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Tue 31st Oct, 2006
Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, interest rates, Consumer debt, Financial products, Spending, Credit record, Unsecured loans, Financial news, Borrowing at 6:16 pm by admin
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, UK Finance, mortgages, Remortgaging, Savings, Consumer debt, Financial products, Property, Financial news, Equity release at 6:13 pm by admin
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 Consumer Credit, Homeowner Loans, UK Finance, mortgages, Homeowners, House buying, Financial products, First time buyers, Spending, Property, Financial news, Housing news, Borrowing at 6:07 pm by admin
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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Mon 30th Oct, 2006
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, Consumer debt, Financial products, Spending, PPI, Unsecured loans, Financial news, Borrowing at 1:03 pm by admin
Insurancewide.com has welcomed the recent rulings of the Financial Services Authority (FSA) regarding payment protection insurance (PPI). The FSA recently found that there were serious failings in the sale of PPI to consumers, a finding which was echoed by the Office of Fair Trading (OFT). The OFT is planning to refer the PPI industry to the Competition Commission next year. Insurancewide has also responded to the recent news that the FSA has fined Loans.co.uk for failings in the sale of PPI.
Insurancewide chief executive, James Harrison, said: ‘The PPI and MPPI products are both helpful and worthwhile products that when required can assist the policyholder in paying loan payments in times of trouble be it as a result of accident, sickness or unemployment. Previously the problem had been that banks sold the policies as part of a package and at a rate that was a lot more than that which could be found from specialist brokers.’
He added: ‘Insurancewide.com welcomed more companies entering the market and offering this product as it created more awareness that they were available outside banks. It is a great pity that some companies appear to have taken advantage of this situation and not been giving clear advice to their customers and we welcome the FSA’s rulings. Our recommendation is to visit specialist brokers such as Britishinsurance.com, available through Insurancewide.com Life & Financial channel, who can offer clear advice and excellent rates.’
The recent decisions by the FSA and OFT regarding PPI have been welcomed by most consumer organisations.
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Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing at 1:02 pm by admin
Financial services provider Halifax has launched Halifax Legal Services, which will provide access to everyday legal services for consumers. The service will cost an annual fee of £89, which will give members unlimited access to all the service offered either by telephone or online. Advice will be provided by qualified solicitors, barristers and other professionals.
Services to be provided include conveyancing, an identity theft resolution service, a web based law guide, review and approval of wills, will preparation and a 24 hour legal advice helpline.
Most people need to use everyday legal services at some point in their lives. The UK market is estimated to be worth £8 billion (Source: Department for Constitutional Affairs). Service providers include Hammonds Direct, First Assist, Epoq and Capita, supported by a dedicated Halifax team.
Halifax that as a high street financial services provider, with a relationship with 40 per cent of UK households, it is well placed to provide these services, which are a significant opportunity for the Halifax group to grow.
In August 2005, Halifax launched a fixed fee conveyancing service which has been used by over 50,000 customers. At that time, Halifax mentioned its plans to offer a wider range of everyday legal products to consumers. In the first instance, Halifax Legal Solutions will be available as a direct to consumer service.
Joel Ripley, head of Halifax Legal Solutions, said: ‘Most people need legal advice at some point in their lives. Usually this is when they are moving home, making a will or dealing with a range of consumer issues. We are offering access to a range of straightforward solutions at a very good price.’
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Posted in Bad Credit, Consumer Credit, Personal loans, UK Finance, Credit Card, mortgages, Consumer debt, Financial products, Card fraud, Spending, Identity theft, Credit record, Unsecured loans, Financial news, Borrowing at 1:01 pm by admin
National Identity Fraud Awareness Week has brought many fraud crimes to public light. Credit information companies like Experian claims that more needs to be done. The crime of identity fraud is not reported in 82 percent of all cases. Those cases that are reported, only seven per cent leads to a prosecution. Twenty nine per cent of all cases are never pursued by the police. All these cases leave the responsibility for the debt in the victim’s hands.
The most common scheme is the fraudulent use of the victim’s present or previous address. The victim’s details are used by someone living at the same address or the fraudster places a postal redirect on the address, or the fraudster uses the victim’s name and address to take advantage of any credit history not yet transferred to a new address.
The victim remains unaware because they never see the bills. The industry is changing. Much of the financial loss due to identity fraud is carried by the companies involved. However, there are still too many cases where the consumer cannot prove fraud, and are forced to pay the loan. Most consumers are unaware that they are hit with identity fraud until they are denied a loan or mortgage.
Hardest hit organisations are mail order companies. More than 60 per cent of all fraudulent accounts during 2005/6 were mail order accounts. However, the biggest losers were credit and store card issuers. They suffered 35 per cent of all fraud losses during this year.
Consumers are warned to cancel all old credit accounts. Many adults believe that these accounts are cancelled after a certain length of inactivity, this is not true. Not cancelling the account can result in mail being sent to an old address and used by a fraudster. Consumers must become aware of the fact that they are ultimately responsible for their own consumer credit information and credit ratings.
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Fri 27th Oct, 2006
Posted in Consumer Credit, UK Finance, Consumer debt, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing at 1:13 pm by admin
The director general of the Council of Mortgage Lenders (CML) has said that the infrastructure for home information packs (HIPs) looks like a ‘costly indulgence’ and has urged to government to think again about whether it can still be justified. The complex certification system looks ‘disproportionate and anachronistic’ now that the requirement for a home condition report has been dropped.
Mr Coogan commented: ‘This infrastructure seems a costly indulgence . It is also a clear-cut example of gold-plating. We have therefore written to the Better Regulation Commission to draw its attention to this example of poor implementation of European legislative requirements.’
The CML believes that the delayed dry run that will soon take place will not be an effective test of the new arrangements, as government funding has been made available to increase take up. There are also no clear criteria for monitoring and evaluating the dry run.
The CML has highlighted the recent innovations that have emerged from lenders in making unconditional mortgage offers at the point of sale, using credit reference information about the borrower and automated valuation data about the property. Mr Coogan concludes: ‘Comparing our experience with other countries around the world, I am even more convinced that market forces should be the primary mechanism for delivering improvements to the house buying and selling process. The current HIPs framework, seemingly justified by the EPC requirements, is simply not proportionate and could not pass a robust regulatory impact assessment. It is time for the government to think again … again.’
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Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Buy to let, Financial products, First time buyers, Property, Financial news, Housing news, Borrowing at 1:11 pm by admin
First time buyers face more of a challenge to get onto the property ladder than their parents did, says a new study by the Alliance Trust Research Centre. The study is looking at key property and income ratios. According to the research, between 1970 and the present the ratio of house prices to income has risen by an average of 60 per cent. The situation is particularly acute in London, East Anglia and the South West, where the increases were 66 per cent, 65 per cent and 63 per cent respectively.
The least affordable region for first time buyers is London, where house prices are now 4.4 time income, compared to 2.6 times income in 1970. In the South East the ratio has increased from 2.7 times income to 4.3 times income, making it the second least affordable region. Scotland has the lowest ratio of house prices to income, with prices now at 3.2 times income, compared with 2.4 times 35 years ago.
During the 35 year period house prices have increased by 3,432 per cent in London, the highest increase, and 1,906 per cent in Scotland, which was the lowest increase. Meanwhile income growth has been very mixed.
Shona Dobbie, Head of the Alliance Trust Research Centre, said: ‘These figures clearly show it is becoming harder for first-time buyers to break into the housing market. In recent years, buy-to-let investors have taken on the traditional role of first-time buyers in keeping the market going, but you really need first-time buyers to sustain prices over the longer term. Our research shows how much pressure these new buyers are now under.’
Dobbie added: ‘With so much time now being spent focusing on saving for a house and paying it off, people are putting off retirement saving for even longer.’
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Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Financial products, Property, Financial news, Housing news, Borrowing at 1:10 pm by admin
New competition in the mortgage and loan industry is opening the market to new customers. One market group that will benefit from the new changes are self-employed people. The non-conforming mortgage market has already introduced self-cert loans. The rise in the number of self-employed applicants is the driving force behind many of the new changes.
Managing director of My Mortgage Direct, Paul Hearnden said: ‘Over the past year we have seen a steady rise in enquiries from people who, while earning enough to pay their mortgage, are dismissed by mainstream lenders because they can’t prove their income with pay slips.’
‘But this doesn’t mean they can’t get a mortgage. A self-certification mortgage option is the straightforward way round this stumbling block and makes the buying of property easier for a section of the market that has long been sidelined.’
Self-certification mortgages allow people who cannot verify their income, those who derive an income from several sources, or those who have been in business for long enough to apply for a mortgage. The mortgage is based on the customer’s actual income instead of its documentary evidence.
‘Increasing numbers of workers are being offered short-term contracts as employers look to reduce their responsibility to their workforce in terms of benefits and pensions,’ Hearnden added. ‘But this should not – and does not - mean they can’t enjoy the financial security of those on permanent contracts.’
This is good news for people who have been self employed in smaller businesses, but do not qualify for a mortgage because their income fluctuates. This can be frustrating for people who are in the higher tax brackets, but have banks treat them like they are in the highest bad-credit category.
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Thu 26th Oct, 2006
Posted in Consumer Credit, Homeowner Loans, UK Finance, mortgages, Remortgaging, Consumer debt, Homeowners, House buying, Financial products, Stamp duty, First time buyers, Property, Financial news, Housing news, Borrowing at 11:41 am by admin
The government has said that the Council of Mortgage Lenders (CML) has used ‘questionable’ data in its first time buyer statistics, reports MoneyMarketing. According to the Treasury, many of those classed as first time buyers by the CML are not actually first time buyers. Instead, many are people returning to home buying after renting for a short period, going abroad or staying with family and friends after a divorce. Many of the people listed by the CML, says the Treasury, are buying second homes.
MoneyMarketing previously reported that the CML defined a first time buyer as anyone buying a property but not selling one at the same time. The CML has just published research which shows tremendous differences in the level of stamp duty paid by first time buyers, with many, especially in London, falling into the 3 per cent band.
Meanwhile, the Treasury says it does not recognise the CML’s data on first time buyers as its definition of first time buyers is questionable. A spokesman says: ‘The fact is that as a result of threshold increases made by the Chancellor less than half of first time buyers pay stamp duty.’
According to MoneyMarketing the CML has responded as follows: ‘The Treasury chooses to ignore the key point we were trying to make. All home-buyers, whether they are new entrants, returners or existing owner-occupiers, are paying increasing amounts of stamp duty. If the Treasury doesn’t recognise our data, what is it using? Ours is exactly the same as the FSA’s and uses exactly the same definition as the FSA.’
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