Insurance companies are not making it clear that payment by instalments is more expensive, says the Financial Conduct Authority, (FCA).
Paying insurance premiums in monthly instalments costs more than paying annually and the insurance regulator, the FCA, says that this is not made clear enough by insurance companies, brokers and comparison websites. As a result, comparing the insurance products offered by different companies is difficult.
The FCA has instructed all companies concerned to take action where appropriate.
According to the regulator, a number of insurance firms, brokers and other intermediaries do not always make the overall costs of paying for insurance explicitly clear to customers. Consequently, many do not understand that paying by monthly instalments is more costly than making one annual payment alone.
Research by the Financial Conduct Authority focused on car and home insurance sold online by thirteen insurance companies and 30 brokers. It examined the process from first enquiries to the point where clients pay for the product they have selected.
The FCA’s acting director of supervision, Linda Woodall, said that customers are entitled to a clear explanation of the payment options offered to them. Consumers expect a fair deal which means that they should be able to view exactly what they are signing up for and the precise costs involved.
Some insurers or their intermediaries were providing credit to their customers but failing to set out the interest rate, fees and charges, the annual percentage rate (APR) and the total amount payable in a representative example.
In some cases, reported the FCA, it was not clear that an additional fee would be charged by the credit broker as well as the insurer.
A spokesperson for the Association of British Insurers said that they would consider the FCA’s findings, in order to insure that consumers were made fully aware of the cost of different payment options.
The Governor of the Bank of England has said that Britain should hold the EU in or out referendum, promised by the Prime Minister, as soon as possible.
Speaking on the Today programme on BBC Radio 4, Mark Carney said that the continued uncertainty regarding the outcome of the EU poll would hurt the economy if companies decided to postpone investment plans.
Carney said that many businesses were already expressing concern about the possibility that Britain could leave the European Union and that it was in everybody’s interests if the poll took place ‘as soon as necessary.’
The European Union is the world’s biggest economy, it is the biggest investor in Britain and the biggest destination for UK investment.
Prime Minister, David Cameron, has promised an EU referendum by the end of 2017. Mark Carney’s words will fuel speculation that the poll could take place next year.
The Bank’s Governor was keen to play down the theory that low productivity in the UK and weak wage growth are caused by the influx of cheap labour from Eastern Europe. He argued that there are more Britons prepared to work longer hours and older people willing to work close to and beyond retirement age, and that this is why wages have not grown significantly.
Carney explained that over the last two years, three thousand older workers have stayed in the labour market than were doing so more than two years ago. Moreover, people are working longer hours which, in effect, adds up to another 200,000 workers, the equivalent of an extra 500,000 workers in total. Net migration over the last two years has been only one tenth of that, 50,000 workers.
Carney also argued that migrants add to productivity because they usually first find employment in jobs for which they are overqualified, before moving into jobs that are more suited to their abilities.
Consumer borrowing has escalated by as much as £1.2 billion from February to March of this year, the steepest rise since the financial crisis of 2007 to 2008, says the Bank of England.
The sharpest increase was in loans, overdrafts and other types of unsecured borrowing, accounting for £1.1 billion of the rise, according to Bank of England figures.
Credit card lending and mortgage borrowing remained largely flat. In fact, March saw 180 fewer mortgage approvals than the previous month. Credit card lending increased over the same period but by a relatively modest £200 million.
The surge in loan and overdraft consumer borrowing is probably due to the fall in the interest rates commonly charged by lenders. According to the consumer finance website, ‘Moneyfacts,’ someone borrowing £5,000 twelve months ago would have had to pay charges of 9.1 per cent. He or she would only have to pay 8.1 per cent now, on the same amount.
Both charities and economists are warning that the sharp rise in borrowing may lead to an increase in debt difficulties for consumers.
Howard Archer, chief economist at IHS Global Insight, cautioned that consumers are likely to be increasing their amount of debt in order to fund their spending. The charity for those in debt, StepChange, expressed concern that the surge in borrowing indicates that many are turning to credit to make ends meet, without having the means to repay all of their debt.
However, the Insolvency Service has reported the lowest number of personal insolvencies for ten years. During the first quarter of 2015, only 20,825 people were declared insolvent, the lowest number since 2005 and a decrease of 18.6 per cent from twelve months ago, one of the sharpest falls since records began
Thousands of Britons are cashing in on the strong pound and buying their euros weeks or even months in advance of their summer holidays, say foreign currency brokers.
Travel agency and foreign exchange broker, Thomas Cook, reported a surge in the number of customers buying European holidays and the amount of euros they were buying. The number of euro transactions were up by one third from the same time last year it said, whilst sales by value were up by 65 per cent.
During the last two weeks alone, Thomas Cook said they had sold more than 31 million euros, at a cost of £22.8 million.
The head of exchange at Thomas Cook, Fraser Millar, said that some customers were buying euros in advance of their summer holidays while others were buying them before they had even booked a holiday.
The Post Office also said that its sales of euros were up by more than fifty per cent on the same time last year. During the last week in January when the euro was at its lowest against the pound, sales rose by as much as 363 per cent.
Saga Travel reported that its euro sales between February and April were twice as much as they were during the same period last year. Asda Money reported an increase of 20 per cent.
Andrew Brown, of Post Office Money, said that customers are more likely to choose their holiday destination based on where they can get the best value for their money.
The pound is not only strong against the euro but has also made gains against other popular holiday currencies, such as the Turkish lira and the Thai baht. Sales of the Croatian kuna increased by 91 per cent in April of this year, compared to the same month in 2014.
The Conservative Party has said that it will exempt all properties worth less than £1 million from inheritance tax, should it win the next election.
Chancellor George Osborne said that the move will support our basic human need to provide for our children. It will mean that more homeowners are able to pass their homes on to their children without paying tax.
The Labour party said that the Conservatives have made similar promises before and failed to deliver. Deputy leader, Harriet Harman, said that as the election approaches, it was becoming clearer that the Conservatives stood to benefit the well off, whereas Labour wanted everyone to be better off.
Independent economists said that raising the level at which properties qualify for inheritance tax in this way will disproportionately benefit the wealthy and push up property prices still further.
The Labour Party has said that it will raise £7.5 billion by fining tax avoiders and closing tax loopholes should it win the coming general election. Shadow Chancellor, Ed Balls, said that his party will carry out an immediate review of tax collection in order to close all existing loopholes, if Labour wins the election in May. They promised to increase and strengthen HM Revenue and Customs’ powers to collect taxes. They will also change rules that enable private equity managers to avoid income tax and hedge funds to sidestep stamp duty.
The Conservatives have said that they will raise £5 billion from tax avoiders but have not yet said how this will be done.
Director of Institute for Fiscal Studies, Paul Johnson, said that both parties are guilty of making up numbers. Neither party can actually know how much money can be raised by cracking down on tax evasion, he added.
Many of the big high street banks are losing customers who are switching current accounts, according to recent figures from The Payments’ Council.
More and more bank customers are moving their current accounts away from the UK’s biggest banks, following changes to the switching system.
It now takes only seven days to switch bank accounts, compared to the thirty days it previously took. All regular standing orders and direct debits are automatically switched over to the new account. Payments that are accidentally requested from or made to the old account are also automatically transferred to the new one, for a period of three years.
The banks recording the largest loss of customers were HSBC, RBS, Nat West, Barclays and Lloyds Bank.
Halifax, Nationwide Building Society, Tesco Bank and Santander, however, gained customers following the introduction of the seven day switching process.
The Payments’ Council has overseen the introduction of the faster switching service and has said that 1.14 million customers changed banks during the past year, a 7 per cent year on year rise.
Andrew Hagger, of Money Comms, said that although the figures show that a number of people are being tempted by the deals many of the banks are offering, the vast majority are staying with their existing providers and ignoring the cash enticements of other banks. Hagger added that this is no doubt because of the confusing number of varying tariffs, interest rates, rewards, charges and cashback deals available. Customers are struggling to work out which current account really offers them best value for money.
The Payments Council is a regulatory body that represents the UK payments industry. It is due to be replaced by the Payment Systems Regulator during the summer of this year.
The number of home owners taking out secured loans rose by almost 11 per cent in February, month on month, from 2014, according to figures recently released in the Loans Warehouse index.
More precise figures show an increase of 10.7 per cent, month on month, with a total of £58.2 million in February 2014 to £64.4 million in February of this year.
Demand for secured loans increased dramatically during the first two months of this year, with 18 per cent higher levels of lending in January and February than in the whole of the first quarter in 2013.
Gross second charge lending, year on year, is up by 36 per cent, performing better than any other area of consumer credit.
However, demand for second charge lending for property purchases declined during the first quarter of 2015. The most recent Bank of England Credit Conditions survey shows that the drop in the number of borrowers applying for second loans for house purchases, has been significant during the first three months of this year, but lenders are optimistic that demand will increase once more during the second quarter of 2015.
Matt Tristan, director and co-founder of Loans Warehouse, said that the figures for February show that demand for second charge lending is strong. Whilst the figures for secured loans for mortgages are lower, it is evident that secured loans are more and more likely to be offered by brokers to clients.
Lenders who have stuck with first charge lending since the sector began to recover in 2013 are returning to the second charge marketplace. Buy to let lender, Paragon, relaunched into the market last year for the first time in five years and Precise launched its own product at the end of 2013.
The 1,000 richest families in Britain have seen their wealth double since the financial crisis of 2007 and 2008 and are now jointly worth more than £547 billion.
Average UK incomes have not yet recovered from the worst recession to hit Britain since the Great Depression of the 1930s and thousands are still using food banks in order to survive, yet the very richest have found themselves richer than ever.
The richest 1,000 had assets of £258 billion in 2009 which has increased by 112 per cent in just six years, according The Sunday Times’ Rich List. The largest increase came in just the last twelve months.
London now has 80 billionaires, eight more than in 2014 and more than any other capital city in the world.
The richest man in the UK today is Len Blavatnik, a Ukrainian billionaire with a London address in Kensington Palace Gardens that is worth £41 million. A US citizen and now owner of Warner Music, as well as stakes in chemical and aluminium companies, Blavatnik’s holdings are said to be worth £13.17 billion. His wealth increased by £3 billion in the past 12 months, pushing the Hinduja brothers, owners of the Hinduja automotive, gas, oil and finance conglomerate, into second place.
Average household incomes, however, have only just recovered to their financial crisis levels according to the Institute of Fiscal Studies.
The richest one thousand families in Britain today own more wealth than the combined wealth of 40 per cent of all British households, says The Equality Trust. Director, Duncan Exley, said that such inequality was ‘hugely damaging’ for British society.
Three British families feature in the richest 1000 list. Galen and George Weston own Selfridges and Associated British Foods and are at number three. Denise Coates and family who own Bet365 are believed to be worth £2.3 billion, and at 44th place. Sir James Dyson and family jumped seven places to 22.
Average house prices have reached a record high, according to property website, Rightmove.
A large rise in the number of people looking for a new home to buy and a continued lack of sellers has led to a further increase in the average property price, to just over £286,000.
Rightmove is the UK’s largest property website and its report highlights the continued housing crisis in Britain today.
According to the Rightmove report, March was its busiest month since it was launched in 2000, with 20 per cent more people viewing property than during the same period in 2014. However, the number of new properties on the site was down by 4 per cent when compared to the first quarter of last year.
House prices were up in every region in April from March of this year and only down on April of last year in Wales. Prices rose the most in Greater London and the north east of England. In Greater London, average house prices are now £594,585, an increase of almost 50 per cent, or £195,000, since the last election in 2010.
Miles Shipside, director at Rightmove, said that an under supply of homes and a record demand for housing has led to an all-time high in property prices. He attributed the price rise to large numbers of potential sellers hesitating to put their homes on the market just before a general election. There has also been a record number of landlords buying properties as long term investments, due to the current poor return on savings.
“Record housing prices are largely due to the continued shortage of new build homes. Successive governments have failed to meet house building targets since the 1980s and this has led to increased property prices and rents,” Shipside added.
Unemployment in the UK has fallen to its lowest rate since the financial crisis of 2008, official figures show.
According to the Office for National Statistics (ONS), the number of people without paid employment fell by 76,000 during December, January and February, to 1.84 million. This puts the unemployment rate at 5.6 per cent, 1.3 per cent lower than in March 2014 and 7.9 per cent lower than in May 2010, when the Coalition government took power. The number of people claiming Jobseeker’s Allowance dropped by 20,700 during March of this year, to 772,400, the ONS revealed.
A senior economist at Capital Economics, Samuel Tombs, said that he expects unemployment figures to continue to drop over the coming months.
The strong unemployment figures helped to strengthen the pound against the dollar, with sterling reaching its highest rate in four weeks.
The number of people in work increased to 31.05 million, a rise of 248,000 in a three month period and the biggest such rise of the last twelve months. The number of unemployed young people aged between 16 and 24 fell to 742,000, a drop of 22,000 during the three months to February. Long term unemployment is also down by 188,000.
Unemployment is currently lowest in the south east of England, at 4.2 per cent and highest in the North East, where it is 7.7 per cent.
Average weekly earnings also increased by 1.8 per cent over the last twelve month period, although they dropped by a percentage point between January and February. Chief economist at Markit, Chris Williamson, said that the upturn in real wages is a significant factor in the UK’s recent economic recovery. Consumer spending is up but there are uncertainties about how long this can last.
For a typical loan of £30,000.00 over 120 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £598.34.
Including a Product Fee of £2,400.00 (8% of the loan amount) and a Lending Fee of £807.00, the total amount repayable is £71,800.20.
Annual Interest Rates ranging from 11.88% to 29.38% (variable). Maximum 50.00% APRC. The loan must be paid back by your 70th birthday. Read more.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
