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 In some cases their chosen delivery company has just withdrawn service and refused to deliver in certain areas.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.
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