, which is currently being implemented, was announced some time ago it didn't get a huge amount of publicity. I know from feedback I've received to the website that many women were caught out by the fact that they wouldn't get their state pension at 60.
We may be able to understand - from a mathematical point of view - that the state pension age has to rise once again. It's one of the less welcome consequences of the 'good news' story of our increased longevity. What's harder to accept is that women born in the mid 1950s (after April 6th 1953) will have had their state pension age increased twice by successive governments.
And while £140 a week is definitely better than £97 a week and even better news if you have a patchy National Insurance record, it means some women - and men - will have to find £5,000 a year if they want to retire before they qualify for their state pension. If they can't find the money, they're likely to face the prospect of working later than they'd planned. Assuming - of course - they're able to find a job.
If a flat rate basic state pension is introduced it will be a huge improvement for both men and women - but especially women - in the future. Last year only 45% of women who reached state pension age received the full basic state pension (currently worth £97.65 a week).
The fact is that even after changes introduced by the previous government in April it will be 2025 before 90% of women qualify for a full basic state pension. I know that there are means tested benefits such as the pension credit which top up pensions for those on the lowest incomes, but they're not really the answer.
Introducing a flat rate pension of around £140 a week - which is the figure the government is rumoured to be thinking of - is not without its problems. The main one is whether or not it's affordable but there are others as well, such as how do you 'sell' the idea of paying National Insurance if you don't get an obvious benefit from it?
As soon as you make changes there will always be winners and losers and while it's not a reason to leave things as they are, I do feel for women who are caught up in the current increase in the state pension age and who have had little or no time to prepare. Although the rise in state pension age from 60 to 65, which is currently being implemented, was announced some time ago it didn't get a huge amount of publicity. I know from feedback I've received to the website that many women were caught out by the fact that they wouldn't get their state pension at 60.
We may be able to understand - from a mathematical point of view - that the state pension age has to rise once again. It's one of the less welcome consequences of the 'good news' story of our increased longevity. What's harder to accept is that women born in the mid 1950s (after April 6th 1953) will have had their state pension age increased twice by successive governments.
And while £140 a week is definitely better than £97 a week and even better news if you have a patchy National Insurance record, it means some women - and men - will have to find £5,000 a year if they want to retire before they qualify for their state pension. If they can't find the money, they're likely to face the prospect of working later than they'd planned. Assuming - of course - they're able to find a job.
Friday 1 October 2010
Clampdown on debt management companies
The news that the Office of Fair Trading has decided to take action against debt management companies that have been flouting the law is very welcome and its findings were nothing short of shocking. Out of the 150 or so debt management companies it checked up on over 90% were flouting the law.
It wasn't just the case that they fell down on some minor administrative matter, they were giving people 'advice' when they hadn't found out the most basic information about their financial position, the firms weren't telling them how they were paid and - in some cases - were making out that the free alternative of debt advice charities weren't worth bothering with.
The debt management industry mushroomed a few years ago when companies realised they could push IVAs (individual voluntary arrangements), which would earn them a healthy fee of, sometimes, several thousand pounds a time. IVAs offer people who owe money the chance to have the majority of their debts written off, but they're not without risks and they're certainly not suitable for everyone.
I've always recommended that people who have debt problems go and see one of the debt advice charities such as CCCS, National Debtline or Citizens Advice. The debt management companies say there's a demand for their services because the debt advice charities can't cope with demand. That may well be the case as the number of people seeking debt advice over the last couple of years has risen sharply.
However, it's been obvious for several years that there's a massive problem in the industry with some companies aggressively pushing their services and - it now emerges - a distinct lack of openness about how they operate and widespread flouting of the law.
The action by the OFT is long overdue but - on the positive side - it pulled no punches. It's said that if 128 of the debt management companies it's looked at don't improve their practices in three months, they could be shut down. What the OFT must do now is to make sure it regulates this sector much more closely in the future. Allowing over 100 companies to have so little regard for the law when they are dealing with people who are often at their wits' end and desperate for help is something that must not be allowed to happen in the future.
It wasn't just the case that they fell down on some minor administrative matter, they were giving people 'advice' when they hadn't found out the most basic information about their financial position, the firms weren't telling them how they were paid and - in some cases - were making out that the free alternative of debt advice charities weren't worth bothering with.
The debt management industry mushroomed a few years ago when companies realised they could push IVAs (individual voluntary arrangements), which would earn them a healthy fee of, sometimes, several thousand pounds a time. IVAs offer people who owe money the chance to have the majority of their debts written off, but they're not without risks and they're certainly not suitable for everyone.
I've always recommended that people who have debt problems go and see one of the debt advice charities such as CCCS, National Debtline or Citizens Advice. The debt management companies say there's a demand for their services because the debt advice charities can't cope with demand. That may well be the case as the number of people seeking debt advice over the last couple of years has risen sharply.
However, it's been obvious for several years that there's a massive problem in the industry with some companies aggressively pushing their services and - it now emerges - a distinct lack of openness about how they operate and widespread flouting of the law.
The action by the OFT is long overdue but - on the positive side - it pulled no punches. It's said that if 128 of the debt management companies it's looked at don't improve their practices in three months, they could be shut down. What the OFT must do now is to make sure it regulates this sector much more closely in the future. Allowing over 100 companies to have so little regard for the law when they are dealing with people who are often at their wits' end and desperate for help is something that must not be allowed to happen in the future.
Saturday 11 September 2010
Why can't shops get it right?
Why is it that some shops seem to know less about our rights than most consumers? I was in a bookshop last weekend when someone in the next queue complained about an e-book reader she'd bought a few months earlier. The shop assistant told her to contact the manufacturer - and this was after she'd checked with the manager.
The Office of Fair Trading has recently published information for retailers so they get it right and don't end up fobbing off consumers. In my view this can't come a moment too soon. OK so our consumer laws may not be the simplest in the world, but they're not rocket science.
And if you're a retailer, trader or supplier, it's down to you to get it right. A couple of years ago when I was still working as a freelance reporter for the BBC I did a report into the issue of shops giving people duff information about their rights and and pushing them to the manufacturer to get faulty goods replaced or repaired.
I interviewed several experts who thought that - while retailers may not be deliberately setting out to mislead - the fact that they didn't seem to think it was important that their shop staff knew the law and gave consumers the right information said something about their priorities.
The fact is that your contract is with the retailer or trader, so if you have a legitimate complaint, it's down to them to put it right. That's what the Sale of Goods Act is there for.
I hope that the OFT carries out some mystery shopping once the online advice hub has been up and running for a while and comes down hard on those retailers that are dodging their obligations.
The Office of Fair Trading has recently published information for retailers so they get it right and don't end up fobbing off consumers. In my view this can't come a moment too soon. OK so our consumer laws may not be the simplest in the world, but they're not rocket science.
And if you're a retailer, trader or supplier, it's down to you to get it right. A couple of years ago when I was still working as a freelance reporter for the BBC I did a report into the issue of shops giving people duff information about their rights and and pushing them to the manufacturer to get faulty goods replaced or repaired.
I interviewed several experts who thought that - while retailers may not be deliberately setting out to mislead - the fact that they didn't seem to think it was important that their shop staff knew the law and gave consumers the right information said something about their priorities.
The fact is that your contract is with the retailer or trader, so if you have a legitimate complaint, it's down to them to put it right. That's what the Sale of Goods Act is there for.
I hope that the OFT carries out some mystery shopping once the online advice hub has been up and running for a while and comes down hard on those retailers that are dodging their obligations.
Friday 13 August 2010
Could the PPI debacle finally be resolved? Not quite...
So, the Financial Services Authority has got tough with banks, brokers and insurance companies over payment protection insurance - and not a moment too soon. There's no doubt that the financial services industry can sometimes take the flak for things that aren't actually its fault. But with PPI mis-selling, I think they deserve everything that's being thrown at them.
OK, so not every single financial insitution was trying to fleece its customers by selling them a payment protection insurance policy they couldn't claim on, weren't told the price of or didn't even know they were being sold in the first place. But there were enough companies active in this market (and I don't mean that as a compliment) for this to be an issue for the whole industry.
What would have been nice - and would possibly have given consumers some hope that banks, brokers and insurers aren't out to squeeze them for every last penny, is if companies could have a) sold these policies properly in the first place and not behaved like they were operating in the Wild West or, if that was mission impossible, b) compensated people who had a genuine case straight away without fobbing them off and without dragging their heels.
As it is they've plainly been turning down legitimate complaints, otherwise why would the Financial Ombudsman Service find in favour of the consumer in over 80% of PPI cases? What's particularly galling is that only 30% of people whose complaints were rejected by their bank or insurer actually pursued it further by going to the ombudsman service. Presumably they thought that, as the bank/broker/insurer thought they had no cause for complaint, they genuinely didn't have - rather than that the financial company might be trying to pull a fast one.
Either that or they may have missed the deadline that means that once you've received your 'final letter' from a financial company rejecting your complaint you only have six months to go to the Financial Ombudsman Service.
The FSA's latest move is a welcome one. It means that companies will have to improve the way they deal with consumers who complain. More than that they'll have to look at how they've sold PPI policies in the first place. But, because it can't - yet - force companies to open old cases where people have complained of mis-selling and had their complaint rejected, hundreds of thousands of others will have been turned down for compensation when they shouldn't have been.
OK, so not every single financial insitution was trying to fleece its customers by selling them a payment protection insurance policy they couldn't claim on, weren't told the price of or didn't even know they were being sold in the first place. But there were enough companies active in this market (and I don't mean that as a compliment) for this to be an issue for the whole industry.
What would have been nice - and would possibly have given consumers some hope that banks, brokers and insurers aren't out to squeeze them for every last penny, is if companies could have a) sold these policies properly in the first place and not behaved like they were operating in the Wild West or, if that was mission impossible, b) compensated people who had a genuine case straight away without fobbing them off and without dragging their heels.
As it is they've plainly been turning down legitimate complaints, otherwise why would the Financial Ombudsman Service find in favour of the consumer in over 80% of PPI cases? What's particularly galling is that only 30% of people whose complaints were rejected by their bank or insurer actually pursued it further by going to the ombudsman service. Presumably they thought that, as the bank/broker/insurer thought they had no cause for complaint, they genuinely didn't have - rather than that the financial company might be trying to pull a fast one.
Either that or they may have missed the deadline that means that once you've received your 'final letter' from a financial company rejecting your complaint you only have six months to go to the Financial Ombudsman Service.
The FSA's latest move is a welcome one. It means that companies will have to improve the way they deal with consumers who complain. More than that they'll have to look at how they've sold PPI policies in the first place. But, because it can't - yet - force companies to open old cases where people have complained of mis-selling and had their complaint rejected, hundreds of thousands of others will have been turned down for compensation when they shouldn't have been.
Tuesday 3 August 2010
The complexity of savings accounts
A few days ago I wrote an article about finding a fixed rate savings account with a competitive rate of interest. Not rocket science, you'd have thought - but it's certainly not that straightforward either.
For a start, some price comparison websites are fond of listing 'best sellers' or 'sponsored products' above the best buys and they don't always compare like with like (some websites exclude deals that come with short term bonus rates while others don't etc). The upshot is that you have to take the time to look at two or three different price comparison sites to be sure of getting the best deal.
Next you have to look at the catches - are you tied into taking out a bank account or investment product with the bank or building society in question? For example, Santander has one year bond paying 4.5%, which is head and shoulders above the rest. Look a little closer and you'll see that you have to invest the same amount as you put into the bond into a 'qualifying investment product'.
It might be the case that Santander's investment is the right one for you, but you shouldn't take out an investment product on the basis of a good rate on a linked savings account - not unless you've checked out the investment product thoroughly.
But it's not just the conditions and catches that you have to watch out for - there's the issue of safety as well. After the shock of the credit crisis most of us a bit a wary about chasing the highest rate without knowing how our savings are protected but finding out how you might be compensated should the bank fail isn't exactly straightforward either. I was trying to cut the explanation down to a couple of short sentences, but it was a struggle.
There is one set of rules for banks based or operating in the UK, another for those headquartered in the EEA, which means that banks based in the EEA can top up so that they offer the same level of protection as banks based in the UK if they want to but they don't have to.
And what about banks in the UK that are owned by the same parent company? Well, in some cases they may share a banking licence with the parent company in others they may not and the amount of your savings that are protected by the Financial Services Compensation Scheme are linked to the way the bank is licensed, not its brand name(your savings are covered up to a limit of £50,000 per banking licence).
I appreciate that banks and building societies will want to compete with each other for market share and that the savings safety scheme was put together when the banking landscape was far simpler. But the fact is that many people feel - understandably - bewildered about making what should be a relatively straightforward decision.
Financial services companies often bemoan the fact that people in the UK aren't very engaged with their finances - particularly long term savings. Perhaps it would be easier if the process of picking a savings account wasn't so complicated.
For a start, some price comparison websites are fond of listing 'best sellers' or 'sponsored products' above the best buys and they don't always compare like with like (some websites exclude deals that come with short term bonus rates while others don't etc). The upshot is that you have to take the time to look at two or three different price comparison sites to be sure of getting the best deal.
Next you have to look at the catches - are you tied into taking out a bank account or investment product with the bank or building society in question? For example, Santander has one year bond paying 4.5%, which is head and shoulders above the rest. Look a little closer and you'll see that you have to invest the same amount as you put into the bond into a 'qualifying investment product'.
It might be the case that Santander's investment is the right one for you, but you shouldn't take out an investment product on the basis of a good rate on a linked savings account - not unless you've checked out the investment product thoroughly.
But it's not just the conditions and catches that you have to watch out for - there's the issue of safety as well. After the shock of the credit crisis most of us a bit a wary about chasing the highest rate without knowing how our savings are protected but finding out how you might be compensated should the bank fail isn't exactly straightforward either. I was trying to cut the explanation down to a couple of short sentences, but it was a struggle.
There is one set of rules for banks based or operating in the UK, another for those headquartered in the EEA, which means that banks based in the EEA can top up so that they offer the same level of protection as banks based in the UK if they want to but they don't have to.
And what about banks in the UK that are owned by the same parent company? Well, in some cases they may share a banking licence with the parent company in others they may not and the amount of your savings that are protected by the Financial Services Compensation Scheme are linked to the way the bank is licensed, not its brand name(your savings are covered up to a limit of £50,000 per banking licence).
I appreciate that banks and building societies will want to compete with each other for market share and that the savings safety scheme was put together when the banking landscape was far simpler. But the fact is that many people feel - understandably - bewildered about making what should be a relatively straightforward decision.
Financial services companies often bemoan the fact that people in the UK aren't very engaged with their finances - particularly long term savings. Perhaps it would be easier if the process of picking a savings account wasn't so complicated.
Friday 23 July 2010
Mortgage errors
The news that 18,000 people were charged the wrong amount on their mortgage may not seem like that big a deal - at first sight. They weren't mis-sold a financial product or lured into taking out a loan they could not afford and - given the millions of mortgages in existence - the figures seem relatively small.
The reason it ended up getting extensive coverage owed more to the way the Yorkshire and Clydesdale banks handled the aftermath than to the error itself. It seems that the original mistake went back to 2008 when the banks' computer systems made a mistake on some tracker and discount rate mortgages on both repayment an interest-only mortgages, but it took Yorkshire and Clydesdale banks until earlier this year to spot it.
The banks say that around half of the 18,000 borrowers who are affected are being asked for an extra £25 a month - although some are having to pay much more. What's interesting...to me at least...is that they've decided not to automatically write off the shortfall, which they say on a £25 a month extra payment works out at £2 a month - so not exactly a fortune.
This isn't exactly a common problem but the last time this happened, my mortgage spy (SavvyWoman's mortgage expert Ray Boulger) tells me that the lender in question wiped off the shortfall.
Why won't Yorkshire and Clydesdale banks do the same? They say they are treating complaints on an individual basis and that they are offering compensation for those who are having problems making the higher payments. But not - it seems - for those who don't complain.
Having found out that Yorkshire and Clydesdale are happy to compensate some of its customers, I'm sure others will be tempted to complain as well. If they do complain and are not happy with the banks' response they can take their case to the Financial Ombudsman Service.
While the FOS will look at each case individually, it is more sympathetic to complaints where it was the lender's fault (which Yorkshire and Clydesdale have not denied) and where the customer couldn't have realised that a mistake had been made. This is a bit trickier, but customers shouldn't be expected to be mortgage experts (that's the bank's job) and even if your mortgage payment fell quite dramatically, at the time the error happened tracker mortgage rates were plummeting.
In these tough times I can see that it might seem hard to justify offering to pay the shortfall for customers before they'd even thought of complaining. But in terms of goodwill and loyalty, it would have been a relatively small investment. Now it's quite possible that the banks will lose a lot more money. Every case that goes to the Financial Ombudsman Service is free for consumers but costs the banks £500.
And if even 50% of the customers who aren't happy decide to switch mortgage lenders when their deal comes to an end, they could lose thousands of borrowers. It's always said that it's not the mistake, it's how you deal with it that matters. Maybe it's a lesson that the Yorkshire and Clydesdale banks could learn.
The reason it ended up getting extensive coverage owed more to the way the Yorkshire and Clydesdale banks handled the aftermath than to the error itself. It seems that the original mistake went back to 2008 when the banks' computer systems made a mistake on some tracker and discount rate mortgages on both repayment an interest-only mortgages, but it took Yorkshire and Clydesdale banks until earlier this year to spot it.
The banks say that around half of the 18,000 borrowers who are affected are being asked for an extra £25 a month - although some are having to pay much more. What's interesting...to me at least...is that they've decided not to automatically write off the shortfall, which they say on a £25 a month extra payment works out at £2 a month - so not exactly a fortune.
This isn't exactly a common problem but the last time this happened, my mortgage spy (SavvyWoman's mortgage expert Ray Boulger) tells me that the lender in question wiped off the shortfall.
Why won't Yorkshire and Clydesdale banks do the same? They say they are treating complaints on an individual basis and that they are offering compensation for those who are having problems making the higher payments. But not - it seems - for those who don't complain.
Having found out that Yorkshire and Clydesdale are happy to compensate some of its customers, I'm sure others will be tempted to complain as well. If they do complain and are not happy with the banks' response they can take their case to the Financial Ombudsman Service.
While the FOS will look at each case individually, it is more sympathetic to complaints where it was the lender's fault (which Yorkshire and Clydesdale have not denied) and where the customer couldn't have realised that a mistake had been made. This is a bit trickier, but customers shouldn't be expected to be mortgage experts (that's the bank's job) and even if your mortgage payment fell quite dramatically, at the time the error happened tracker mortgage rates were plummeting.
In these tough times I can see that it might seem hard to justify offering to pay the shortfall for customers before they'd even thought of complaining. But in terms of goodwill and loyalty, it would have been a relatively small investment. Now it's quite possible that the banks will lose a lot more money. Every case that goes to the Financial Ombudsman Service is free for consumers but costs the banks £500.
And if even 50% of the customers who aren't happy decide to switch mortgage lenders when their deal comes to an end, they could lose thousands of borrowers. It's always said that it's not the mistake, it's how you deal with it that matters. Maybe it's a lesson that the Yorkshire and Clydesdale banks could learn.
Tuesday 13 July 2010
Families with disabled children struggle financially
On Saturday I was interviewed on BBC Breakfast about some research carried out by a charity called Contact a Family. It surveyed over 1,100 families with one or more disabled children and found that 23% had gone without heating, 34% were behind with credit card or loan repayments and one in seven went without food.
Most of these figures showed a deterioration from the last time the research was carried out in 2008. They reveal a struggle that many families with disabled children face to arrange child care (which is far harder to access if you have a disabled and often much more expensive), combine caring for a disabled child with work and to do more than survive financially.
No one would pretend that the benefits system is straightfoward, whatever type of state help you want to claim. But disability living allowance (DLA), which is the main benefit disabled children are entitled to, is particularly complex. There are two different components of the benefit (care and mobility components) which can be paid at several different levels. And assessing whether a child needs extra care because they are disabled or because they are a child is not always clear cut.
Add to that the fact that most parents find out about benefits they're entitled to through other parents whose children have the same disability and you can see how hit and miss the system is.
There are no government figures on the number of families with disabled children who claim disability benefits, but charities estimate that as many as 40% of parents don't get the help they're entitled to.
In this period of austerity the government is looking to reduce spending on welfare, not increase it. But if families with disabled children are getting further into debt or going without food and heating, something needs to be done. How about better signposting of benefits so that families are told about the help they may be entitled to when they receive a diagnosis for their child?
And what about encouraging employers to be more flexible? At the moment you only have the right to ask for flexible working once you've been in a job for six months. For families with disabled children who want to get back into work, that six-month 'hurdle' can be an impossible one to clear. Some companies may genuinely struggle to give these employees the flexibility they need. But I bet some could think of more creative ways of working than 9-5. What do you think?
Most of these figures showed a deterioration from the last time the research was carried out in 2008. They reveal a struggle that many families with disabled children face to arrange child care (which is far harder to access if you have a disabled and often much more expensive), combine caring for a disabled child with work and to do more than survive financially.
No one would pretend that the benefits system is straightfoward, whatever type of state help you want to claim. But disability living allowance (DLA), which is the main benefit disabled children are entitled to, is particularly complex. There are two different components of the benefit (care and mobility components) which can be paid at several different levels. And assessing whether a child needs extra care because they are disabled or because they are a child is not always clear cut.
Add to that the fact that most parents find out about benefits they're entitled to through other parents whose children have the same disability and you can see how hit and miss the system is.
There are no government figures on the number of families with disabled children who claim disability benefits, but charities estimate that as many as 40% of parents don't get the help they're entitled to.
In this period of austerity the government is looking to reduce spending on welfare, not increase it. But if families with disabled children are getting further into debt or going without food and heating, something needs to be done. How about better signposting of benefits so that families are told about the help they may be entitled to when they receive a diagnosis for their child?
And what about encouraging employers to be more flexible? At the moment you only have the right to ask for flexible working once you've been in a job for six months. For families with disabled children who want to get back into work, that six-month 'hurdle' can be an impossible one to clear. Some companies may genuinely struggle to give these employees the flexibility they need. But I bet some could think of more creative ways of working than 9-5. What do you think?
Tuesday 6 July 2010
Public Sector Pensions
The government has asked John Hutton to carry out a review of public sector pensions. There's no doubt that the cost of providing a final salary pension for workers in the public sector is rising and, at a time when the UK's finances are in a mess, it's right that public sector pensions, along with other spending, should be looked at.
But it's important that any changes made don't penalise one section of the public sector workforce disproportionately. We don't yet know what the Hutton review will suggest, there is a real danger that cutbacks to public sector pensions across the board could have the effect of penalising women.
We all know that women retire on far less than men. Figures from the Prudential show that 35% women will retire 'in poverty' (as defined by the Joseph Rowntree foundation) this year. If women give up work to have children, retirement saving becomes a luxury.
The one time when women do save for their retirement is when they work in the public sector. 60% of those who join public sector pensions are women; in the private sector the figure is 40%. But we're not talking a 'gold plated' retirement as the average public sector pension is around £7,000 a year and women - generally - receive far less. In local government, the average pension is around £4,400, but for women it's £2,600. Around half of women in the NHS retire on a public sector pension of £3,500 - that's less than £70 a week on top of the state pension.
In a way these figures show the big success of public sector pensions - the fact that they've encouraged people on lower incomes to save for their retirement, which doesn't happen to the same extent in the private sector.
What we do need is long term affordability and sustainability of public sector pensions (and there are some imaginative ways that could reduce the costs while protecting the pensions of those on the lowest incomes). What we don't need are changes that will hit the lowest paid workers - who are mainly women - hard. Reducing their pension benefits could just tip them into means-tested benefits, which hardly seems fair and - ultimately - is unlikely to give the government the savings it's looking for.
But it's important that any changes made don't penalise one section of the public sector workforce disproportionately. We don't yet know what the Hutton review will suggest, there is a real danger that cutbacks to public sector pensions across the board could have the effect of penalising women.
We all know that women retire on far less than men. Figures from the Prudential show that 35% women will retire 'in poverty' (as defined by the Joseph Rowntree foundation) this year. If women give up work to have children, retirement saving becomes a luxury.
The one time when women do save for their retirement is when they work in the public sector. 60% of those who join public sector pensions are women; in the private sector the figure is 40%. But we're not talking a 'gold plated' retirement as the average public sector pension is around £7,000 a year and women - generally - receive far less. In local government, the average pension is around £4,400, but for women it's £2,600. Around half of women in the NHS retire on a public sector pension of £3,500 - that's less than £70 a week on top of the state pension.
In a way these figures show the big success of public sector pensions - the fact that they've encouraged people on lower incomes to save for their retirement, which doesn't happen to the same extent in the private sector.
What we do need is long term affordability and sustainability of public sector pensions (and there are some imaginative ways that could reduce the costs while protecting the pensions of those on the lowest incomes). What we don't need are changes that will hit the lowest paid workers - who are mainly women - hard. Reducing their pension benefits could just tip them into means-tested benefits, which hardly seems fair and - ultimately - is unlikely to give the government the savings it's looking for.
Tuesday 11 May 2010
Who's cashing in on ISA rates?
A few weeks ago I wrote an article for SavvyWoman about switching cash ISAs and - knowing how fond banks and building societies are of changing rates - last weekend I checked that the rates were up to date.
What was interesting, no, let me rephrase that, somewhat shocking, was how low some cash ISA rates were. Did you know that some ISA providers will take your money and give you a tax-free return of 0.10%. Yup, a tenth of one percent.
That means even if you paid in the current tax year's maximum amount of £5,100 you'd still only earn just over a fiver in interest after a year. That's enough for a fish and chip supper or a bottle of nail varnish, but it's not much to show for saving several thousand pounds for 12 months.
OK so let's name some names - Santander, which - rightly - got lots of publicity for its market-leading cash ISA earlier this year also has an 'easy ISA' paying 0.1%. Oh, but if you've got £27,000 or more you'll get 0.3%. That's OK then.
The Dunfermline building society has a Soccersaver Cash ISA for Celtic fans, but scores an own goal with its 0.1% interest rate.
Meanwhile Barclays has announced that it will keep its market leading cash ISA (paying a healthy 3.1%) open to new customers until June 1st. That's the good news. The bad news is that this ISA won't accept transfers in from existing ISAs, it will only take new money. If you want to transfer your ISA to Barclays, you can transfer it to an account paying 0.1%. Hmmm. I'll get back to you on that one.
I appreciate that banks and building societies have to make a profit and that the Bank of England rates are low. But the grand game of snakes and ladders that cash ISA savers seem to have unwittingly signed up for isn't the answer. Someone's laughing all the way to the bank, but it's not the majority of cash ISA savers.
What was interesting, no, let me rephrase that, somewhat shocking, was how low some cash ISA rates were. Did you know that some ISA providers will take your money and give you a tax-free return of 0.10%. Yup, a tenth of one percent.
That means even if you paid in the current tax year's maximum amount of £5,100 you'd still only earn just over a fiver in interest after a year. That's enough for a fish and chip supper or a bottle of nail varnish, but it's not much to show for saving several thousand pounds for 12 months.
OK so let's name some names - Santander, which - rightly - got lots of publicity for its market-leading cash ISA earlier this year also has an 'easy ISA' paying 0.1%. Oh, but if you've got £27,000 or more you'll get 0.3%. That's OK then.
The Dunfermline building society has a Soccersaver Cash ISA for Celtic fans, but scores an own goal with its 0.1% interest rate.
Meanwhile Barclays has announced that it will keep its market leading cash ISA (paying a healthy 3.1%) open to new customers until June 1st. That's the good news. The bad news is that this ISA won't accept transfers in from existing ISAs, it will only take new money. If you want to transfer your ISA to Barclays, you can transfer it to an account paying 0.1%. Hmmm. I'll get back to you on that one.
I appreciate that banks and building societies have to make a profit and that the Bank of England rates are low. But the grand game of snakes and ladders that cash ISA savers seem to have unwittingly signed up for isn't the answer. Someone's laughing all the way to the bank, but it's not the majority of cash ISA savers.
Thursday 29 April 2010
How fair is the Farepak settlement?
How would you feel if you'd saved £400 for Christmas but only received £60? Probably you'd be pretty angry, but that's what's happened to the 150,000 or so people who saved with the Christmas savings club Farepak.
It went bust over three years ago taking millions of pounds with it. I covered the Farepak story at the time when I was was a freelance reporter for BBC Breakfast and I spoke to someone who'd saved hundreds of pounds with Farepak and - as an agent - had encouraged her work colleagues to do the same. She was furious, not only because she'd lost out, but because she genuinely believed that she was helping her colleagues by encouraging them to save.
At the time, credit was easy but the people who saved with Christmas clubs like Farepak liked the idea of locking money away throughout the year. The reward for this prudence was knowing they'd have extra cash to spend at Christmas.
It's taken three years of work by the liquidators (whose fees come directly out of the money available to creditors) to come up with the settlement of 15 pence in the pound. Pretty poor, in my opinion. The only positive bit of news is the fact that it's brought the wait for compensation to an end.
The situation has improved in that Christmas clubs that are members of the Christmas Prepayment Association now have to pay customers' money into a trust account, so the cash is kept separate from the companies' own money. This is big step in the right direction. But when over 150,000 people are still down by 85% on money they saved in what they thought was a safe scheme, I don't think anyone can say enough has been done.
It went bust over three years ago taking millions of pounds with it. I covered the Farepak story at the time when I was was a freelance reporter for BBC Breakfast and I spoke to someone who'd saved hundreds of pounds with Farepak and - as an agent - had encouraged her work colleagues to do the same. She was furious, not only because she'd lost out, but because she genuinely believed that she was helping her colleagues by encouraging them to save.
At the time, credit was easy but the people who saved with Christmas clubs like Farepak liked the idea of locking money away throughout the year. The reward for this prudence was knowing they'd have extra cash to spend at Christmas.
It's taken three years of work by the liquidators (whose fees come directly out of the money available to creditors) to come up with the settlement of 15 pence in the pound. Pretty poor, in my opinion. The only positive bit of news is the fact that it's brought the wait for compensation to an end.
The situation has improved in that Christmas clubs that are members of the Christmas Prepayment Association now have to pay customers' money into a trust account, so the cash is kept separate from the companies' own money. This is big step in the right direction. But when over 150,000 people are still down by 85% on money they saved in what they thought was a safe scheme, I don't think anyone can say enough has been done.
Monday 15 March 2010
Credit card companies bought into line...kind of.
Credit card companies have been coming under increasing pressure to clean up their act over the last year or so, and finally it seems that change is on the way. OK, so it won't happen overnight (as the card companies have until the end of the year to make the changes) but it should mean a better deal for many card customers.
There are five major changes, one of which will force card companies to give customers 60 days' notice that they're going to raise their rates as well as the right to reject the rate rise. Under current rules, we're only given 30 days' warning. It could mean that millions of people are better off. Last year credit card companies raised the rates on over 6 million cards and it's not clear that consumers knew they had the right to freeze their account and pay off the debt at the old rate. It seems very few people did this and - as most of us don't have money to chuck around - the assumption has to be that some weren't aware they could do this.
But this isn't the only change; one that I think is more interesting will mean that credit card companies have to use our payments to clear the most expensive debts first, a complete reversal of the present situation for the vast majority of credit cards. I did a report about this for TV a few years ago and most of the people I spoke to couldn't believe that card companies chose to maximise their profits by paying off the cheapest debt first.
It meant that if you transferred your balance to another card (say, one charging 0% interest), but then bought something using the same card when it charged 18% for purchases, your payments would be used to clear the 0% balance first and only then to pay off the purchases at 18%. Of course, this wasn't a problem if you cleared your credit card balance in full or if you didn't use a balancen transfer card for purchases. But the card providers' trade body the UK Cards Association says the changes will benefit around 25% of cardholders or around seven million people.
I'm all for making a profit (even the banks and credit card companies would be allowed to make money, if I ruled the world!). But I don't think that tricks and catches are the way to go about it. This clampdown on card companies can't come a moment too soon.
There are five major changes, one of which will force card companies to give customers 60 days' notice that they're going to raise their rates as well as the right to reject the rate rise. Under current rules, we're only given 30 days' warning. It could mean that millions of people are better off. Last year credit card companies raised the rates on over 6 million cards and it's not clear that consumers knew they had the right to freeze their account and pay off the debt at the old rate. It seems very few people did this and - as most of us don't have money to chuck around - the assumption has to be that some weren't aware they could do this.
But this isn't the only change; one that I think is more interesting will mean that credit card companies have to use our payments to clear the most expensive debts first, a complete reversal of the present situation for the vast majority of credit cards. I did a report about this for TV a few years ago and most of the people I spoke to couldn't believe that card companies chose to maximise their profits by paying off the cheapest debt first.
It meant that if you transferred your balance to another card (say, one charging 0% interest), but then bought something using the same card when it charged 18% for purchases, your payments would be used to clear the 0% balance first and only then to pay off the purchases at 18%. Of course, this wasn't a problem if you cleared your credit card balance in full or if you didn't use a balancen transfer card for purchases. But the card providers' trade body the UK Cards Association says the changes will benefit around 25% of cardholders or around seven million people.
I'm all for making a profit (even the banks and credit card companies would be allowed to make money, if I ruled the world!). But I don't think that tricks and catches are the way to go about it. This clampdown on card companies can't come a moment too soon.
Monday 22 February 2010
How state pensions discriminate against women.
Here's the thing. You work all your life, but in low paid part-time jobs. Or you give up work to care for a relative who's too proud to claim sickness benefits (or who doesn't realise what they're entitled to). And what happens when you reach pension age? You only receive a fraction of the state pension, that's what.
The government's own figures show that barely half of all women manage to qualify for a full basic state pension in their own right (worth £95.25 a week). To be fair, that percentage will increase in April when some fairly major reforms of the state pension system are introduced.
But the point is that most people assume that the state pension will be there for them when they retire, which is pretty much the case for men as only a small minority miss out. But it's very different for women. Tens of thousands of women don't earn anything towards their pension because they have part-time jobs that pay less than £95 a week. Worse than that, the planned state pension refoms due to come into effect on April 6th won't do anything to help them.
It's true that it will be easier for women who care for family members who are ill to be credited with National Insurance contributions after the new rules are introduced on April 6th. At the moment, they can only be credited towards their National Insurance record if they care for someone for more than 35 hours a week and they receive Carer's Allowance and the person they care for claims one of several disability benefits. Quite a tall order, so it's not surprising that many carers (mainly women) lose out.
It's obviously a good thing that state pensions are improving so that fewer women (and men) will lose out in the future. But it's still the case that - even after the major shake up of pensions in April - one in four women will not be entitled to a full basic state pension. The state pension reforms are much needed and long overdue, but I'm not convinced they go far enough.
The government's own figures show that barely half of all women manage to qualify for a full basic state pension in their own right (worth £95.25 a week). To be fair, that percentage will increase in April when some fairly major reforms of the state pension system are introduced.
But the point is that most people assume that the state pension will be there for them when they retire, which is pretty much the case for men as only a small minority miss out. But it's very different for women. Tens of thousands of women don't earn anything towards their pension because they have part-time jobs that pay less than £95 a week. Worse than that, the planned state pension refoms due to come into effect on April 6th won't do anything to help them.
It's true that it will be easier for women who care for family members who are ill to be credited with National Insurance contributions after the new rules are introduced on April 6th. At the moment, they can only be credited towards their National Insurance record if they care for someone for more than 35 hours a week and they receive Carer's Allowance and the person they care for claims one of several disability benefits. Quite a tall order, so it's not surprising that many carers (mainly women) lose out.
It's obviously a good thing that state pensions are improving so that fewer women (and men) will lose out in the future. But it's still the case that - even after the major shake up of pensions in April - one in four women will not be entitled to a full basic state pension. The state pension reforms are much needed and long overdue, but I'm not convinced they go far enough.
Monday 8 February 2010
Did you know you could lose your home if you can't pay your credit card bill?
OK, so in reality very few people's homes are repossessed because they can't pay their credit card bills or other personal debt (such as bank loans etc), but the fact is that some do. According to the Ministry of Justice, fewer than 350 properties were sold in the last six months of 2008 because credit card companies and banks wanted their money back.
There may well be times where it's not a case of 'can't pay' but 'won't pay' - when only the threat of drastic action will do the trick, but I bet the vast majority of people who had to sell their home had no idea what they were letting themselves in for when they signed up to their credit card or personal loan.
We're used to the disclaimer that 'your home may be at risk if you don't keep up repayments' when we take out a mortgage or other secured loan. In fact, we're probably so used to it that the words barely register anymore. But losing your home over a credit card debt?
Debt advice charities have become increasingly concerned about the rise in the number of companies trying to get the courts to approve 'orders for sale', which gives them the power to force someone to sell their home. Although the numbers are relatively low, the concern has to be that there will be more as property prices recover.
It's certainly been the case that there's been a rush of companies trying to stake their claim to money they're owed. Ten years ago there were fewer than 20,000 applications to the courts to have unsecured debt turned into a debt that was secured against the value of your property. By 2008 (the last year the government has accurate figures for), that figure had increased by around 1000% to 165,000.
Now, I'm a firm believer in the fact that if you borrow money, you should expect to pay it back. But I also realise that changes in someone's life - redundancy, illness, divorce etc., can make this pretty difficult. What I also believe is that companies should be straight with us. So, if they're going to charge us 16% (the average credit card interest rate), compared to 8% or so for a secured loan, they should be prepared to take on the extra risk that goes with it. Or, if they're really offering a credit that's secured against our home, we should pay secured loan rates.
The government is planning to raise the bar so that credit card companies and banks won't be able to force the sale of a home if you owe less than £5,000-£10,000. That would be a welcome step, but it also needs to force card companies and banks to spell out the worst that could happen if a customer gets into arrears. Preferably on their marketing bumph and in the same sized font as the eye-catching slogan.
There may well be times where it's not a case of 'can't pay' but 'won't pay' - when only the threat of drastic action will do the trick, but I bet the vast majority of people who had to sell their home had no idea what they were letting themselves in for when they signed up to their credit card or personal loan.
We're used to the disclaimer that 'your home may be at risk if you don't keep up repayments' when we take out a mortgage or other secured loan. In fact, we're probably so used to it that the words barely register anymore. But losing your home over a credit card debt?
Debt advice charities have become increasingly concerned about the rise in the number of companies trying to get the courts to approve 'orders for sale', which gives them the power to force someone to sell their home. Although the numbers are relatively low, the concern has to be that there will be more as property prices recover.
It's certainly been the case that there's been a rush of companies trying to stake their claim to money they're owed. Ten years ago there were fewer than 20,000 applications to the courts to have unsecured debt turned into a debt that was secured against the value of your property. By 2008 (the last year the government has accurate figures for), that figure had increased by around 1000% to 165,000.
Now, I'm a firm believer in the fact that if you borrow money, you should expect to pay it back. But I also realise that changes in someone's life - redundancy, illness, divorce etc., can make this pretty difficult. What I also believe is that companies should be straight with us. So, if they're going to charge us 16% (the average credit card interest rate), compared to 8% or so for a secured loan, they should be prepared to take on the extra risk that goes with it. Or, if they're really offering a credit that's secured against our home, we should pay secured loan rates.
The government is planning to raise the bar so that credit card companies and banks won't be able to force the sale of a home if you owe less than £5,000-£10,000. That would be a welcome step, but it also needs to force card companies and banks to spell out the worst that could happen if a customer gets into arrears. Preferably on their marketing bumph and in the same sized font as the eye-catching slogan.
Tuesday 26 January 2010
The FSA acts....at last
So, the Financial Services Authority has finally decided to act and is proposing new rules to stop mortgage lenders from piling charges and interest on borrowers who get into arrears. It's good that the FSA is acting, but shouldn't it have put these rules into place when repossession wasn't such a real threat to thousands of borrowers?
A few years ago I filmed a story for TV about a woman aged 62 who had been diagnosed with bipolar disorder. She owned her property and had paid her mortgage every month without fail. But after she went on a spending spree during one of her 'highs' she was left with debts of around £25,000.
She was advised by a broker to take out a second mortgage with a sub prime lender, which she would have to pay until she was 85 (the broker helpfully filled in her application form for her and stated that she was a self-employed cleaner, rather than the retired civil servant she actually was).
Not surprisingly she couldn't make the mortgage payments, but she did make an arrangement to pay £200 of the £300 she owed every month by standing order. And what did the lender do? They charged her a £50 arrears fee every single month (plus interest plus other random assorted fees).
I won't even begin to tell you the extraordinary way the sub prime lender tried to justify the fact that a 62-year-old 'self-employed cleaner' had mortgage that would last for 22 years. What became clear was that the lender was charging her £50 a month for no reason at all. The company didn't have to do anything to chase up the payment - it arrived on the same day every month.
As if that wasn't enough, once the arrears (largely made up of charges, interest and fees) reached around £750, they wrote to her threatening her with repossession.
If the FSA's planned rule change means people won't be treated like this in the future, it can only be a good thing. But I bet there are many others who've had similar experiences and for whom help is coming too late....
A few years ago I filmed a story for TV about a woman aged 62 who had been diagnosed with bipolar disorder. She owned her property and had paid her mortgage every month without fail. But after she went on a spending spree during one of her 'highs' she was left with debts of around £25,000.
She was advised by a broker to take out a second mortgage with a sub prime lender, which she would have to pay until she was 85 (the broker helpfully filled in her application form for her and stated that she was a self-employed cleaner, rather than the retired civil servant she actually was).
Not surprisingly she couldn't make the mortgage payments, but she did make an arrangement to pay £200 of the £300 she owed every month by standing order. And what did the lender do? They charged her a £50 arrears fee every single month (plus interest plus other random assorted fees).
I won't even begin to tell you the extraordinary way the sub prime lender tried to justify the fact that a 62-year-old 'self-employed cleaner' had mortgage that would last for 22 years. What became clear was that the lender was charging her £50 a month for no reason at all. The company didn't have to do anything to chase up the payment - it arrived on the same day every month.
As if that wasn't enough, once the arrears (largely made up of charges, interest and fees) reached around £750, they wrote to her threatening her with repossession.
If the FSA's planned rule change means people won't be treated like this in the future, it can only be a good thing. But I bet there are many others who've had similar experiences and for whom help is coming too late....
Wednesday 20 January 2010
When is cash not cash....?
So, the Financial Services Authority has flexed its muscles for the first time in 2010 and this time it's Standard Life that has caught its attention. Not some two bit company we've never heard of, but Standard Life, which has been around for absolutely donkeys' years.
In case you missed the original story, around a year ago it emerged that a so-called 'cash fund', aimed at investors who had put money into a Standard Life pension, but who didn't want to risk it by investing in shares, was itself investing in an ...erm... interesting range of products (including mortgage-backed securities) and consequently, had fallen in value.
I'm not an expert in the kinds of financial instruments that Standard Life's pension cash fund invested in, but it appears that some of them were pretty risky. And - whatever the risks - they were not made clear to investors.
What's so frustrating about the whole affair is that Standard Life initially said it didn't believe it needed to compensate any of those who'd lost money - although it did have a change of heart (which seemed to coincide with a flurry of articles focusing on people who'd lost money).
The industry tightened up the rules last year up so that firms can no longer describe funds that invest in riskier financial products as 'cash' and Standard Life says it has learned important lessons from its mistake. But this sorry incident will do little to reassure consumers - most of whom have little trust in financial companies in the first place - that they really are in tune with their customers' needs and that, when things do go wrong, they will be quick to own up to their mistakes and put things right as speedily as possible.
In case you missed the original story, around a year ago it emerged that a so-called 'cash fund', aimed at investors who had put money into a Standard Life pension, but who didn't want to risk it by investing in shares, was itself investing in an ...erm... interesting range of products (including mortgage-backed securities) and consequently, had fallen in value.
I'm not an expert in the kinds of financial instruments that Standard Life's pension cash fund invested in, but it appears that some of them were pretty risky. And - whatever the risks - they were not made clear to investors.
What's so frustrating about the whole affair is that Standard Life initially said it didn't believe it needed to compensate any of those who'd lost money - although it did have a change of heart (which seemed to coincide with a flurry of articles focusing on people who'd lost money).
The industry tightened up the rules last year up so that firms can no longer describe funds that invest in riskier financial products as 'cash' and Standard Life says it has learned important lessons from its mistake. But this sorry incident will do little to reassure consumers - most of whom have little trust in financial companies in the first place - that they really are in tune with their customers' needs and that, when things do go wrong, they will be quick to own up to their mistakes and put things right as speedily as possible.
Tuesday 12 January 2010
Can you have a good divorce?
There's so much in the papers about how couples rush to divorce in January that you may feel like you can't bear to read another article about breaking up. But I promise I won't overwhelm you with statistics about how many marriages break up at this time of year - I'm interested in how couples break up, not how many do so.
It's been a long time coming, but it seems that less confrontational methods of divorce are becoming more popular. For years it felt like the only option available if you wanted to get divorced was to hire a lawyer to 'fight your corner'. The reality may have been different, but the choices were certainly more limited than they are today.
These days, some couples are splitting up without using a lawyer at all and an increasing number of those who are using legal help are choosing 'friendlier' divorce methods, such as collaborative law or mediation. In 2003 only 12 lawyers in England and Wales were trained in collaborative family law. By last February the figure had reached 1200. Yes, it's still a minority who use collaborative law or mediation, but many of those find it's a more positive experience than the traditional lawyer-led negotiations.
The main benefit is that couples each get a real say in what happens (even if the eventual agreement involves a lot of compromise). Although many divorces don't get as far as the courts, a number of couples are effectively forced to agree to settlements because they're told that it's what a court would be likely to do.
Collaborative family law, which involves round-table meetings with you and your ex and your respective lawyers, is not necessarily a cut-price option. But it can mean both parties are less emotionally scarred by the process and - when it comes to sorting out the money - that finance doesn't become such a battle ground. The downside is that if the process breaks down, you each have to hire new lawyers, which can raise the cost considerably. But for an increasing number of couples, it's a risk worth taking.
Do you agree?
I am hosting a free divorce advice surgery on Thursday January 28th from 4pm to 8pm in Covent Garden, central London. David Allison, who's a trained mediator and collaborative family lawyer with Family Law in Partnership and Karen Ritchie, from independent financial advisers
Financial Planning for Women will be giving free advice on a one-to-one basis. It will cover a range of financial issues. Places are limited and available on a first come, first served basis. Email sarah@savvywoman.co.uk if you'd like to find out more.
It's been a long time coming, but it seems that less confrontational methods of divorce are becoming more popular. For years it felt like the only option available if you wanted to get divorced was to hire a lawyer to 'fight your corner'. The reality may have been different, but the choices were certainly more limited than they are today.
These days, some couples are splitting up without using a lawyer at all and an increasing number of those who are using legal help are choosing 'friendlier' divorce methods, such as collaborative law or mediation. In 2003 only 12 lawyers in England and Wales were trained in collaborative family law. By last February the figure had reached 1200. Yes, it's still a minority who use collaborative law or mediation, but many of those find it's a more positive experience than the traditional lawyer-led negotiations.
The main benefit is that couples each get a real say in what happens (even if the eventual agreement involves a lot of compromise). Although many divorces don't get as far as the courts, a number of couples are effectively forced to agree to settlements because they're told that it's what a court would be likely to do.
Collaborative family law, which involves round-table meetings with you and your ex and your respective lawyers, is not necessarily a cut-price option. But it can mean both parties are less emotionally scarred by the process and - when it comes to sorting out the money - that finance doesn't become such a battle ground. The downside is that if the process breaks down, you each have to hire new lawyers, which can raise the cost considerably. But for an increasing number of couples, it's a risk worth taking.
Do you agree?
I am hosting a free divorce advice surgery on Thursday January 28th from 4pm to 8pm in Covent Garden, central London. David Allison, who's a trained mediator and collaborative family lawyer with Family Law in Partnership and Karen Ritchie, from independent financial advisers
Financial Planning for Women will be giving free advice on a one-to-one basis. It will cover a range of financial issues. Places are limited and available on a first come, first served basis. Email sarah@savvywoman.co.uk if you'd like to find out more.
Monday 4 January 2010
New rules on savings accounts
If you have savings, do you know whether your bank has its own banking licence or shares it with another bank? No? I didn't think so. But, until January 1st this year, that's what you'd have to know (or be able to find out) before you could work out how your savings would be covered by the compensation scheme, should the worst happen and your bank go bust.
When the credit crunch was - frankly - scaring the socks off all of us and high street banking names looked like they might melt into a puddle, the government raised the limits for the UK's savings compensation scheme so that the first £50,000 of an individual's savings would be protected.
A good move. But what it didn't do at the same time was simplify the scheme so that the £50,000 limit applied to each bank (or banking brand). Instead, it stuck with the existing and unnecessarily complicated system of the £50,000 limit applying to each banking licence. This seemed absurd because there's no logic or pattern to which banks have their own licence (for example, NatWest and Royal Bank of Scotland) and which share a licence (Halifax, Bank of Scotland and Birmingham Midshires).
From the beginning of this year, bank, building societies and anyone else offering savings accounts will have to tell consumers how their money is covered by the compensation scheme. That means you should know whether you'd be able to claim the full £50,000 from each bank or building society that you have savings with or whether that total is spread across several different brands within the same group.
If you've saved with a bank based within the European Economic Area (the 27 EU member states plus Iceland, Norway and Lichtenstein), you'll also be told whether you're only covered by their country's own scheme or whether you may also be able to claim some compensation from the UK's scheme.
It's good that banks will actually be forced to tell consumers how their money will be protected. But it seems extraordinary that the scheme was set up in such a consumer-unfriendly way in the first place and that it's taken until now - well over a year after the credit crisis was at its worst - for banks to even be obliged to explain the rules to their own customers.
What do you think?
When the credit crunch was - frankly - scaring the socks off all of us and high street banking names looked like they might melt into a puddle, the government raised the limits for the UK's savings compensation scheme so that the first £50,000 of an individual's savings would be protected.
A good move. But what it didn't do at the same time was simplify the scheme so that the £50,000 limit applied to each bank (or banking brand). Instead, it stuck with the existing and unnecessarily complicated system of the £50,000 limit applying to each banking licence. This seemed absurd because there's no logic or pattern to which banks have their own licence (for example, NatWest and Royal Bank of Scotland) and which share a licence (Halifax, Bank of Scotland and Birmingham Midshires).
From the beginning of this year, bank, building societies and anyone else offering savings accounts will have to tell consumers how their money is covered by the compensation scheme. That means you should know whether you'd be able to claim the full £50,000 from each bank or building society that you have savings with or whether that total is spread across several different brands within the same group.
If you've saved with a bank based within the European Economic Area (the 27 EU member states plus Iceland, Norway and Lichtenstein), you'll also be told whether you're only covered by their country's own scheme or whether you may also be able to claim some compensation from the UK's scheme.
It's good that banks will actually be forced to tell consumers how their money will be protected. But it seems extraordinary that the scheme was set up in such a consumer-unfriendly way in the first place and that it's taken until now - well over a year after the credit crisis was at its worst - for banks to even be obliged to explain the rules to their own customers.
What do you think?
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