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Tue 31st Oct, 2006
Posted in Bad Credit, Borrowing, Consumer Credit, Consumer debt, Credit record, Financial news, Financial products, Personal loans, Spending, UK Finance, Unsecured loans, interest rates at 6:16 pm by Steve Smith
Despite government regulation and groups lobbying for change, banks discriminate against people who are disabled. If they do lend to someone who is disabled, they are chastised. Lloyds TSB defended itself today against claims that it lent £40,000 to a customer who suffered from bipolar disorder.
The man, from Burton-upon-Trent, Staffordshire, built up a £70,000 debt by giving away money to homeless people in the belief he was a philanthropist. He reportedly suffered a form of manic depression, and was eventually forced to seek treatment. Financial advisers at the town’s Citizens Advice Bureau investigated his case and criticised Lloyds TSB for allegedly not making more stringent checks into his condition.
On the other hand, people who are on a disability pension cannot receive a loan, while people who make less, and can find themselves unemployed at any time, can obtain a loan up to three times their yearly income. This prevents these disabled people from purchasing homes and automobiles.
Disabled people receive lower incomes while they need to pay extra costs needed to adapt to their impairment. The problem of lending money that disabled people cannot pay back has resulted in 2 out of 5 seeking loans to try and improve their standard of living.
The Leonard Cheshire disability charity is asking the UK Government and the credit industry in general to help solve the problem. A survey reveals that 9 out of 10 of disabled people run out of money on a regular basis.
The problem is, disabled people who do not qualify for affordable credit, will turn to high interest unsecured loans like credit cards, which will compound the problem.
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Posted in Consumer Credit, Consumer debt, Equity release, Financial news, Financial products, Property, Remortgaging, Savings, UK Finance, mortgages at 6:13 pm by Steve Smith
The Financial Services Consumer Panel (FSCP) has expressed concern about the announcement by the Financial Services Authority of the final rules for the regulation on home reversion plans. The plans will be regulated by the FSA from 6 April 2007, following recent parliamentary approval of the necessary legislation.
The chairman of the FSCP John Howard said the panel had had several discussions with the FSA about home reversions and remained concerned about consumer protection. With home reversions being equity release products used by many elderly people to boost their retirement income, consumers must be careful, said the panel.
Specifically, the panels concerns are:
- ‘Firstly, the new FSA rules will allow these products to be sold without advice, when this reduces the existing protection under trade body guidelines which said that advice should always be given;
- Secondly, there will be one valuation of the property for both the consumer and the firm purchasing part of their property, so consumers may not get the best price for the portion that they are selling.
- Thirdly, the Treasury has imposed a twenty year limit on home reversion schemes to differentiate home reversions from other loans – and yet this will mean that if a consumer aged around 60 takes out a home reversion, they could face eviction from their home when they are around 80, when the investor would be able to demand the return on their capital investment, with inevitable consumer worry and detriment.’
Howard said: ‘We have repeatedly stated our concerns to the FSA – these are complicated products, purchased by elderly people who are often less able to look after themselves, and which will need to be fully explained to consumers. We do not think that the FSA’s new rules go far enough to protect consumers.’
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Posted in Borrowing, Consumer Credit, Financial news, Financial products, First time buyers, Homeowner Loans, Homeowners, House buying, Housing news, Property, Spending, UK Finance, mortgages at 6:07 pm by Steve Smith
Abbey has released research which shows that 17.3 million people are unable to get on the property ladder. Some 7.4 million say one of the main reasons is because of house prices. Of the people polled, 6.9 million said they were unable to afford a deposit, while 3.4 million are waiting for house prices to fall. Additionally, 2.1 million said they could not find the right mortgage. The research also found that 2.7 million first time buyers compromise on the property that they buy.
Some people feel unable to buy because of job security (3 million), lack of time (2.5 million) or simply not wanting to make a commitment (6 million). There were also 1.5 million people who had not found the right area to settle in.
Abbey mortgage product executive Nici Audham Gardiner said: ‘There are people who feel that they do not want to get on the property ladder, but those who do face many barriers of which the most notable is the cost of homes. However, there other more surprising results, for example, job security, lack of time and finding the right mortgage. Strangely, despite hundreds of mortgages available to buyers, our research shows that 12 per cent of non-homeowners believe that they would be on the property ladder if they could just find the right mortgage.’
Abbey is making changes to its mortgage range and lending policy to make it easier for people to get on the property ladder. These include a special range for first time buyers with 5 per cent cashback mortgages and mortgages that allow home purchase with a deposit of just 3 per cent.
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