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Credit cards to get their comeuppance

This issues raised by the White Paper should have been aired several years ago, with any leglislation not likely until  ‘after’ the next election.

Many would argue that it is the borrower’s own fault for getting into credit card debt, but remember over the past decade this country’s economy has been fuelled by around 1.5 trillion pounds of consumer borrowing.

Morally and socially we have been encouraged to spend and pay later through slick marketing and the easy availability of credit.  From this we have developed a culture of must have now.

We also have triggers in our life, perhaps when a relationship breaks up, with a loss of employment or with an illness and it has been all too easy to fall on the credit card back up.

That said, consumers should not feel as if they have been exploited or disadvantaged and they have a right to clear information to enable them to help them avoid that. However they also have a responsibility to manage their finances properly.

One concern is that the plans could mean that some borrowers will be forced to pay back more of their debt earlier, which they may not be able to afford.

The proposals could go further by capping interest rates on credit cards making them in line with the bank base rate; for example, the card interest rate would always be say 10% above base rate, that way the card provider is protected should interest rates go up and the consumer if they come down, a bit too simple really.

One last point, I can see credit card providers laying off staff in the future as these proposals will seriously reduce their income over the coming years and reverse their current business models! Can't say I’m sorry to see this, they had it coming. Full article here.

Need help with your budgeting? If so then try our free budget wizard.

Thinking of a 0% credit card balance transfer? You may think again after reading our 0% credit card balance transfers - warning

Read more: Credit cards to get their comeuppance, FSA fines GMAC-RFC for mis-treating mortgage customers &...


Bohemian Bankruptcy

This is a brilliant piece work by some very talented individuals, we have had numerous comments on the website, here are just a few:

'Superb! Excellent lyrics and production which well illustrates a lot of people's problems at present. Sure it would do well if released.'

'They should go on the x-factor. Christmas No1.'

'Amazing arrangement. Particular reference to..."I sometimes wish I'd never gone buy to let"; "Foreclosure and summons, very very frightening fees" & my personal favourite..."Have to sell the wife on the streets of the city". Just brilliant.'

'Probably the best vodcast of the year!'

Drag Queen sings you through the economic crisis demonstrating that there is no better way then to illustrate this story in song describing the heart-wrenching tale of greed, power and loss with...

No longer available to view.            

Is it time to issue steel toe caps to the FOS?

The British Bankers Association has a voluntary code which says that Banks ‘Will deal quickly and sympathetically with things that go wrong and consider all cases of financial difficulty sympathetically and positively.  Under Financial Services Authority (FSA) rules, banks are supposed to treat hardship claims sympathetically.

But the FOS is still receiving complaints from hard up consumers complaining that the banks are just rejecting their legitimate claims.

It is so frustrating and annoying when I read that banks have been ‘asked’ to ensure that they do what they should be doing as of right.

Clearly the bank’s don’t think it is in their interest to help out on financial hardship cases, even though it is in the BBA voluntary code, (see page 25) and the 'Guidance for Subscribers code' (then see page 46), as the longer they can take to fob people off, the less it will impact on their business, as it COSTS them money!

Read more: Bohemian Bankruptcy and Is it time to issue steel toe caps to the FOS?


Halifax is certainly not ‘giving that little bit extra’ instead they plan to take it from its one million customers as it engages in what some see as day light robbery.

Under the new charges those account holders that have an authorised overdraft will have to pay up to £31 per month on overdrafts under £2,500, and a £2 per day charge on authorised overdrafts above £2,500. If the overdraft is unauthorised then the fee will be £5 per day, around £150 per month.

Although those with large authorised overdraft balances may benefit, this will seriously penalise customers with relatively small authorised overdrafts and who stay within their limit.

In some instances this increase on fees for certain customers could be as high as 300% at a time when we are waiting for the outcome of the test case. The test case currenlty in the courts is all about whether the OFT can investigate and assess bank charges. Once we know the outcome, which I understand will be within the next 10 days, then it will be round two if OFT win and virtually the end if the banks win, for the record I back the OFT.

It is difficult to comprehend when all we see on the news and in the papers bankers giving themselves massive six figure bonuses, part funded by bank charges from honest hard working consumers that have felt the need for an overdraft to help ends meet.

Halifax claim that the move is part of its plan to bring overdraft charges on all of its current accounts, except its student account, in line with its Reward Current Account, which was launched in February.

Consumers need to switch and ditch those banks that are devious in their business methods. See our article on this below.

You have until 6th December 2009 to do this so act now and go to a bank that offers a better deal. You have been warned.

Bank accounts to be made clearer and easier to switch

Bank charges latest news

Read more: Halifax grabs that little bit extra! 300% in some cases.


The City watchdog, the Financial Services Authority (FSA), has announced proposals to reform the way mortgages are offered to borrowers.

The review’s key features in the proposal are to:

  • Make lenders ultimately responsible for assessing a borrower’s ability to pay and to carry out affordability test for all mortgages;
  • Ban ‘self-cert’ mortgages by requiring verification of the borrower’s income;
  • Ban sale of products which could put borrowers at risk
  • Ban arrears charges when the borrower is already repaying these and ensure firms do not profit from those in arrears;
  • Make all mortgage advisers personally accountable to the FSA.
  • Bring ‘Buy-to-let’ and secured lending under the FSA regulation.

Following the new proposals the courts may take a different view on repossession orders as the lender may be made more accountable for not ensuring that the loan was affordable. This hopefully should be to the borrower’s advantage.

Lenders, consumer groups and the industry have until 30 January 2010 to respond following which the FSA expects to publish its findings in March 2010 with implementation soon after. So none of this is law yet, it is what it is, a proposal and it is up for discussion.

The full proposals can be found under mortgage market review discussion paper.

The measures proposed by the FSA are, in my view, long overdue and although they may be uncomfortable for some they are necessary in order to haul us back to sensible levels of manageable borrowing, otherwise we would just be on countdown for the next property crash. Although this new proposed regulation is welcomed it will come at a price as any higher costs for the lender will be passed on to the borrower.

Read more: Mortgage crackdown by City watchdog to hit thousands


Government cannot reclaim on overpaid benefits - new Appeal Court ruling

The Appeal Court ruled on the 14th October 2009, that Secretary of State for Work and Pensions cannot recover overpayments of social security benefits through the courts where the claimant is not at fault.

The case was brought by Child Poverty Action Group, CPAG, after government wrote to over 65,000 claimants telling them it could take them to court at common law if they did not pay back overpayments.

The benefits include many of those that cost the taxpayer the most, including income support, incapacity benefit, housing benefit, pension credit and the state pension.

The court’s decision means the government cannot write these letters to claimants in future.

The basically means the incompetence of the bureaucrats at the Department of Work and Pensions the tax payer will pick up the bill for which auditors are claiming to be as much as £900million in overpayments last year alone.

This ruling has affected the poorest people in our society and they do not have the means to repay the sums back. Had the DWP won the case all they would have done would stop the current benefits to those that had been overpaid until they had recovered the amounts, this would have caused considerable hardship and misery.

Important point to note, this ruling does NOT affect 'over payment of tax credits'. There is a separate campaign on this which you can find out more at the CPAG Amnesty for tax credits overpayments.

Read more: Government cannot reclaim overpaid benefits & Post strike - how to avoid those late payment charges


Shared Appreciation Mortgages Schemes (SAMs) 

On 5 October 2009 the High Court granted a Group Litigation Order to UK home owners who are suing BOS and Barclays over “unfair” Shared Appreciation Mortgages (SAMs). This is an important victory for homeowners who will now sue the Banks on a group, rather than an individual, basis. 

These schemes, which were only sold between 1997 and 1998 before being withdrawn from the market, enabled borrowers to take out loans secured against their homes, at a zero or a reduced fixed rate of interest. 

The problem came on repayment of these loans as borrowers had to pay an additional charge which in most cases worked out at or close to 75% of the increase in the value of the property during the lifetime of the loan (the appreciation). 

The steep rise in house prices in the ten years between 1997 and 2007 has meant that with zero interest SAMs the lender’s share of the appreciation is now an average of 4.4 times the amount borrowed, equivalent to an average interest rate of 35 - 40% per annum on a simple interest basis. With fixed interest SAMs, the average interest rate is even greater at 42 - 52% per annum on a simple interest basis. 

For some house owners that borrowed £25,000 they now have to pay a total of £175,000 on redemption. If another owner borrowed £75,000 at a fixed rate of interest, they now have to pay a total of £225,000 on redemption as well as about £50,000 in interest payments over the term of the loan - in all a staggering £275,000 or thereabouts.

Many of these mortgages were taken up by older people, who now find themselves trapped in properties which are no longer suitable for them, as they cannot afford to sell up and buy a suitable smaller property. 

It is estimated that a total of 12,000 SAMs were sold in the UK, of which around 7,000 may still be unredeemed.  

Hilary Messer of RWP solicitors, who is the lead solicitors in these cases, spoke with DebtWizard and is desperately trying to locate other home owners that are part of this scheme because time limits could statute bar some claims.  

If you have a shared appreciation mortgage and believe you have a potential claim then register on  the group action website or call them on 0845 003 9355. If just one family is missed then the repercussions could be very costly.

Consumers need to act now to avoid late payment charges and damage to their credit files

With the postal strike gathering momentum and forecasting all out on 22nd October 2009, consumers need to act now many consumers are getting their credit and store card statements delayed. There is also a delay in sending payments such as cheques, which can lead to a late payment charge. Check below to see if you could be affected by any of the following; 

Read more: Urgent - time running out on Shared Appreciation Mortgages Schemes (SAMs) &


Banks have agreed to make it easier for customers to switch current accounts and to make it clearer what their charges are. Under the changed, proposed by the  Office of Fair Trading, banks must provide monthly reports and an annual summary of the actual account charges - this will enable consumers to compare the prices and benefits of other bank accounts and make it easier to switch accounts for a better deal, a bit like car insurance. 

Although the proposed changes on switching direct debits are soon to be made easier is welcome, what is concerning is that we will all have to wait for up to two years for the changes to be introduced. It is estimated that this will not come fully into operation until 2011. So don't get too excited.
I am also concerned that the issue regarding unauthorised overdraft charges has still not been settled - this is because the legal battle between the banks and the OFT continues, with banks appealing earlier Court decisions to allow the OFT to decide whether charges are fair or not.

Bank charges need to be made clear. One hopes this will be clarified once the House of Lords (which is currently considering the issue) announces its decision.

If we had had this proposal some 15 years ago then many customers would not have fallen to the trap of hidden and obscene charges for going overdrawn.
These latest proposals are a move in the right direction but it is annoying that it has taken this long for the banks to do something positive.

It's common sense that a good working business needs to demonstrate transparency and be up front with costs -  which begs the question: "why have banks been allowed to get away with this deception for so long?"
Consumers have had enough of non transparency, especially where banks are involved. These new measures should help people plan their finances and give then the opportunity to walk away from a bank that is not open and up front.
The new changes will also mean that banks will have to work harder to keep a customer - that’s a first, I say with a wry smile.

How to claim bank charges, credit card charges and use 'Financial Hardship' can be found here Bank charges latest news and claim tools.

Read more: Bank accounts are to be made clearer and Citizens Advice Bureau under pressure as thousands of...


Massive unreported change in bankruptcy procedure

This is unbelievable that as from April 6th this year Insolvency Service removed the mandatory requirement to advertise someone’s bankruptcy in the local paper and instead has decided to leave this at the discretion of the Official Receiver. No one knows about this other than the usual charities and Insolvency practitioners that act as trustees in the bankruptcy case, not even the media have reported on this!

I was so concerned that only a few a very few organisations were aware of this and not the general public I wrote to the Insolvency Service to ask why this was not made public knowledge back in April this year. This mandatory requirement to advertise anyone's impending insolvency has deterred many consumers from petitioning for bankruptcy, even though this would have been their best option. In the past all details of a bankrupt went into the local paper which included the bankrupt's full name, home address and last known occupation placed.

I must confess the Insolvency Service Policy Unit has responded in a very positive manner and I have been invited to their Stakeholder Conference on Insolvency Rules Modernisation on the 14 October 2009. They have also asked me for any suggestions I may have on how they should provide further publicity for the new insolvency advertising regime to reach individuals that are considering personal insolvency. Easy, just let me know about these major changes in policy and I will broadcast it on my website and through my radio and tv appearances!

Some will argue that we need to have publicity in all cases of bankruptcy and that this change of policy is making it too easy for those in debt. I disagree, I see the pain and suffering of consumers that have lost control and the ability to repay, instead they are plagued by debt collectors and harassed to pay monies they do not have, they become ill, depressed and often turn to alcohol, crime or gambling.

One wonders whether it is those that pay their debts are having a problem accepting those that cannot pay, the stigma of bankruptcy is fast eroding and it will be the general public that will need to change their views, not the bankrupt.  Full article here Massive unreported change in bankruptcy policy

UK debt numbers for September 2009

Credit Action has just released the startling debt numbers that are relevant to consumers for the month of September, and they are a real concern. Just take a look at three I have selected;

Read more: Massive unreported change in bankruptcy procedure, UK debt numbers September, Thousands to get...


OFT refuses a doorstep lender a licence to trade.

U-Turn Financial Solutions Ltd have been refused for a consumer credit licence to operate as a 'doorstep lender'.

According to the OFT website following an investigation assisted by Kent Trading Standards Service, the OFT refused the application because it decided that the applicants were not suitable you hold the licence.

It is refreshing to see the OFT doing something positive about protecting vulnerable and desparate consumers that feel the need to approach these organisations.

Although Doorstep lenders are regulated matters can turn nasty if the consumer falls behind with their payments due to the higher than the norm interest rates. However for some consumers this form lending actually works because they cannot get access to credit from the usual sources such as the High Street banks. Hence the growth over the past few years for their services.

Anyone thinking of using a 'Doorstep lender' should visit the independent website lenderscompared.org.uk, and shop around for the best deal before they do any more and make sure they know exactly what they will be paying out. 

Consumers coulsd also consider joining a 'Credit Union'. You can find more on how they work and search for one nearest to you here Credit Union Search.

More on this article cn be found here.

More on 'Doorstep lending' can be found at my DebtWizard guide to Doorstep Lenders.

The German invasion

Not content with pinching our sun beds the Germans are now invading the UK to use our insolvency rules to go bankrupt! New EU rules allow individuals heavily into debt to use other EU regulations and local laws to resolve them, which is what the hard up Germans are doing.

So why come to Britain to resolve their debt problems I hear you ask? Well in Germany it can take up to 7 years and Ireland 12 before the debts are written off, here in the UK it is between 6 and 12 months before discharge.

Read more: OFT refuses to licence 'doorstep lender ' & The German invasion of sleepy Kent


Broadband tax, could it be a diverted call?

Broadband tax, I know it is only 50 pence per month per telephone household but it is a bit of a liberty especially for those that do not have broadband or do not intend to get it in the future.  We pay enough as it is for telephones and other forms of communication but my real concern about this is that some of this money could end up diverted elsewhere to help make ends meet.

Bankruptcy tourist

Found this one fascinating as the first I heard of this was on Wednesday when I was on BBC Essex with John Hayes, he asked me what my views were on the Germans coming over here to petition their bankruptcy because it was easier and quicker than back in Germany! Article now available see The 'Bankrupt tourist'.

Changes in bankruptcy procedure 

Just working on a major change in procedure which in my view will encourage more consumers to go bankrupt, god or bad thing? Let me do the article then decide.

Gym Membership fees - update

Been chatting with Robert Watts from The Sunday Times, look out for his article on Gym Membership Fees this weekend, quite an eye opener!

Read more: Broadband tax, Bankruptcy tourist, Changes in bankruptcy procedure, Gym membership fees &...



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