Money Advice Trust: Information Hub - News

25% rise in buy-to-let repossessions during 2011

Money Advice Trust — Fri, 10 Feb 2012 00:00:00 +0000

New data from the Council of Mortgage Lenders shows that the number of buy-to-let properties repossessed increased from 4,700 to 5,900 in 2011, up from 4,700 in 2010.

This was within the context of falls in the total number of properties repossessed and mortgages in arrears. The number of mortgage repossessions in the final quarter of 2011 was 8,500, down by 9% from 9,300 in the third quarter.

Looking ahead, the CML anticipates that rising unemployment and a higher cost of living are likely to lead to around 45,000 repossessions and around 180,000 mortgages in arrears of 2.5% or more by the end of 2012.

For more information please visit the CML website.

CDFA launches manifesto to grow the community finance sector

Money Advice Trust — Mon, 06 Feb 2012 00:00:00 +0000

The Community Development Finance Association (CDFA) has launched a manifesto 'Just Finance', containing proposals to build the Community Finance sector. The manifesto sets out steps to address the growing gap between demand for finance and credit

CDFA states that although government, banks, businesses, and consumer market advocates, increasingly recognise the value and effectiveness of community finance as provided by Community Development Finance Institutions (CDFIs), many CDFIs are struggling to access the capital and revenue they need to lend to underserved markets and many communities in the UK do not have access to community finance.

Drawing upon a range of survey and research findings, CDFA says that although access to finance is one of the biggest drivers of economic growth, small businesses (particularly micro-enterprises and start-ups) as well as social enterprises, increasingly struggle to secure credit. The Association also cites evidence that shows 15% of the population is excluded from mainstream bank lending and credit cards

The manifesto sets out a 10-point plan of what is needed to build the Community Finance sector:

1. Enshrine government support of community finance as an HM Treasury remit

2. Require finance service providers to disclose lending data

3. Integrate and embed community finance into the larger financial services system

4. Create a community Finance partnership scheme

5. Launch a nationwide bank-to-CDFI referral system

6. Support and grow mentoring and advisory services

7. Communicate, publicise and promote community finance

8. Set up a CDFI Fund

9. Drive social investment into the community finance sector

10. Develop an array of specialist funding streams

For further details, see the CDFA website.

Personal insolvencies fell between 2010 and 2011

Money Advice Trust — Fri, 03 Feb 2012 00:00:00 +0000

Figures released by the Insolvency Service show that the total number of personal insolvencies fell from 135,045 during 2010 to 119,850 during 2011. However, there had been a rise in the number of debt relief orders.

While the overall number of personal insolvencies decreased, analysis suggests there had been increases in some parts of the UK such as Birmingham, Middlesborough and Stirling.

For more information, click here.

Drop in personal borrowing is largest recorded

Money Advice Trust — Fri, 03 Feb 2012 00:00:00 +0000

Far less borrowing on overdrafts, bank loans and hire-purchasing agreements has been responsible for an overall £377 million drop in personal borrowing during December 2011 according to the Bank of England.

This is despite credit card debts remaining at the same level.over the same period.

For more information visit the Bank of England website.

Finance and Leasing Association launches new Lending Code

Money Advice Trust — Thu, 02 Feb 2012 00:00:00 +0000

The Finance and Leasing Association (FLA) released its updated Lending Code on 1 February 2012. The new code takes accounts of legal and regulatory changes such as the Consumer Credit Directive and Office of Fair Trading guidance on second charge lending.

Main elements of the new code include:

· Additional measures to help customers in financial difficulty and in particular those with mental health problems.

· A ban on commission payments for shop staff selling store cards, and a delay in discounts or other benefits for the first seven days after a store card is acquired.

· A requirement on lenders to ensure customers are aware of the total cost of a short-term loan (including fees and charges) before they apply, and that the loan is not suitable for long-term borrowing.

· A restriction on the number of times a short-term loan can be extended to a maximum of three, coupled with a requirement that a new credit assessment be carried out each time.

For more information, visit the Finance and Leasing Association website.

National Debtline warns of increase in water debt

Money Advice Trust — Thu, 02 Feb 2012 00:00:00 +0000

National Debtline has released figures showing a significant increase in calls involving water debt.

The number of water debt calls handled by National Debtline in 2011 was a 32 per cent increase on the figure for 2010. Nearly ten percent of callers now have water debt problems, compared to only three percent in 2006. The Money Advice Trust, the charity which runs National Debtline, has warned that scheduled price rises will put more people at risk of falling into arrears.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“The number of people calling us for help with water debts has been sharply increasing over the last few years. The sobering fact is that paying water bills is becoming increasingly difficult for many households across the country, and it doesn’t seem to be a problem that will go away any time soon. Indeed planned price rises will most likely make the problem even worse. Whilst the price rises may be in line with inflation, they are not in line with any growth in earnings, meaning water bills will take up more and more of the money we bring in.

“We are working with the water industry to explore better ways of helping struggling consumers.

“Anyone with concerns over their water bills should contact National Debtline, visit My Money Steps (www.mymmoneysteps.org), or go to your local Citizens Advice Bureau for free, impartial advice.”

For more information, visit the Money Advice Trust website.

FSA publishes consultation on a new set of proposed responsible lending requirements as part of its Mortgage Market Review

Money Advice Trust — Tue, 31 Jan 2012 00:00:00 +0000

The Financial Services Authority (FSA) has published a new set of proposed responsible lending requirements for consultation as part of its Mortgage Market Review.

This follows considerable pressure from the industry not to require lenders to make a full assessment of borrower affordability.

Although the borrower's income will have to be verified in every mortgage application, under the new proposals, lenders will not have to consider expenditure in detail although they should not ignore unavoidable bills, such as heating and council tax.

Other key features of the proposals include:

Interest-only mortgages can still be offered as long as borrowers have a credible plan to repay the capital. Relying on hopes of rising property values, however, is not enough
Lenders will have to consider the impact of increases in interest rates in line with current market expectations
Some applicants, such as those trying to consolidate debts with a mortgage, will have to get advice to ensure they understand the full implications and costs; and
Existing borrowers will be unaffected and lenders will have the flexibility to provide new mortgages to some existing customers even where they do not meet the new affordability requirements.

The FSA is encouraging consumers, industry and all other interested parties to give their opinions on this new set of proposals as well as on the accompanying cost benefit analysis. The consultation is open until March 30 2012. The FSA Board will make a decision on the final form of rules in the summer of 2012, with implementation not taking place before 2013.

Further details can be found on the FSA website.

Fewer than half have cash left at month end

Money Advice Trust — Fri, 27 Jan 2012 00:00:00 +0000

Fewer than half of British adults (43%) say they have cash left over at the end of the month, according to new research by the Resolution Foundation. People in low to middle income households are particularly feeling the pinch.

Just under half of people in low to middle income households have cash left over at the end of each month (48%) and fewer than three in ten (27%) make monthly savings. By contrast, two-thirds of people in higher income households have cash left over each month (66%) and half say they make monthly savings (47%).

One in four people overall (25%) expect their financial situation to get worse over the next 12 months. People over 55 are most likely to expect to be less well-off in the next year (30%).

Further details can be found on the Resolution Foundation website.

Households pay for housing costs by cutting back on food and fuel

Money Advice Trust — Fri, 27 Jan 2012 00:00:00 +0000

A survey commissioned by Shelter indicates that one in three Britons have spent less on food, and one in five cut back on fuel bills in order to meet their rent or mortgage payments.

The key findings are:

· 34% have spent less on food to help pay their rent or mortgage in the last 12 months; and

· 22% have spent less on gas and electricity.

The housing charity estimates this equates to around 16 million and 10 million people respectively, representing sharp increases over the past 4 years.

The survey also suggests nearly seven million people rely on credit to help pay their housing costs.

More details can be found here.

Debt is ‘normal’ part of university life for one in three students

Money Advice Trust — Fri, 27 Jan 2012 00:00:00 +0000

Many young people regard debt as a normal part of student life, according to money education charity, Credit Action.

Student life is ‘normalising the debt culture’ according to a recent survey from Credit Action. Over a third of young people surveyed saw being in debt as a normal part of university life. The survey also revealed that 27% of students had never had any form of financial education and 46% had never discussed financial issues with their families. Credit Action’s Student Moneymanual will be distributed this year to all prospective students via UCAS.

For more information visit the Credit Action website.

Which? calls for action on bank overdraft charges

Money Advice Trust — Mon, 23 Jan 2012 00:00:00 +0000

New research by Which? reveals how hard it is to calculate unauthorised bank charges under the current charging structures of the main banks.

Which? experts have discovered that people using unauthorised overdrafts would find it extremely difficult to calculate how much their bank would charge them, or to compare charges between banks as the fee structures are so complicated. They explain that while overdraft charges may appear easy to compare, because banks charge either 'simple' daily fees or interest on their main current accounts, there are often a myriad of additional complex rules and fees associated with them.

The Which? researchers also found that people could be paying over twice as much a month for an unauthorised overdraft with one bank as compared with another, and that many banks are using expensive daily fees.

Which? is using the topic of inflated and complex bank charges to highlight the tough action it wants to see taken by the new financial regulator, the Financial Conduct Authority (FCA), when it takes over responsibility for protecting consumers from the current Financial Services Authority (FSA) towards the end of this year. Accordingly, Which? has launched a Watchdog not Lapdog campaign calling on the Government to make the FCA a strong 'watchdog' and not a weak 'lapdog' to stand up to the banks.

For more information, visit the Which? website.

Millions of households lack savings to provide safety net

Money Advice Trust — Fri, 20 Jan 2012 00:00:00 +0000

Research from the bank first direct suggests that millions of people have no accessible savings set aside for emergencies.

In a sample of 1,000 UK households, 21% had no savings to fall back on and 7% had less than £250, leaving them vulnerable to a sudden drop in income such as from redundancy or unemployment. If repeated across the population, this would equate to as many as six million households.

For more information visit the first direct website.

Protection for customers to increase where debt collection transferred to third parties

Money Advice Trust — Thu, 19 Jan 2012 00:00:00 +0000

New provisions have been agreed that increase the level of protection offered to customers under the Lending Code where their debt is sold or transferred to a third party for collection.

Where a debt is sold, subscribers to the Code need to ensure that appropriate arrangements are in place to ensure that the debt purchaser will continue to deal with customers in a manner consistent with the requirements in the Code for the treatment of customers in financial difficulties.

Full details of these new provisions, which come into effect on 1^st May 2012, can be found here or via the Lending Standard Board’s website

Big Energy week 16th to 21st January 2012

Money Advice Trust — Mon, 16 Jan 2012 00:00:00 +0000

Big Energy Week is a campaign being co-ordinated by Citizens Advice to help people spend less on heating and powering their home, and hence to save money on their energy bills.

The campaign is being supported by Consumer Focus, Which?, Energy UK, energy companies, charities, accredited switching sites, Ofgem and the Government, and will involve over 100 local ‘help and advice’ events being held across Britain, from advice stands in shopping centres, to online switching help in Citizens Advice Bureaux.

The key messages being promoted in the campaign include encouraging people to:

Contact their supplier to check they are on the best tariff and payment method;
Visit an accredited switching website to see if they could get their energy cheaper elsewhere;
Insulate the walls and loft of their home, checking to see if they are eligible with their suppliers for free or discounted insulation;
Check they are not missing out on any benefits or tax credits that could increase their income;
Use less energy through simple things like turning off lights and switching appliances off at the wall;
Contact their energy supplier if they are unable to pay their bills immediately; and
Consider shopping around to compare prices, and / or buying in bulk with their neighbours or through an oil club, if they are a heating or liquid petroleum gas customer.

For more information, visit the Citizens Advice service website.

Legal Aid cuts may shift burden to other government departments

Money Advice Trust — Fri, 13 Jan 2012 00:00:00 +0000

A recent report concludes that proposed Legal Aid cuts of £350 million will increase costs for other government departments and achieve lower net savings than predicted.

The report, Unintended consequences: the cost of the government’s Legal Aid reforms, was commissioned by the Law Society and produced by Dr Graham Cookson of King’s College London. It concludes that proposed cuts will generate £139 million of unbudgeted costs, which will cancel out nearly 60 percent of projected savings from the reforms and placing additional burdens on government departments such as the NHS.

For more information visit the Kings College London website.

Expectations of lower incomes for retirement in 2012

Money Advice Trust — Wed, 11 Jan 2012 00:00:00 +0000

People about to retire this year expect their pensions to be lower than those who have retired in any of the previous four years.

A survey by the Prudential insurance company found that expected annual retirement income has dropped by £3,100 since 2008, to £15,500.

For more information visit the BBC website.

Research predicts sharp rise in demand for debt advice in the first half of 2012

Money Advice Trust — Tue, 10 Jan 2012 00:00:00 +0000

Research published by the Money Advice Trust has found that the number of people getting help from free debt advice agencies in the UK increased in 2011 to 1.54 million people, up from 1.4 million in 2010.

However, the charity is warning that there is a far larger ‘latent’ demand for help as figures from a recent YouGov Debt Track survey show that around 10 million individuals in the UK (around 20 per cent of the adult population) are in a ‘constant struggle’ to manage their debts and of these only one in five seeks advice from a free debt advice provider about their situation. The main reason given is that individuals do not perceive that they can be helped.

The research carried out by the University of Nottingham for the Money Advice Trust is an update on previous work forecasting demand for debt advice in the UK. Based on the Office for Budget Responsibility (OBR) economic forecasts, the research predicts a sharp rise in demand for advice on debts in the first half of 2012, mostly down to growing unemployment and stagnating wage growth.

For more information visit the Money Advice Trust website.

Shelter survey suggests millions rely on credit to meet housing costs

Money Advice Trust — Fri, 06 Jan 2012 00:00:00 +0000

Seven million people in Great Britain rely on some form of credit to meet their housing costs, according to the housing charity Shelter.

The survey also indicates that up a million people took out payday loans to help with housing costs during 2011. The findings are based on a YouGov survey of 4014 people, carried out in December 2011.

For more information visit the Shelter website.

Insolvency Service figures suggest higher than average rate of debt relief orders among young people

Money Advice Trust — Thu, 05 Jan 2012 00:00:00 +0000

Figures released by the Insolvency Service suggest more people aged between 25 and 34 are turning to Debt Relief Orders (DROs) to deal with their debt problems than other age groups.

A preliminary analysis of 44,000 DROs in England and Wales over the first two years since their introduction in April 2009, shows that one in four people with DROs fall within this age group.

DRO figures over the last two years show that one in three people under 25 who were given a DRO owed less than £5,000. Two in five (40%) of those over 25 owed between £10,000 and £15,000, which is the maximum allowable debt in a DRO.

For more information visit the Insolvency Service website.

Research suggests 3.5 million people may be considering taking out a payday loan

Money Advice Trust — Thu, 08 Dec 2011 00:00:00 +0000

New research by insolvency trade body R3 indicates 3.5 million people could be considering taking out a payday loan to help with their finances.

The research asked a sample of people if they had or were considering taking out a payday loan. Of those who already had payday loans 60% said they regretted the decision and 48% believed the loan had made their financial situation worse. 13% felt that the loan had made a positive impact on their finances.

The report suggests that one in six people were only able to meet the interest charges on their debts, rather than making any payment towards the debt itself.

It also indicates that fewer people are saving in the final quarter of the year with 27% reporting having no savings at all compared with 19% in the third quarter.

For more information visit the R3 website.

Consumer focus research shows one in four households face fuel poverty

Money Advice Trust — Fri, 02 Dec 2011 00:00:00 +0000

Consumer Focus estimates suggest homes in fuel poverty in England and Wales rose from 18% to 24% in the last two years.

Calculations from Consumer Focus suggest that almost 5.7 million households in England and Wales are in fuel poverty, defined as spending more than 10% of household income on fuel.

Wales in particular showed a significant increase in the number of households in fuel poverty, with 41% of households now classed as falling in to this category. Other regions badly impacted include the West Midlands with 32% of households and the North East with 30% of households in fuel poverty. The South West region has the lowest level of fuel poverty with 17%.

The figures are calculated using the most up to date official government fuel poverty figures which date from 2009.

For more information visit the Consumer Focus website.

Ofgem research suggests consumers welcome simplified tariffs

Money Advice Trust — Thu, 01 Dec 2011 00:00:00 +0000

Ofgem announces that plans for ‘no frill’ tariffs should lead to more consumers changing energy suppliers.

Ofgem tested similar tariffs on 2000 people and found that more could identify the cheaper tariff than previously.

Of those tested, 70% said they would be more inclined to switch suppliers if tariffs were easier to understand. 85% were able to identify the cheapest tariff in less than half a minute when there was just a single unit rate to compare. This compares to 44% when a simpler version of the current tariff system was tested.

This follows announcements from Ofgem in October that all domestic energy suppliers should offer standard, simple tariffs to their customers to help them to compare prices and identify the cheapest tariff.

For more information visit the Ofgem website.

The number of people experiencing difficulty with energy debts rises

Money Advice Trust — Thu, 17 Nov 2011 00:00:00 +0000

The number of people with new energy debts increased by over a quarter for electricity and a fifth for gas, in spring 2011.

The combination of rising costs and an increase in fuel bills of around 7% last winter has left over 850,000 electricity consumers and 700,000 gas consumers in debt with their energy bills.

Consumer Focus has also reported that:

· Over half of people in Britain are worried about being able to afford their energy bills this winter. The figure increases among families and older people living on low incomes, with almost two thirds concerned.

· One in six people plan to only heat half, or fewer, of the rooms in their house this winter.

· One in 20 people will only be heating one or two rooms, rising to one in 10 of those in the poorest social group.

In addition, just over half of people (55%) said that they trust their supplier to help them if they get into debt.⁴ Fewer than half of people (49%) were aware their energy firm should take their circumstances and ability to pay into consideration when arranging repayments of outstanding bills and almost one in five (19%) believe their supplier could name any amount and they would have to pay it.

To read the full report, visit the Consumer Focus website.

The effects of unemployment may be felt in 2012

Money Advice Trust — Wed, 16 Nov 2011 00:00:00 +0000

The Money Advice Trust warns that over 70,000 of the one million-plus unemployed 16-24 year olds are likley to be struggling with debt.

Research from the Money Advice Trust indicates that around 72,000 (7.2 per cent) of the one million young people who are currently unemployed will be facing severe debt problems.

Of the 129,000 people who have become unemployed in the three months leading to September, more than one in eight (16,600) will experience severe debt problems as a result (12.9 per cent).

For more information visit the Money Advice Trust website.

Latest statistics show 9200 properties were taken into possession by mortgage lenders in the third quarter of 2011.

Money Advice Trust — Thu, 10 Nov 2011 00:00:00 +0000

The Council of Mortgage Lenders releases third quarter statistics showing repossession and mortgage arrears levels in the third quarter of 2011.

The number of properties taken into possession by mortgage lenders in the third quarter of 2011 was 9,200, largely unchanged from 9,100 in the second quarter, according to the latest survey data from the CML.

This year, a total of 27,500 properties have been taken into possession. This represents a drop of 4% compared to the same period last year.

There was also a slight drop in the number of households in arrears with their mortgage across all categories. At the end of the third quarter the total number of mortgages with arrears of 2.5% or more of the outstanding balance fell to 161,600 which represents 1.44% of all loans. This is down by 2% from 165,200 (1.47% of all loans) and is eight percent lower than the 175,100 cases (1.55% of all loans) at the end of September 2010.

However, the CML highlights a number of households with significant arrears. 27,300 loans have arrears of more than 10% of the outstanding balance. It also suggests that the effects of a drop in household incomes, cost of living rises and increasing unemployment will have an impact on household finances and could lead to increased arrears in the coming quarters. It also notes that extended forbearance by lenders has contributed to keeping many households facing payment difficulty in their homes, but suggests that ongoing pressures remain and the economic backdrop represents a significant challenge to the recent improving trend in arrears.

For more information, visit the CML web site.

Financial outlook report reveals that some UK regions are experiencing greater financial stress than others.

Money Advice Trust — Thu, 10 Nov 2011 00:00:00 +0000

A UK economic outlook report released by Price Waterhouse Coopers (PWC) this month indicates the UK regions where households are experiencing the highest levels of financial stress.

The report shows that the North East and Wales have experienced the highest levels of financial stress followed by the West Midlands, whilst households in London, South East and East have experienced relatively lower financial stress levels.

A variety of key indicators of financial stress have been used to create the index, including levels of unemployment, and financial inactivity, average earnings growth, personal insolvency and reductions in house prices. These factors have been combimed to build a picture of household finances across the UK.

To read the full report, visit the Price Waterhouse Coopers website.

Money Advice Trust warns that many insolvencies are avoidable.

Money Advice Trust — Fri, 04 Nov 2011 00:00:00 +0000

Many UK households face the prospect of insolvency unless they act to manage their finances.

Following today’s insolvency figures, The Money Advice Trust has expressed concern that many UK households face the prospect of insolvency unless they act to manage their finances.

It is warning that many struggling households are taking unsustainable action to keep up with rising prices rather than seeking free, independent advice.

Research commissioned by the Money Advice Trust found that, at any given time, up to five million people report arrears on consumer credit, failure to keep up with mortgage payments, or that meeting credit commitments is a ‘heavy burden’, but of these, just one in six seek advice from any source.

Joanna Elson OBE, chief executive of the Money Advice Trust, said:

“Many of the insolvencies in these figures will have been avoidable had people reached out for help before things began to get out of control. We have spoken with people who have gone to extreme lengths to make ends meet, without actually considering getting some free advice.

“From people paying for day-to-day shopping on credit cards, to people selling cars and even pets to get some quick-cash, people have undoubtedly demonstrated resilience in dealing with financial problems, but these kinds of solutions aren’t sustainable. Unfortunately far too few people are doing the one thing that stands the best chance of making a real difference, and that is seeking out free, impartial advice.

“It is getting more and more expensive each month to put food on our tables, heat our homes and fill up our cars with petrol, and this means many households are really struggling with debt. But by acting early and getting advice, people have more options for dealing with their debt, and don’t necessarily have to go down the insolvency route, with all the consequences that can bring. For any struggling households it is crucial to recognise that there is problem, and then act on it.

“This means there is a great onus on advice agencies and Government to make sure that awareness of free services and the positive impact they can have in changing people’s lives for the better is improved. When people take the brave step of dealing with their money worries they need to know where to place their first step.”

For more information, visit the Money Advice Trust website

Shelter release numbers of people at risk of loosing their homes in Britain.

Money Advice Trust — Fri, 04 Nov 2011 00:00:00 +0000

Shelter estimate that 35,000 people across Britain face the prospect of losing their homes between now and Christmas.

Shelter’s Christmas campaign shows that every two minutes someone faces losing their home. They believe this could mean that an estimated 35,000 people – 630 people a day - could receive a letter threatening the loss of their home between now and Christmas.

Shelter’s campaign features six families who were either homeless last Christmas or who are living under the threat of homelessness now.

Shelter’s research shows that 61 per cent of people who have experienced homelessness or the threat of homelessness said that it directly led to a stress related illness, while 70 percent said they spent most of their time worrying about it.

The research also explored how the general public would feel if they were to face losing their home. When asked to rate the severity of certain life experiences, being threatened with homelessness came out as a more severe experience than being burgled, assaulted, or having to fight a custody battle for children following divorce.

For more information, visit the Shelter website.

New research examines the impact of early intervention

Money Advice Trust — Tue, 01 Nov 2011 00:00:00 +0000

Research by Barclays and Money Advice Trust provides an insight into the impact that pre-arrears support can have for consumers facing financial difficulty.

New research commissioned by Barclays with support from Money Advice Trust and authored by the Personal Finance Research Centre was launched yesterday. 'Understanding financial difficulty: Exploring the opportunities for early intervention' aims to gain insight into the needs and motivations of consumers who have been assisted by the Barclays pre-arrears service and to understand the impact that pre-arrears support can have.

As there is very little publicly available research on pre-arrears assistance to consumers, this research also provides valuable new insights that will be of interest to the wider credit industry, the advice sector and government.

Amongst findings, the research highlights a description of an ideal pre-arrears service from the consumer’s perspective:

A pre-arrears service should get in touch at an early stage, allowing consumers to also contact them easily without incurring large telephone bills;
Staff should be understanding, polite and friendly, with consumers being able to deal with the same member of pre-arrears staff to sort out their financial difficulties; and
Pre-arrears staff should be knowledgeable with the authority to make decisions, taking time a collaborative approach to agree a course of action and should keep in touch with consumers to check how they are managing.

For more information read the summary executive report 'Understanding financial difficulty: Exploring the opportunities for early intervention'.

OFT launches revised debt collection guidance

Money Advice Trust — Thu, 27 Oct 2011 00:00:00 +0000

The Office of Fair Trading (OFT) has published its updated Debt Collection Guidance which sets out the standards expected of all businesses engaging in the recovery of consumer credit debts.

The OFT produced its original Debt Collection Guidance in July 2003, and updated it in December 2006. This latest version of the Guidance was subject to consultation between 10 March and 2 June 2011. 65 responses were received to the consultation and, in addition, a number of consultation workshops were held.

The new guidance sets out specific business practices that the OFT considers to be unfair or improper, such as using Facebook and Twitter and other social networking sites to contact debtors, as well as contacting debtors at unreasonable times, or at inappropriate locations, for example when they are a patient in hospital.

The guidance:

warns against misuse of continuous payment authority to recover debts, such as making recurring attempts to recover a single repayment
highlights the responsibilities of all parties involved in the debt recovery process, including creditors, for the quality and level of information they maintain and exchange with others, in order to avoid the wrong person being pursued for a debt
provides greater clarity on the OFT's position on issues such as reasonably queried and disputed debt and statute barred debt
makes debt recovery businesses aware that they should adopt appropriate practices and procedures for dealing with particularly vulnerable debtors.

For more information read the new Debt Collection Guidance on the OFT website.

Facing the squeeze: what it's really like to be in financial difficulty

Money Advice Trust — Tue, 25 Oct 2011 00:00:00 +0000

New research from the Money Advice Trust shows how individuals and families across the UK are dealing with the current economic climate.

Revisiting research from 2009, the Money Advice Trust has worked with The University of Bristol to get a picture of what difficulties people are facing, and found that households are struggling to make ends meet more than in the height of the recession.

Key findings include:

Households are feeling the effects of the recession that took place in the UK between late 2007 and early 2010;
Many people are overly reliant on maintaining credit lines to keep afloat, with reluctance to risk losing these lines of credit leading some into further debt. This can also give people the impression that they are in better control of their finances than is actually the case;
Those that have witnessed the greatest downturn in financial fortunes have been those who were initially worse off. Poorer households seem to have been hit the hardest, and are subsequently having the greatest difficulty in dealing with their debts. This has forced some to cut back heavily on spending; and
People suffering from a single financial blow have found it easier to cope than those suffering from multiple blows. When money problems are compounded they can become more difficult to manage.

For more information visit the Money Advice Trust site or read the full report.

Prime Minister to attend energy summit on gas and electricity prices

Money Advice Trust — Mon, 17 Oct 2011 00:00:00 +0000

Politicians, consumer groups, Ofgem and suppliers will attend an energy summit to tackle increasing gas and electricity costs today.

The energy secretary Chris Huhne has invited the six biggest energy suppliers to meet consumer groups and regulator Ofgem today at an energy summit. The event which will be attended by the Prime Minister, seeks to gain more transparency around energy costs and to explain the increasing prices of gas and electricity.

Last week, Ofgem published its simplification plan, outlining a no-frills tariffs, which would consist of a standing charge fixed by the regulator plus a unit charge for energy used. This would mean the only number consumers would have to compare between suppliers would be the unit energy charge.

Ofgem will publish its detailed proposals for consultation next month and hopes to have implemented some of its reforms in time for winter 2012.

For more information about the simplification plan visit the Ofgem website.

New research forecasts child and working-age poverty will increase

Money Advice Trust — Thu, 13 Oct 2011 00:00:00 +0000

A new study undertaken by the Institute for Fiscal Studies and published by the Joseph Rowntree Foundation forecasts income poverty among children and working-age adults to increase between 2010 and 2020.

This study undertaken by the Institute for Fiscal Studies (IFS) and published by the Joseph Rowntree Foundation (JRF) forecasts relative and absolute income poverty among children and working-age adults for each year between 2010/11 and 2015/16, and for 2020/21. It also examines the impact of the coalition Government's reforms on poverty and implications for policy and poverty measurement.

Key findings from the research include:

The number of children in relative poverty is forecasted to rise from 2.6 million in 2009/10 to 3.3 million by 2020/21(before housing costs), and that of working-age adults from 5.7 million to 7.5 million by 2020/21;
Relative child poverty will rise from the present 20% to 24% by 2020/21, the highest rate since 1999/2000;
The proportion of children in absolute poverty is forecasted to rise to 23% by 2020/21, compared with the 5 per cent target;
Absolute poverty will rise considerably in the next few years as earnings growth is forecast to be weak but inflation high; and
Universal Credit should reduce poverty but the effect of other government changes to personal taxes and state benefits will offset these improvements.

Read the full report 'Child and working age poverty and inequality in UK: 2010' on the IFS website.

Minimum wage rate is increased

Money Advice Trust — Mon, 03 Oct 2011 00:00:00 +0000

The minimum wage main rate for adults aged 21 or over has been increased by 15p to £6.08 an hour.

The minimum wage was introduced in 1999 at £3.60 an hour for adults, and is set each year by the Low Pay Commission.

The minimum wage has been increased to the following amounts:

The main rate for adults aged 21 or was increased by 15p to £6.08 an hour;
The development rate for those aged 18 to 20 was increased by 6p to £4.98 an hour;
For 16 and 17 year olds has increased by 4p to £3.68 an hour; and
The hourly apprentice rate has increased by 10p to £2.60.

For more information visit the Low Pay Commission website.

Consumer Focus issues super complaint after research on foreign currency fees

Money Advice Trust — Thu, 22 Sep 2011 00:00:00 +0000

Consumer Focus issued the complaint after its research discovered customers were charged about £1bn a year for exchanging money.

Consumer Focus is calling for a simplification of charging structures for using cards overseas; cost-reflective cash withdrawal charges, or even a ban if they are not justified; and a clearer explanation of exchange rates used by suppliers to make comparison easier for consumers.

Consumer Focus issued the complaint after its research discovered customers were charged about £1bn a year for exchanging money. The report said it was unclear which of these charges were warranted and which were excessive. The report highlights three key areas:

Charges for using debit or credit cards overseas are unnecessarily complex and confusing;
Banks and credit card providers charge customers cash withdrawal fees when buying travel money with a card in the UK which do not reflect actual costs; and
The use of marketing phrases such as "0% commission" and "competitive exchange rates" is misleading and makes it difficult for consumers to make informed choices and compare banks with bureaux de change or the Post Office.

The Office of Fair Trading is to investigate whether UK holidaymakers are paying too much for foreign currency following the super complaint by Consumer Focus.

For more information about the super complaint and to read the report visit the Consumer Focus website.

Sharp rise seen in water debts

Money Advice Trust — Wed, 21 Sep 2011 00:00:00 +0000

Money Advice Trust comments on a sharp rise in water debts seen at National Debtline.

Commenting on the decrease in complaints to water companies, Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“Whilst it is good that complaints are going down, the number of people calling us for help with water debts has been sharply increasing over the last couple of years. Until last year, the proportion of people calling National Debtline for help with water debts had for a long time remained between two and four per cent. However the last 18 months has seen a steep rise in calls from people with water debts, and in August this year nearly nine per cent of callers had this type of debt. Our advisers have already spoken with more than 10,000 people already this year who needed help to repay their water debts.

“The sobering fact is that paying water bills is clearly becoming increasingly difficult for many households across the country, and it doesn’t seem to be a problem that will go away any time soon. We hope the water industry looks to do more for struggling consumers and works more closely with the free debt advisers who are there to help.

Money Advice Trust warns of ’havoc' of unemployment

Money Advice Trust — Thu, 15 Sep 2011 00:00:00 +0000

Research suggests that one in eight people sacked or made redundant will experience ‘severe’ debt problems.

Research from the Money Advice Trust indicates that of the 80,000 people who have become unemployed in the three months leading to July, more than one in eight will experience severe debt problems as a result (12.9 per cent). More broadly 180,000 (7.2 per cent) of the 2.51 million people who are currently unemployed will be facing severe debt problems.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“At National Debtline, which is run by the Money Advice Trust, we often witness the financial havoc that unemployment brings to individuals and families. The numbers can be hard to digest when you realise just how many lives are so badly affected by unemployment.

“Unemployment is one of the key drivers of debt problems in this country. A family can be managing their household budget just fine until unemployment brings a sharp drop in income. Suddenly every bill becomes a big problem and things can quickly spiral out of control.

“The good news is there is help available, and no matter how bad the situation, people will always have options when facing their money worries head on. The first step is to get some free, expert and independent advice from charitable sources such as National Debtline, My Money Steps (www.mymoneysteps.org), Citizens Advice or the Consumer Credit Counselling Service.”

My Money Steps helps 10,000 already this year

Money Advice Trust — Mon, 05 Sep 2011 00:00:00 +0000

Online money advice service My Money Steps has helped 10,000 people, providing nearly 17,000 advice sessions, with one third of users returning to the site for additional help and to update their progress.

My Money Steps, developed by the Money Advice Trust in partnership with Barclaycard, can be found at www.mymoneysteps.org. It provides a personalised financial action plan based on the answers to a series of questions. Users will get email reminders to encourage them to keep up with the plan and can return to the site to update their circumstances, track their progress or get new suggestions on what action to take if their situation changes.

The site has been most popular with people between 35 and 50 years old, with a broader skew towards younger users – more than three quarters of users are between 25 and 50. In contrast with other free debt advice services offered face-to-face or over the telephone, the online service is predominantly used by those in employment, with 77 per cent of registered users recording income for a full or part time job.

Some of the most common pieces of advice offered by the service include how to negotiate reduced mortgage payments with lenders; checking telephone expenditure; and how to find out if you are eligible for benefits or tax credits.

My Money Steps testimonials:

Female, London

“My Money Steps returned our peace of mind and did all the hard work for us. We have taken control and completed everything that needed to be done in just a few hours. Brilliant tool… had we come across it sooner we wouldn’t have had as many sleepless nights and arguments.”

Male, Kent

“Using the site was easy, it was clear what needed to be done. I found the ‘my progress’ section really useful, as it meant I could map out and plan what I was doing and the email reminders helped remind me what steps I needed to take.”

Female, West Yorkshire:

“I visited the site to get an understanding of incomings and outgoings and to get a budget. Completing the budget sheet was really easy. The financial statement at the end was a really good way of showing what was left over, which was a really useful piece of information."

Number of workless households slightly decrease

Money Advice Trust — Thu, 01 Sep 2011 00:00:00 +0000

The Office for National Statistics data shows the number of households where no adult aged 16 to 64 is in work has fallen slightly in the past year.

The Office for National Statistics (ONS) figures show there were 3.88 million households between April and June this year where no adult aged 16 to 64 is in work. That equates to 18.8% of all households and represented a fall of 0.3%, or 38,000, in the past year.

The percentage of households where all adults work was 53.5%, up 0.5% from a year ago. The vast majority of the workless households were ones in which all the adults aged 16-64 were deemed to be economically inactive. More than two-thirds of them said they were either retired or suffering from long-term sickness or disability.

For more information on unemployment and workless households visit the ONS website.

Payments Council responds about the future of cheques

Money Advice Trust — Wed, 24 Aug 2011 00:00:00 +0000

The Treasury Select Committee report had recommended the return of cheque guarantee cards and that banks be required to tell customers cheques will continue to be in use for the foreseeable future.

In 2009 the Payments Council announced that cheques would be phased out by October 2018. It also abolished the cheque guarantee card scheme from 1 July 2011, meaning that it was not possible to guarantee cheques up to a maximum of £250 by handing over a card featuring the scheme's logo or hologram.

In response, the Treasury launched an inquiry in February 2010, saying it would examine the organisation's structure and performance, including whether it was sufficiently accountable for the way its decisions impact on consumers.

The Payments Council announced that cheques would not be abolished in mid-July this year, ahead of the Treasury Select Committee report's publication.

For more information visit the Payments Council website.

Call for information: Advising vulnerable citizens

Money Advice Trust — Fri, 19 Aug 2011 00:00:00 +0000

The NEA is calling for information around the forthcoming Green Deal and Energy Company Obligation. The call for information will remain open until 6pm on Tuesday 6th September 2011 when the web-based survey will close.

NEA has been commissioned by the Department of Energy and Climate Change to identify and evaluate the approaches that can be adopted to ensure that the advice requirements for vulnerable households mean they can take advantage of the forthcoming Green Deal and Energy Company Obligation. Ensuring that advice and support services are in place to assist households to access and benefit from these schemes will be essential.

To achieve this NEA believes they need to hear from as many expert agencies for whom engaging with vulnerable citizens is part of their day-to-day work. Your feedback can help to identify the challenges and gaps in advice provision, but importantly, to also to help identify and shape the solutions. To help the NEA achieve this they are inviting organisations that work with vulnerable citizens and households to share their views and experiences of delivering advice and communicating with vulnerable households and/or low income communities to take part in this call for information.

Whilst the aim of this call is to inform advice services to consumers on forthcoming energy efficiency programmes, the NEA can also learn from the experience of others engaging vulnerable groups. There is much to learn from those working in financial inclusion and digital switchover outreach services for example. Therefore, this call is extended to organisations that are not solely engaged in the domestic energy and fuel poverty agendas, as well as those that are.

The call for information will remain open until 6pm on Tuesday 6th September 2011 when the web-based survey will close. If you are unable to complete the call for information in one go, please note that you can revisit the survey at anytime to complete any unfinished questions.

To respond to this call for information please complete the NEA survey.

UK unemployment figures show an increase

Money Advice Trust — Thu, 18 Aug 2011 00:00:00 +0000

The Office for National Statistics latest figures show the number of people unemployed in the UK rose by 38,000 to 2.49 million in the three months to June.

The Office for National Statistics (ONS) latest figures show the unemployment ratehas increased from 7.7% to 7.9% in the three months to June. The number of people claiming Jobseeker's Allowance also rose, by 37,100 in July to 1.56 million, its biggest increase since May 2009.

The figures also showed:

The youth unemployment rate rose to 20.2%, up from 20% in the quarter to March;
The number of unemployed men increased by 18,000 to 1.45 million;
The level of unemployed women rose by 21,000 to 1.05 million - the highest figure since May 1988;
The number of employees working part-time because they could not find a full-time job increased by 83,000 to 1.26 million - the highest figure since comparable records began in 1992;
The unemployment rate remained the highest in the north-east of England (10%), the south-east of England still had the lowest rate of unemployment (5.8%); and
The unemployment rate in Scotland was unchanged at 7.7%, in Wales it jumped to 8.4%, and in Northern Ireland it crept up to 7.3%.

For more information about unemployment statistics visit the ONS website.

Mortgage arrears and repossessions remain stable

Money Advice Trust — Thu, 11 Aug 2011 00:00:00 +0000

The Council of Mortgage Lenders (CML) report low interest rates have kept the level of UK mortgage arrears and home repossessions steady.

The Bank of England has held its Bank rate at 0.5% for more than two years which may have assisted mortgage holders facing difficulties in keeping up with their monthly payments. The latest figures from the CML show the total number of mortgages in arrears was broadly unchanged in the second quarter of the year.

The number of mortgages in arrears of between 1.5% and 2.5% of the outstanding balance increased slightly from 77,800 in the first three months of this year to 78,500 in the second quarter. Those with arrears of more than 2.5% of the balance declined from 166,700 to 164,500 over the same period.

The number of householders who have lost their homes owing to mortgage payment difficulties was 7% lower in the first half of 2011 compared with the first half of 2010, and 28% down on the first half of 2009.

For more information on statistics on mortgage arrears and repossessions visit the CML website.

Mortgage lending increased in June

Money Advice Trust — Wed, 10 Aug 2011 00:00:00 +0000

Latest figures from the Council of Mortgage Lenders (CML) show mortgage lending increased by 22% in June.

The CML has reported that the total number of new home loans to house buyers rose by 22% from May of this year to 46,700 in June. Mortgage lending for first-time buyers also reached a 10 month high in June as it increased by 24% from May.

The number of new mortgages arranged in June was similar to the level recorded last October. The figures are 63% higher than January this year, when newly arranged loans had been at their lowest monthly level for nearly two years.

For more information on mortgage lending statistics visit the CML website.

Number of personal insolvencies appears to stabilise

Money Advice Trust — Fri, 05 Aug 2011 00:00:00 +0000

The Insolvency Service has published figures for the second quarter of 2011 showing the number of people going bankrupt has remained stable.

Insolvency Service figures show that personal insolvencies in England and Wales rose 1% in the second quarter of the year. 83% of bankruptcies were made on the petition of the debtor, broadly comparable to the levels for recent quarters.

The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) was 20.6% in the first quarter of 2011 (second quarter 2011 figures for trading-related bankruptcies are not yet available), noticeably higher than levels seen in recent quarters.

For more information on insolvency statistics visit the Insolvency Service website.

New figures show a freeze on pay for 75% of employees

Money Advice Trust — Wed, 03 Aug 2011 00:00:00 +0000

The Chartered Institute for Personnel and Development (CIPD) has reported figures showing only a quarter of workers in the UK have had a pay rise so far this year.

CIPD research has shown that most UK employees have received no pay rise in the last six months. The findings partly reflect the government's current pay freeze for most public sector staff, Chancellor George Osborne announced a two-year public sector pay freeze in his 2010 Budget, except for those paid less than £21,000 a year. Four out of five public servants said they had not received a pay increase.

The North East is most affected by pay freezes as 75% of employees reported that their pay had not risen since the start of the year, followed by the West Midlands (66%). By age, 25-34 year olds were most likely to have received a pay rise (31%), while those aged 55 and over were least likely (23%).

For more figures and information visit the CIPD website.

A new code of practice for pay day lenders is launched

Money Advice Trust — Wed, 20 Jul 2011 00:00:00 +0000

The Consumer Finance Association (CFA) has published a code of practice containing ten customer commitments.

The CFA which represents pay day lenders in the UK, states that the code of practice is intended to help promote high standards in the short-term lending sector.

The code, called the Lending Code for Small Cash Advances, is aimed specifically at businesses that offer pay day loans from high street outlets, by phone or online.

Commitments in the code include:-

Treat all customers fairly and with care, correcting any mistakes quickly and courteously, and compensating customers for any reasonable losses we may cause;
Explain in clear language the terms and conditions of our service, and offer help if there is anything that applicants do not understand, and
Always show applicants the total cost of repayment clearly and prominently before they apply for a loan. There will be no hidden fees or charges.

To read the full code of practice, visit the CFA website.

The number of households classed as fuel poor in the UK rises to 5.5 million

Money Advice Trust — Wed, 20 Jul 2011 00:00:00 +0000

The latest annual report from the Department of Energy and Climate Change shows an increase of 1 million fuel poor households, from 4.5 million in 2008 to 5.5 million in 2009.

The Annual Report on Fuel Poverty Statistics 2011, identifies that the increase in fuel poverty between 2008 and 2009 was largely due to rising fuel prices. Gas prices rose by 14 per cent, and electricity prices by 5 per cent during this time.

Fuel poverty amongst vulnerable households (classed as households containing the elderly, children or somebody who is long-term sick or disabled) for 2009 stood at 4.5 million. This is an increase of 0.75 million from 2008.

The report also contains chapters looking at trends in fuel poverty over time, detailed analysis of drivers of fuel poverty, and future developments.

To read the full report, visit the Department for Energy and Climate Change website.

Government responds to the consumer credit and personal insolvency review

Money Advice Trust — Tue, 19 Jul 2011 00:00:00 +0000

Department for Business, Innovation and Skills (BIS) has today published its formal response on the insolvency aspects of the review and a summary of responses on the consumer credit part.

BIS has published its response to the consumer credit and personal insolvency review which was consulted at the end of last year. The call for evidence was conducted between 15 October and 10 December 2010 and asked 31 questions covering a range of issues from advertising regulations to dealing with unfair bank charges to dealing with debt.

Read the full response, Consumer credit and personal insolvency review: summary of responses on consumer credit and formal response on personal insolvency on the BIS website.

UK unemployment rate falls

Money Advice Trust — Wed, 13 Jul 2011 00:00:00 +0000

The Office of National Statistics data shows that UK unemployment fell 26,000 in the three months to May to 2.45 million.

The Office of National Statistics (ONS) has reported that the UK unemployment rate has dropped to 7.7%, from 7.8% in the previous quarter. However, the number of people claiming Jobseeker's Allowance in June rose by 24,500 to 1.52 million showingthe biggest increase in two years. The discrepancy between the two measures could be due to an increase in the number of women claiming Jobseeker's Allowance arising from changes in the benefits system.

The ONS also reported the number of long-term unemployed fell by 37,000, although there was also an 11,000 increase in the number of people out of work for less than a year. The number of 16 to 24-year-olds out of work fell by 42,000.

For more information on unemployment statistics visit the ONS website.

Increased cost of renting in the private sector

Money Advice Trust — Fri, 08 Jul 2011 00:00:00 +0000

The Department for Communities and Local Government has published the English housing survey showing private tenancy costs have risen 55% in the last six years.

Figures published by the Department for Communities and Local Government (CLG) in its annual English housing survey show the number of private renters increased from 2.15 million in 2003-04 to 3.35 million in 2009-10. The number of tenants in social housing fell slightly from 3.92 million to 3.67 million (a drop of 6.5%) over the same period, while the total number of owner-occupiers fell from 14.54 million to 14.52 million, a drop of 0.18%.

While the average weekly rent for social renters was £75 last year, tenants in private accommodation paid an average of £155 a week. The survey also found that 2.9% (630,000) of households were living in overcrowded conditions: this affected 1.4% of owner-occupiers (204,000 households), 7.1% of social renters (273,000 households) and 5.1% of private renters (152,000 households). At 7.8%, London had the highest rate of overcrowding of all areas in England, and the lowest rate of under occupation at 24.7%.

For more information read the full English housing survey 2009-10 household report on the CLG website.

Essential living costs reviewed by charity

Money Advice Trust — Tue, 05 Jul 2011 00:00:00 +0000

The Joseph Rowntree Foundation has published its annual update, based on what members of the public think people need to achieve a socially acceptable standard of living.

Since 2008 the Joseph Rowntree Foundation (JRF) has published annual updates on a ‘minimum income standard’, based on what members of the public think people need to achieve a socially acceptable standard of living.

Over time, changes in prices alter the cost of a basket of goods and services that represent a minimum standard of living. In addition, changes in social norms will alter the content of that ‘minimum basket’.The official cost of living rose by 4.5% in the year to April, as calculated by the Consumer Prices Index (CPI) measure of inflation.

However, the new JRF research suggests that the cost of living had risen by between 4.7% and 5.7% during the same period. This was because the basket of goods included food, council tax and public transport, taking up a considerable chunk of lower-income families' budgets, which had risen sharply in price.

For more information on the JRF review of living costs read the full report A minimum income standard for the UK in 2011.

New research shows the places in England with the highest proportion of homeowners at serious risk of repossession.

Money Advice Trust — Mon, 27 Jun 2011 00:00:00 +0000

New research by the housing and homeless charity Shelter shows the places in England with the highest proportion of homeowners who are at serious risk of repossession.

Shelter conducted the research to create a national picture of areas with the highest proportion of homeowners who have been issued with a possession order on their home.

The analysis was carried out using the Ministry of Justice statistics on claims leading to possession orders by mortgage lenders, published in May 2011. A rate of possession claims leading to orders per 1,000 private households was calculated for each local authority, using the latest available data on numbers of private households.

65 local authorities were identified as high-risk repossession areas because they are in the top fifth nationally. Corby in the East Midlands was identified as having the highest rate of homeowners at risk, followed by Barking and Dagenham and Newham in London, Knowsley in the North West and Thurrock in the East of England.

The research also identifies a strong link between unemployment and rates of possession orders with unemployment having risen at more than double the rate in areas with households most at risk, compared with the least-at-risk areas.

To read the full report, visit the Shelter website.

New research suggests an increase in the number of people experiencing stress and depression due to housing costs.

Money Advice Trust — Mon, 27 Jun 2011 00:00:00 +0000

The housing and homeless charity Shelter has released research showing a significant increase in the number of people suffering from stress and depression as a result of high housing costs.

A YouGov survey, commissioned by Shelter, found that 18 million people (38 per cent) in Britain believe that housing costs cause stress and depression in their family. This represents an increase of seven million (15 per cent) since 2009.

The survey which investigated how the risk of repossession and rent rises are effecting people also found that:

12 million people (26 per cent) have tried to cover their housing costs by lowering the amount that they spend on food, and
The number of people stating that they keep up with their mortgage or rent payments without difficulty has dropped from 19 million people (41 per cent) in 2009 to 13 million people (28 per cent).

For more information about the survey, visit the Shelter web site.

The latest statistics on Statutory Homelessness show a 10 per cent increase in 2010/11 compared to the previous year.

Money Advice Trust — Mon, 27 Jun 2011 00:00:00 +0000

Statistics released by the Department for Communities and Local Government show that 44,160 households were classed as homeless in 2010/11.

The release, produced quarterly, shows that:

11,350 applicants were accepted as owed a main homelessness duty by a local authority during January to March 2011, 18 per cent higher than the same quarter last year;
On a seasonally-adjusted basis, there were 11,500 acceptances, an increase of 2 per cent from 11,240 in the previous quarter, and
During the 2010/11 financial year, there were 44,160 acceptances. This is an increase from 40,020 (10 per cent) in 2009/10 - the first financial year increase since 2003/04.

The term "Homelessness" is often considered to apply only to people "sleeping rough". However, these statistics on homelessness relate to the statutorily homeless i.e. those households which meet specific criteria of priority need set out in legislation, and to whom a homelessness duty has been accepted by a local authority. Such households are threatened with the loss of, or are unable to continue with, their current accommodation.

To view the full report, visit the Department for Communities and Local Government web site.

Gross mortgage lending improved in May

Money Advice Trust — Mon, 20 Jun 2011 00:00:00 +0000

Gross mortgage lending totalled an estimated £11.3 billion in May, according to new data from the Council of Mortgage Lenders.

The Council of Mortgage Lenders (CML) has published new data showing that gross mortgage lending was an estimated total of £11.3 billion in May. Gross mortgage lending includes lending for both house purchase and remortgage. Compared to April, this shows an increase of 12% and is an improvement on the same period last year.

For more information and statistics on gross mortgage lending visit the CML website.

HMRC faces huge loss in tax debt

Money Advice Trust — Wed, 15 Jun 2011 00:00:00 +0000

Time to pay scheme to help struggling businesses through the recession has built up at least £650m in tax debt.

New figures show there is just under £1bn outstanding as part of the government's 'time to pay' arrangements. The scheme enabled HM Revenue & Customs to strike deals with struggling businesses to give them longer than usual to pay their tax bills.

Of that £1bn, £650m has not been paid as initially agreed by HMRC with the businesses concerned according to figures obtained by R3. Between the launch of the scheme in November 2008 and the end of March 2011, time to pay struck more than 400,000 deals, allowing breathing space on £7.4bn of tax debts.

For more information on time to pay arrangments visit the HRMC website.

Lower income households experience higher inflation than the rich

Money Advice Trust — Tue, 14 Jun 2011 00:00:00 +0000

New research undertaken by researchers at the Institute for Fiscal Studies reveals least well off households pay 4.3% inflation, while the richest pay 2.7%.

Low income households in Britain are suffering from a far higher inflation rate than the rich, according to research released today by the Institute for Fiscal Studies (IFS) that shows the impact of increasing food and energy bills on those with the lowest incomes.

IFS said its analysis using the retail prices index (RPI) showed that the poorest fifth of households had faced an inflation rate of 4.3% between 2008 and 2010, compared to 2.7% for the richest fifth of households. RPI inflation has continued to rise in 2011 and stood at 5.2% in April.

The study found that the doubling of energy prices over the past decade had disproportionately hurt poor households, which on average spend twice as much of their income on food and fuel than the better off (19.6% of income on food and 9.4% on domestic fuel, compared to 10.1% and 4.4% respectively for the richest 20%).

Findings also showed that pensioners, and in particular those dependant on state benefits, have been hard hit by the increase in oil and other commodity prices over the past three years. The inflation rate for a pensioner reliant on state benefits was 4.6% on average over the three years to 2010, compared to 4.3% for a pensioner not dependant on benefits.

For more information on this study visit the IFS website.

Interest rates do not need to rise

Money Advice Trust — Mon, 13 Jun 2011 00:00:00 +0000

Bank of England says there is no need to raise interest rates as low wages are slowing down inflation.

The Bank of England has published a study today suggesting that interest rates can be safely held at 0.5 per cent in order to prevent growth from stalling.

The study shows that while energy and food costs are increasing, there is little evidence that short-term price rises are feeding through to wages or long-term price setting by big companies.

Sir Mervyn King, the Bank’s new governor, has repeatedly promised to keep rates low to allow public spending to be cut without destroying the recovery.

For more information on this news visit the Daily Mail website.

Savings levels rise at expense of debt repayments

Money Advice Trust — Fri, 10 Jun 2011 00:00:00 +0000

Survey shows the amount of debt being repaid by people is at its lowest since 2009, while savers have put away £26.9bn in the first three months of this year.

The Guardian website has published results from a survey conducted by unbiased.co.uk showing that people are saving at the expense of reducing debt levels, with consumers paying back 7p for every pound saved during the first three months of 2011.

Britons saved £26.9bn in the first quarter compared to £21.1bn in the last three months of 2010. This is an increase of £5.8bn, but debt repayments fell to £1.8bn from £2.4bn.

Whilst it is vital to have a savings fund in the case of emergencies, reducing outstanding debt should remain important as no savings account pays sufficient interest to balance out the erosive effects of interest charged on even the cheapest credit.

For more information visit the Guardian website.

11,000 disabled people could lose their homes as a result of housing benefit cuts

Money Advice Trust — Sun, 05 Jun 2011 00:00:00 +0000

The homeless charity Crisis warn that new government statistics show that 11,000 disabled people could lose their homes as a result of a cut to housing benefit that will come in from January 2012.

At present, single under 25 year olds can apply for the lower Shared Accommodation Rate of housing benefit which is based on the cost of a room in a shared house, rather than a modest one bed flat. Crisis warns that applying this lower rate to single people under 35 will mean average losses of £41 per week for those affected, with the vast majority losing their homes.

Those affected are expected to move into shared accommodation, but Crisis warns that for many disabled people this will not be appropriate.

A national survey of housing professionals in local authorities and the voluntary sector published by Crisis in April this year found that:

87% of those surveyed said they already have difficulty finding appropriate properties for people currently on the shared accommodation rate (under 25s);
72% said that there is not enough shared accommodation available in their local area
Around 63% of those surveyed said that there is a higher risk of tenancies breaking down in shared properties; and
95% of front-line housing professionalsexpressed concerns about the proposed change, including that it will cause increased homelessness, higher costs for local authorities and increase hardship and destitution.

House repossessions to rise in 2012

Money Advice Trust — Thu, 02 Jun 2011 00:00:00 +0000

The Council of Mortgage lenders (CML) warns house repossessions are likely to rise again next year.

Describing the UK as going through "a weak and patchy recovery", the CML forecasts that:

Interest rates will probably stay at 0.5% for most of this year, rising only modestly in 2012;
The number of borrowers classified as in arrears will rise to 180,000 this year, as originally forecast, and stay there in 2012; and
The number of homes repossessed will, as previously forecast, rise from 36,000 in 2010 to 40,000 this year, but will rise further next year to 45,000.

If this last forecast is borne out, it will take the annual number of homes being repossessed close to the total recorded in 2009. Though that would be still be considerably less than the number seized by lenders during the recession of the early 1990s, when repossessions reached a peak of 75,500 in 1991.

For more information on the forecast visit the CML website.

Loan fee scams to be stopped by OFT

Money Advice Trust — Wed, 01 Jun 2011 00:00:00 +0000

Dishonest loan firms that demand upfront fees for loans they have no intention of making will be closed down by the Office of Fair Trading (OFT).

The OFT is making it mandatory for fees to be refunded if a loan is not agreed. The OFT is also going to ask the government to consider changing the law to ban outright the practice of demanding upfront fees in exchange for arranging loans.

The measure is part of a general crackdown by the regulator following a complaint from Citizens' Advice about people who had received a text message or telephone call from firms offering to find them an unsecured loan.

Those who accepted were then charged large up-front fees for little or no service in return. Other victims were persuaded to hand over their bank details and later found that money had been taken from their account without their permission. Victims struggled to get somebody to deal with the issue, and were charged a premium rate when calling to complain.

For more information about the proposed measures visit the OFT website.

Small claims court limit may rise

Money Advice Trust — Tue, 31 May 2011 00:00:00 +0000

Ministers are consulting on increasing the value of disputes that can be settled in the small claims court from £5,000 to £15,000.

Ministers are consulting on tripling the value of disputes that can be handled by the small claims court as part of a radical shake-up of the civil justice system. The Ministry of Justice is looking at increasing the value of cases that can be brought in the fast-track procedure for low-value civil cases from £5,000 to £15,000 from next April.

The small claims track is a procedure within the county court designed to serve as a low-cost, user-friendly forum for resolving disputes without the need for a lawyer. Significantly, the normal "costs follow the event" rule in UK courts does not apply. This means you can bring a legal action without being exposed to paying the other side's legal costs, which can easily exceed the value of the claim if your action fails.

For more information on small claims court visit the HM court service website.

BBC investigation highlights ongoing problems with debt management companies

Money Advice Trust — Fri, 27 May 2011 00:00:00 +0000

BBC investigation shows debt management companies have been holding on to clients' cash rather than paying it to creditors.

The Office of Fair Trading (OFT) has condemned the practice as "totally unacceptable" and has promised a crackdown.

The BBC report highlights how Global Debt Solutions arranged repayment plans for people in debt but failed to pass on the payments to creditors. Global Debt Solutions, which later became know as 3 Step Finance, has subsequently been shut down by the Insolvency Service, but the BBC report indicates that the practice may be common across the industry.

Private debt management companies have 375,000 clients on repayment plans and take £250m in fees.

For more information on the investigation visit the BBC website.

Mortgage lending dropped 14% in April

Money Advice Trust — Tue, 24 May 2011 00:00:00 +0000

The Council of Mortgage Lenders (CML) report mortgage lending fell back in April due to seasonal factors.

The total amount of new funds lent by mortgage lenders fell by 14% from March, to £9.8bn and was down 5% from April last year.

The figures point to the continued stagnation of the property market, with few sales and prices subsiding.

However, the CML said last month's drop was due to Easter falling in April and the extra public holiday because of the royal wedding.

For more information on mortgage lending statistics visit the CML website.

A new services turns consumers phones into 'mobile wallets'

Money Advice Trust — Sun, 22 May 2011 00:00:00 +0000

Consumers can now pay for purchases using their mobile phone.

A service that allows consumers to pay for purchases via their mobile phone has been launched in the UK.

The service, known as ‘Quick Tap’, requires users to have Orange and Barclaycard accounts along with a mobile phone that allows contactless payments.

The system currently only allows purchases up to a value of £15, however it does allow consumers to preload their mobile with up to £100.

A number of stores are signed up to use the system including McDonalds, Pret-a-Manger and some Boots stores.

Other mobile phone producers are expected to launch similar services later this year.

Household incomes in UK 'may return to 2004 levels'

Money Advice Trust — Fri, 13 May 2011 00:00:00 +0000

Households in the UK may be facing the biggest drop in income for 30 years, warn the Institute for Fiscal Studies.

The Institute for Fiscal Studies (IFS) have published research that shows average take-home incomes actually rose during recent recession due to low inflation and higher social benefits. But IFS analysis suggests the long-term effects of the recession and higher inflation will squeeze incomes.

Lower wage increases and the corrosive effect of rising inflation mean that it is "entirely possible" that income this financial year (2010-11) will return to levels of six years ago, the policy group said. Average income could fall 3% this year, the steepest drop since 1981 and taking households back to 2004-5 levels.

Key findings from the IFS research show:

Overall poverty has fallen slightly;
Child and pensioner poverty are at their lowest levels since 1980s;
Poverty amongst working-age adults without children has risen to a new high; and
Average incomes rose during recession, but are likely to decrease.

For more information read the full report,‘Poverty and inequality in the UK: 2011’, on the IFS website.

Fuel debts become a major part of debt landscape

Money Advice Trust — Thu, 12 May 2011 00:00:00 +0000

National Debtline has seen a 180 per cent increase in callers with fuel debts over the last four years.

Debt advice charity the Money Advice Trust is warning consumers to pay close attention to their fuel costs after witnessing a rise in the number of people with fuel debts seeking advice. Since 2007 National Debtline, which is run by the Money Advice Trust, has seen a 181 per cent increase in the number of people advised who carry fuel debts. Just over the last twelve months the charity has seen ten per cent more people calling in with fuel debts*.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“Fuel debts have now become a major part of our debt landscape and are one of the fastest growing problems we have witnessed at National Debtline. As consumers we have to pay close attention to how much gas or electricity we use and whether or not we have the right tariff, not always an easy decision. It is a concern that so many people will be whether they can afford to boil a kettle or turn on the heating.

“We have been working closely with several energy companies who have been keen to engage in the best ways to help their customers get back to a more healthy financial position.

“People also need the best information on how to deal with arrears for gas or electricity. Fuel debts should be treated as a priority debt as gas and electricity companies are free to cut off your supply within a few weeks if you don’t pay them. Fortunately there are options available to those who are struggling.

“Firstly, free advice agencies like National Debtline can help people put together a budget and identify whether someone is paying too much for your utilities, they can also go through this process online at www.mymoneysteps.org. Advice can also help prioritise debts and come up with a plan for tackling them.

“Secondly, individuals can contact their provider to arrange an affordable repayment plan, or use a pre-payment meter.

“Thirdly, some fuel companies have set up trust funds that can sometimes pay fuel bills where customers are in financial difficulties.”

For more information on dealing with fuel debt visit the Money Advice Trust website.

The Co-operative enters gas and electricity market

Money Advice Trust — Wed, 11 May 2011 00:00:00 +0000

Co-operative Energy will offer a single variable tariff in a bid to simplify a 'baffling and bewildering' market.

The Co-operative has entered the energy market with a simple, single tariff designed to be consistently fair and competitive. The Pioneer tariff, named after the Rochdale pioneers who founded the first co-operative in 1844, has a variable rate and no penalties for switching to a different provider. Co-operative Energy also promises that new customers will not receive preferential treatment over existing customers with cheaper price offers.

The company describes the multi-tariff offerings of other energy providers as "baffling and bewildering", and says it will challenge the big profits made by the other companies by including a twice-yearly profit-sharing deal for all its customers, who will own the business.

Electricity will be sourced from low-carbon generators, including from renewable energy sources such as wind and hydro, and the Co-op's aim is for the carbon content of its electricity to be less than half the national average by April 2012.

For more information visit the Co-operative Energy website.

High Court makes decision on challenge to PPI rules

Money Advice Trust — Fri, 06 May 2011 00:00:00 +0000

High Court dismisses the British Bankers Association’s judicial review of the Financial Service Authorities new Payment Protection Insurance complaints handling measures.

The High Court heard a judicial review brought principally by the British Bankers Association (BBA) against the new rules relating to the potential mis-selling of Payment Protection Insurance (PPI) set down by the Financial Service Authorities (FSA), and the Financial Ombudsman Service (FOS).

The new rules cover how banks should handle past cases where PPI may have been mis-sold, and could result in many more people who were mis-sold PPI being eligible for compensation.

The FSA have received more than 1.5 million complaints about PPI since taking over regulation of it in 2005. It estimates that on average around 60% of the claims made to them have been rejected by the PPI provider. However, the FSA say that the vast majority of cases referred to the FOS are found in the customers favour.

The BBA may now decide to seek to appeal the courts judgment. In the meantime, the FSA are advising that companies should continue to deal with complaints where possible, including letting their customers know that they can refer their complaint to the FOS if they are unable to progress it.

30-day energy price rise notifications come into effect

Money Advice Trust — Thu, 05 May 2011 00:00:00 +0000

Consumers must now be told about energy price rises 30 days in advance, rather than being notified up to two months after the event.

The changes made by regulator Ofgem strip away previous rules that meant suppliers had 65 working days after prices had risen to tell customers. The rule also covers any change to a contract that leaves a customer significantly worse off.

The 65-day statutory deadline was supposed to be in place so people were made aware prices had changed, rather than having to study their bills. After notice was given, customers had 20 days to switch supplier if they wanted to avoid paying the increased price. Under the new rules, they can now do this before the rise comes into effect.

For more information on the new 30 day rule visit the Ofgem website.

Older people struggle with living costs

Money Advice Trust — Wed, 20 Apr 2011 00:00:00 +0000

New research shows pensioners are finding it hard to cope with rising living costs, with 47% saying they are "just getting by".

In a study for Age UK, 11% described themselves as finding it difficult or "really struggling" to cope. The face-to-face survey of 1,258 people suggested 19% cut back on heating this winter in order to manage their money.

The research found some 26% pensioners said they were buying cheaper or less food and 19% going out less. Among poorer pensioners, the figures rose to more than a third, or 35%, buying cheaper or less food, and 21% going out less. A total of 11% said they were in debt through mortgage, credit cards or bank loans.

The findings were released to coincide with Age UK's More Money in Your Pocket campaign, which says as much as £5.4bn in pensioner benefits goes unclaimed each year. The charity says this is often because people are unaware of the help available. It says just under a half of pensioners are entitled to pension credit but a third of people eligible do not claim, while up to 1.97 million pensioners are also missing out on council tax benefit worth £1.5bn a year.

For more information on the 'More Money in Your Pocket' campaign visit the Age UK website.

Legal insurance overhaul required

Money Advice Trust — Tue, 19 Apr 2011 00:00:00 +0000

Consumer Focus has called for an overhaul of legal expenses insurance, arguing that many people are unaware of what it covers.

Legal expenses insurance, which is a £450m-a-year market in the UK, is often sold as part of a bundle with car insurance, or with packaged bank accounts. It usually costs between £13 and £24 a year, and gives people access to legal advice in cases such as unfair dismissal, personal injuries and small consumer disputes.

Consumer Focus said that many people were given access to justice as a result of having this cover, especially as the free legal aid service was being reduced. However, Consumer Focus argued that, as a result of being part of a bundle, many people were unaware of the exact details of legal expenses insurance cover.

The watchdog has called for clearer information for customers, as well as an appeals system for those whose applications for policies have been rejected by insurance companies.

For more information read the new report from Consumer Focus, ‘In Case of Emergency’, and visit the Consumer Focus website.

UK unemployment falls by 17,000 to 2.48m

Money Advice Trust — Wed, 13 Apr 2011 00:00:00 +0000

UK unemployment fell by 17,000 in the three months to the end of February to 2.48 million, the first drop since last autumn.

The Office for National Statistics (ONS) has published statistics today, showing that unemployment in the UK had fallen to 7.8%. Unemployment among 16 to 24-year-olds stood at 963,000, with the jobless rate for young people remaining above 20%. The rate of unemployment among 50-64 year olds was unchanged at 4.8%, while the rate for those over 65 fell to 1.9% from 2.5%.

The number of people claiming jobseeker's allowance rose by 700 in March to 1.45 million. While the number of unemployed men fell by 31,000 in the three months to the end of February, the number of jobless women rose by 14,000.

The ONS also said that the number people in employment rose by 143,000 to 29.23 million, compared with a pre-recession peak of 29.56 million recorded for the three months to the end of May 2008.

For more information on unemployment statistics visit the ONS website.

Money woes 'linked to rise in depression'

Money Advice Trust — Thu, 07 Apr 2011 00:00:00 +0000

BBC News reports about the possible link between economic problems and a rise in depression in England.

Health and mental well being has been in the past been shown to be linked to financial health. BBC News has published an article today around how financial woes could often act as a "trigger", though reports other factors may also be playing a role in the rise.

Mental health charity Sane is quoted in the acticle, saying they have seen more people contacting its e-mail and phone advice lines with money worries.

Anyone with concerns about their finances should visit www.mymoneysteps.org, call National Debtline on 0808 808 4000, or contact CCCS or a local Citizens Advice Bureaux for free, independent and confidential advice.

For more information read the full article on the BBC News website.

New Code launched

Money Advice Trust — Mon, 04 Apr 2011 00:00:00 +0000

Following the independent review of the Lending Code, a new edition has been launched which becomes effective on 31 March 2011.

The Lending Standards Board (LSB) has published the new version of the Lending Code following an independent review undertaken by Professor Lorne Crerar.

The Lending Code, originally launched in 2009, incorporates the credit and debt provisions of the old Banking and Business Banking Codes. The review sought comments from all interested stakeholders on the content of the Code which sets standards of good practice in relation to personal unsecured loans, credit cards and overdrafts and lending to micro-enterprises.

For more information read the March 2011 Lending Code.

Which? submits super-complaint over excessive card fees

Money Advice Trust — Wed, 30 Mar 2011 00:00:00 +0000

The OFT has today received a super-complaint from Which? relating to surcharges that are payable when customers use a debit or credit card.

Which? has identified two areas that it would like the OFT to investigate:

Transparency - are consumers informed that the surcharge will be payable before they commit to making a purchase?
Charge - is the surcharge proportionate to the cost incurred by the business for processing the payment?

The OFT will now consider the issues raised in the super-complaint in order to establish whether any element, or combination of elements, in the relevant markets is or appears to be significantly harming the interests of consumers. It will publish a response to the super-complaint within 90 days.

Possible outcomes include:

Improving the quality and accessibility of information for consumers;
Encouraging businesses in the market to self-regulate;
Making recommendations to Government to change regulations or public policy;
Taking competition or consumer enforcement action;
Making a market investigation reference to the Competition Commission; or
A clean bill of health.

For more information on the super-complaint visit the Which? website.

Lending to individuals rose in February 2011

Money Advice Trust — Wed, 30 Mar 2011 00:00:00 +0000

Figures released by the Bank of England show that lending to individuals rose in February.

Total lending to individuals rose £2.0 billion in February compared to the previous six-month average increase of £1.1 billion.

Within total lending, lending secured on dwellings rose £1.2 billion, compared to the previous six-month average increase of £1.0 billion. There were 46957 mortgages approved for house purchases, an increase of 815 compared with January.

Remortgaging loans also increased to 35,725 up from 33,972.

To read the full release visit the Bank of England website.

Men, debt and seeking advice

Money Advice Trust — Mon, 28 Mar 2011 00:00:00 +0000

Money Advice Trust launches new research on how men see their own debt advice needs, their experiences and expectations of debt advice services.

Money Advice Trust has today released 'Seeking direction: men, money advice and the road to financial health', a report into how men deal with debt problems. The research, which was undertaken by Dr. Jackie Goode and Dr. Amanda Waring from the Centre for Research in Social Policy, uncovered reasons why men can be seen to be less likely to seek debt advice than women:

Gendered divisions of ‘financial labour’ within the family in which this was seen as part of the woman’s role;
Over-optimistic assessments of prospects for improving the situation;
Lack of awareness, understanding and inaccurate perceptions of what advice services offer;
Confusion about not-for-profit debt advice organisations and commercial debt consolidation services, combined with a marked preference for the former and a marked distrust of the latter;
Lack of self-confidence and the social skills perceived to be necessary to access services; and
A powerful need to see themselves as in control of their finances and able to ‘do it themselves’ in relation to managing problematic debt.

In November last year Money Advice Trust launched My Money Steps (www.mymoneysteps.org), an online debt advice service. The report suggests online tools might be particularly useful for men who are more likely to feel the need to ‘help themselves’ and to re-gain a measure of control of their finances. My Money Steps compliments existing services, National Debtline and Business Debtline, which deliver money advice on a self help basis over the phone.

For more information on read the full report, 'Seeking direction: men, money advice and the road to financial health'.

DWP places restrictions on crisis loans

Money Advice Trust — Mon, 21 Mar 2011 00:00:00 +0000

The Department for Work and Pensions (DWP) has put in place a number of 'urgent restrictions' on crisis loans, as current spending levels threaten to exhaust the Social Fund budget before Christmas.

The Department indicates that in the last seven years there have been over seven million claims from 400,000 regular users applying for ten or more crisis loans. Since telephone claims were introduced in 2006, daily spend on the loans has tripled to £1million a day.

The planned changes to the crisis loan system from April 2011 are:

Crisis loans will no longer be payable for items such as cookers and beds;
There will be a reduction in the rate paid for living expenses from 75 per cent down to 60 per cent of benefit rate; and
A cap will be implemented of three crisis loan awards for general living expenses in a rolling twelve month period.

For more information on the proposed changes to crisis loans visit the DWP website.

Rate rise alert

Money Advice Trust — Mon, 21 Mar 2011 00:00:00 +0000

Shelter warns that as many as one in four homeowners may be completely unprepared for the costs of rising interest rates.

Results of a survey of more than 1500 UK homeowners by the Council of Mortgage Lenders showed that one in four people believe that interest rates are either higher, the same as they have been in the past, or simply don’t know.

These findings follow research by Shelter showing that in the past year:

the number of homeowners struggling to pay their mortgage has risen by 78%, and

the number of people using credit cards to help pay their rent or mortgage has increased by 50%

Campbell Robb, Shelter’s Chief Executive said:

‘It is frightening to think so many homeowners are completely unaware that interest rates are at a record low. We are extremely concerned that millions will be financially unprepared when interest rates go up and won’t have plans in place to manage increased costs.’

For more information visit the Shelter website.

EDF Energy to fund new Energy Debt Advice service helping customers with household debts

Money Advice Trust — Mon, 21 Mar 2011 00:00:00 +0000

EDF Energy has announced a new nationwide partnership with Citizens Advice, the largest providers of independent debt advice in the UK.

The energy company will fund the Energy Debt Advice service, which will offer its customers free access to independent advice on how to deal with household debts through Citizens Advice. Help will be tailored to suit each individual’s needs, ranging from providing general information to carrying out detailed casework to assist the customer in resolving their financial issues.

For more information, vist the Citizens Advice website.

Supply companies failing consumers: Ofgem proposes a radical overhaul

Money Advice Trust — Mon, 21 Mar 2011 00:00:00 +0000

In a press release today Ofgem proposes changes to ensure that the electricity and gas markets work effectively for consumers.

The proposal includes:

Changing what Ofgem refers to as 'complex and unfair pricing practices;
A requirement that the six major suppliers auction up tp twenty percent of their electricity generation output;
A risk of facing a Competition Commission referral this year if they do not cooperate, and
An investigation in to Scottish Powers standard credit prices.

The press release goes on to explain that Ofgem’s review found competition is being stifled by a combination of tariff complexity, poor supplier behaviour, and lack of transparency. Further, the degree of influence the big six assert on the retail market has not diminished since Ofgem’s 2008 probe.

For more information visit the Ofgem website.

OFT consults on revised Debt Collection Guidance

Money Advice Trust — Thu, 17 Mar 2011 00:00:00 +0000

The Office of Fair Trading (OFT) has launched its consultation with an aim to publish a revised version of the Debt Collection Guidance.

The OFT consultation document ‘Debt collection: draft OFT guidance for creditors, debt collectors, law firms and other businesses engaged in the recovery of consumer credit debts’ to update guidance on debt collection first published in 2003 and revised in December 2006.

The OFT's aim is to ensure that debt collection is carried out transparently and fairly, and debt enforcement tools are used appropriately, taking into account the individual circumstances of debtors. The OFT is inviting those with an interest in debt collection activities to respond to the consultation. It will consider all submissions and, where appropriate, reflect these in the final version of the updated guidance.

The new guidance is designed to:

Confirm it applies to all businesses involved in debt recovery, including creditors as well as debt collectors and purchasers, lenders, law firms and tracing agents;
Clarify creditors' responsibilities for the quality and level of information they pass on to debt collection agencies or debt purchase companies;
Take account of other new and developing industry practices;
Take account of other recently issued OFT guidance, including the updated Irresponsible Lending Guidance; and
Reflect recent changes in the law.

The consultation closes on the 02 June 2011.

For more information on ‘Debt collection: draft OFT guidance for creditors, debt collectors, law firms and other businesses engaged in the recovery of consumer credit debts’ visit the OFT website.

Demand, capacity and need for debt advice in the United Kingdom

Money Advice Trust — Mon, 07 Mar 2011 00:00:00 +0000

Money Advice Trust publishes new research forecasting the likely future demand for debt advice from the free-to-client advice sector.

Money Advice Trust has published the full report, ' Demand, capacity and need for debt advice in the United Kingdom', which forecasts the likely future demand for debt advice from the free-to-client advice sector based on two future predictions for the UK economy. The report, produced by Dr John Gathergood, an economist at The University of Nottingham, warns that if independent forecasts are right and unemployment rises by more than two per cent in 2011, the demand for debt advice by the middle of next year will exceed that seen at the peak of the financial crisis.

The report was based on the extensive ONS Wealth and Assets Survey and supplemented by data from the free-to-client debt advice sector. The report reveals that between 2008 and 2009, there was an increase of 350,000 individuals seeking free debt advice. In 2010, 1.4 million people have received advice from charities such as National Debtline, Citizens Advice and CCCS – one in every 33 UK adults.

The research also found that, at any given time, up to five million people report arrears on consumer credit, failure to keep up with mortgage payments, or that meeting credit commitments is a ‘heavy burden’. Of these, just one in six seek advice from any source.

For more information read ' Demand, capacity and need for debt advice in the United Kingdom'.

New Lending Code provides improved protection for borrowers

Money Advice Trust — Fri, 04 Mar 2011 00:00:00 +0000

Customers who borrow from the UK’s major lenders will benefit from changes being introduced following an independent review of the Lending Code.

The sponsors of the Lending Code (the British Bankers’ Association, the Building Societies Association and The UK Cards Association), have announced a range of new provisions designed to strengthen the protection available to customers who have personal loans, credit cards and current account overdrafts and to small business customers.

Key recommendations being adopted include:

Stronger requirements for responsible credit assessment;
New provisions on customers’ ability to opt-out from unarranged overdrafts;
More support for customers who may be in, or approaching financial difficulties;
Extension of the Code’s temporary breathing space moratorium on debt collection to customers using ‘self-help’;
New standards on the appropriate use of the right of set-off; and
Further assistance for customers in financial difficulty who have a mental health condition.

For more information on the Lending Code visit the Lending Standard Board website.

£27 million for face to face debt advice

Money Advice Trust — Tue, 15 Feb 2011 00:00:00 +0000

The Financial Inclusion Fund (FIF) is provided with £27 million, giving the face to face debt advice programme temporary reprieve.

The Government announced that it will continue to support face to face debt advice provision for a further 12 months, at a cost of £27 million. The funding will maintain one aspect of the FIF project which was due to come to an end next month.

The FIF debt advice programme supports the employment of around 500 advisers based in Citizens Advice bureaux and other local agencies.

There is also an indication that the Consumer Financial Education Body (CFEB) is to be rebadged as the Money Advice Service, and that this will offer an annual financial healthcheck, to provide people with a holistic overview of their finances and include a personalised action plan, in the spring.

For more information on the funding announcement visit the HM Treasury website.

OFT clamps down on payday loan providers

Money Advice Trust — Mon, 14 Feb 2011 00:00:00 +0000

The Office of Fair Trading (OFT) today warned payday lenders that they must not misuse direct debit facilities to vary the amount or date of a loan repayment.

The warning follows the OFT's decision to impose requirements on a payday lender. Payday loans are designed to offer short term credit until the borrower receives their salary.

Direct debit facilities are used by some payday lenders to give them greater control over the repayment of the short-term loan. This means that if a borrower defaults on the loan, the lender can make multiple attempts to take money from the borrower's account without agreeing specific amounts or dates with the consumer.

The OFT believes that some lenders use this 'continuous authority' as a way to bypass proper checks on a borrower's ability to repay.

For more information on payday loans visit the Which? website.

Court debts reach record highs in Northern Ireland

Money Advice Trust — Wed, 09 Feb 2011 00:00:00 +0000

Registry Trust figures published today show debt judgments issued against businesses and consumers in Northern Ireland reached a record high in 2010.

The annual figures for Registry Trust show that the number of judgments rose by 2.6 percent in 2010 compared to the previous year. Registry Trust, the not for profit company which collects judgment information in the United Kingdom and Ireland, released its 2010 statistics for Northern Ireland yesterday. The total value of these judgments fell by 8.7 percent to £25.7m. However, this is still far above the historical trend.

Registry Trust is a non-profit company, maintaining public records of judgment and decree information for most jurisdictions in the British Isles and Ireland. On 6th April 2006, the Register of Judgments, Orders and Fines superseded the Register of County Court Judgments and Registry Trust is contracted to the Lord Chancellor to maintain this new Register. Since 1st April 2009, the Register has also included details of enforced tribunal awards relating to individuals, companies or businesses subject to a tribunal decision as a result of which a sum of money is payable.

During 2010 Registry Trust received 7,331 separate requests to search the register from Northern Ireland, almost 3,000 more than the previous record. Judgment information provides vital credit history information, when, for example, doing business with a new company.

For more information about Registry Trust visit the Trust Online website.

Skills needed to take control of finances

Money Advice Trust — Tue, 08 Feb 2011 00:00:00 +0000

Two-thirds of people surveyed by Learndirect find financial matters too confusing to make the best choices with their money.

The results of a Learndirect poll surveying 3,000 people has raised concerns about financial knowledge at a time when family budgets are being squeezed. The VAT rise has translated into people needing to review their spending habits, Learndirect's poll suggests that a quarter of respondents felt they did not have the right skills to do so.

The research found that 26% of people thought a lack of maths skills could be hindering them working out the best deals or budgeting effectively. Results also revealed that 13% blamed poor IT skills for struggling to find the right advice or the best deals online.

Learndirect have published the survey results along with a feature on money worries online highlighting the importance of maths, English and IT skills to manage finances.

For more information on the survey visit the Learndirect website.

Number of insolvencies decrease again

Money Advice Trust — Fri, 04 Feb 2011 00:00:00 +0000

Statistics released by the Insolvency Service for the fourth quarter of 2010 show falling numbers of personal insolvencies.

The latest Insolvency Service quarterly statistics report shows that there were 30,729 individual insolvencies in England and Wales in the fourth quarter of 2010. This was a decrease of 13.6% on the same period a year ago.

There were 135,089 individual insolvencies in England and Wales in 2010, an increase of 0.7% from 2009. This included 59,194 bankruptcies (which were down 20.7% on 2009), 50,716 Individual Voluntary Arrangements (IVAs), (which were up 6.5% on 2009) and 25,179 Debt Relief Orders (DROs).

Company insolvencies also fell, there were 16,045 compulsory liquidations and creditors’ voluntary liquidations in total in 2010 – a decrease of 15.9% on 2009.

For more information on the quarterly statistics visit the Insolvency Service website.

Funding debt advice

Money Advice Trust — Thu, 03 Feb 2011 00:00:00 +0000

New research suggests that there is a business case for creditors to provide further funding for independent debt advice services.

Friends Provident commissioned research to understand debt advice from the perspective of a range of private sector creditors, including mainstream banks, other consumer credit organisations and utility companies.

The current funding model for independent debt advice relies heavily on public funding, with significantly less financial input from creditors. Currently, government funding for debt advice is under review and there are concerns about the future of funding for the debt advice sector. Citizens Advice have announced today their service could be looking at a 45% drop in funding as a result of cuts in local and central government support.

The impact of independent debt advice services on the UK credit industry based its findings on:

A review of literature and research data;
Interviews with private creditor firms, debt advice agencies and other relevant stakeholders;
Challenging and refining the hypothesis that debt advice leads to positive outcomes for creditors; and
A model quantifying the benefits to creditors of debt advice.

The model was developed to test whether debt advice leads to better outcomes for creditors when compared to other pathways to the resolution of defaults. The model compared the percentage of debt recovered from individuals receiving independent debt advice to the percentage that creditors might expect to receive in the absence of such advice. The results indicate that creditors in total might improve the amount they recover by £1 billion (or collectively, £1,100 per advised individual), where independent advice is given.

For more information on The impact of independent debt advice services on the UK credit industry visit the Friends Provident website.

Better protection for bill of sale consumers

Money Advice Trust — Tue, 01 Feb 2011 00:00:00 +0000

Bill of sale lenders will be working under a new code of practice from 1 February 2011.

The Government issued a response to their consultation on proposals to ban the use of bills of sale for consumer lending last week. As part of the measures put forward a new code of practice came into effect today that contains increased protections for consumers, especially for those who are having difficulty repaying the loan.

A bill of sale is used to secure a loan on an item of personal property, typically a car. This practice has been the subject of relatively high levels of complaints to consumer groups and the Office of Fair Trading (OFT). Complaints related to the lack of consumer protections available to people if they fall into arrears, unfair collection practices, the complex nature of the language used in agreements and the high cost of the loans.

Key measures in the response included:

Consumer information sheet explaining in plain English how bills of sale work and what can be expected from the lender;
New Consumer Credit Act requirements from 1 February 2011;
OFT monitoring under Irresponsible Lending Guidance; and
A commitment to look at reforming bills of sale again if problems continue.

For more information on the consultation response visit the Department for Business, Innovation and Skills website.

50 debt management companies fail to meet requirements

Money Advice Trust — Mon, 31 Jan 2011 00:00:00 +0000

The Office of Fair Trading (OFT) announces further enforcement action against debt management companies following its compliance review.

The OFT had issued warnings to 129 firms in September 2010, after its review of the debt management sector found widespread problems with compliance. All firms were asked to provide evidence of compliance measures by 16 December 2010.

The latest news that 35 debt management firms have surrendered their consumer credit licences and at least 15 are facing licensing action is further evidence that the fee charging debt management industry is not fit for purpose.

Since warnings were issued in September 2010:

35 firms have surrendered their licences;
Eight firms have been informed that the OFT intends to revoke their licences;
A further seven companies who did not respond are currently being investigated; and
79 firms have submitted evidence, which the OFT will now review.

For more information on the debt management enforcement action visit the OFT website.

Scottish Government warns against Housing Benefit cuts

Money Advice Trust — Fri, 28 Jan 2011 00:00:00 +0000

Around 60,000 households will face severe hardship when UK housing benefit changes take hold in Scotland.

This year in April, 55,000 households will be given nine months to either lose Housing Benefit or move out of their home. It will affect households who already pay the average price of rent in their area as they will now need to find available accommodation in the bottom third bracket of rental prices.

Yesterday Alex Neil, Housing and Communities Minister, outlined concerns that Scottish Government has about the proposed changes to Housing Benefit. The Scottish Government has said that an expert group will be established in response to the impending and proposed changes. The group of Scottish Government, local government, charity and third sector organisations will share knowledge of local impacts to take the strongest possible case for stopping some measures to the UK Government.

In the coming weeks, the UK government is also set to publish a Welfare Reform Bill which is expected to propose further extensive cuts and changes to welfare and benefits. The Scottish Government will also press for the devolution of powers on welfare and benefits.

For more information about the assessment of changes to Housing Benefit in Scotland visit the Scottish Government website.

Scottish insolvency numbers down again

Money Advice Trust — Mon, 24 Jan 2011 00:00:00 +0000

New Accountant in Bankruptcy (AiB) figures show the number of personal insolvencies in Scotland continued to fall from 5168 to 4583 in the run up to Christmas.

Scottish insolvencies dropped by 11% during October–December 2010 compared to the previous quarter, and numbers were down by almost a fifth compared to the same quarter for the previous year.

Awards of bankruptcy are at their lowest since the introduction of LILA in April 2008 despite the introduction of the new certificated route into bankruptcy in November. The new route has seen 99 debtors awarded bankruptcy who would otherwise have been unable to qualify for bankruptcy and struggled to cope with unmanageable debts.

In this period 2,090 Protected Trust Deeds recorded showing an increase of 1% on quarter two but a 10% decrease compared to the same period last year. 440 debt payment programmes were approved under the Debt arrangement Scheme (DAS); 11% down on the previous quarter but up 16% on the same quarter of the previous year.

For more information about Scottish Insolvency statistics visit the AiB website.

Tackling child poverty

Money Advice Trust — Thu, 20 Jan 2011 00:00:00 +0000

Government consults on a new approach to dealing with child poverty and improving life chances.

The Government has issued a consultation paper setting out its proposed approach to tackling child poverty. ‘Tackling child poverty and improving life chances: consulting on a new approach’ indicates that Government is particularly concerned about inter-generational poverty and argues that “simply increasing household income, though reducing income poverty, will not make a big difference to children's life chances.”

The number of children living in relative poverty has fallen by around half a million over the past decade (based on the 60% of median income definition of poverty). The paper cites that levels of child poverty have begun to rise in recent years, and the UK child poverty rate remains amongst the highest in the EU.

The consultation proceeds to set out ‘the other key drivers of life chances’, including the home and family environment, early years and education. Health, support and advice around training and work are also laid out as key drivers. ‘Tackling child poverty and improving life chances: consulting on a new approach’ will close on the 15th February 2011.

For more information about the consultation visit the Department for Education website.

British Gas gives vulnerable customers £50 credit

Money Advice Trust — Fri, 14 Jan 2011 00:00:00 +0000

British Gas will be reducing the bills of about 340,000 of its Essentials discounted tariff customers by £50 to help with their winter fuel bills.

British Gas are issuing the payments as part of a £37m investment by the firm to support vulnerable customers; the remaining £20m will be put in the British Gas Energy Trust, a charity which pays grants to people in arrears with their energy bills and other household bills. It also funds voluntary sector organisations to provide money and debt advice.

The £50 payments will be made as credits on customers' winter bills. Prepayment customers will receive the credit direct to their meter. The small number of customers for whom these payment methods are not appropriate will instead receive a cheque.

For more information about the Essentials Programme visit the British Gas website.

Shelter reveals more than two million people use credit cards to housing costs

Money Advice Trust — Fri, 14 Jan 2011 00:00:00 +0000

Results of a the YouGov poll show that the numbers of people using credit cards to pay their mortgage or rent increased by almost 50% during the last 12 months.

Shelter warns that the start of the New Year could see many of these people facing the risk of homelessness, and urges anyone using credit cards in this way to get advice on how to manage their debts.

The YouGov poll which was conducted in August 2010 asked 2234 people in Great Britain if they had borrowed money on their credit card to pay their rent or mortgage in the last 12 months. Six per cent of respondents said yes, compared with four per cent in November 2009.

Shelter goes on to warn that for people in this situation, a single event such as a bout of illness, an increase in rent or a drop in income, can push people into a spiral of debt and arrears that can lead to the loss of their home.

Shelter’s Chief Executive Campbell Robb urged everyone using credit cards in this way to seek urgent advice to ensure that they don’t loose their homes.

For more information, visit the Shelter website.

Energy Best Deal reaches out again in 2011

Money Advice Trust — Wed, 12 Jan 2011 00:00:00 +0000

Households facing higher energy bills in the New Year could benefit from free advice offered by the Energy Best Deal campaign, run by national charity Citizens Advice with support from energy regulator Ofgem.

Energy Best Deal offers a package of energy related advice for consumers who really need it. Last year, over 44,000 customers are estimated to have benefitted from the scheme.At least 280 sessions will be delivered across England and Wales in the first few months of 2011. Presentations are aimed at consumers and frontline advisers at agencies that give face-to-face advice to the public, who are likely to be in contact with those most at risk of falling into fuel poverty, such as pensioners and those on low incomes.

The campaign builds on the research under Ofgem’s Consumer First Programme which showed that many vulnerable customers needed:

More information and guidance on tariff payment options;
Access to grants to install insulation and central heating; and
Ways to manage bills through energy efficiency.

The first national roll out of the campaign across England and Wales in 2008/2009 was funded by the Department for Energy and Climate Change and supported by Ofgem, following a successful pilot phase funded by Ofgem. In 2009/2010 the second phase of the campaign was funded by energy suppliers EDF Energy, E.On, npower and Scottish Power - with support from Ofgem.

For more information about Energy Best Deal visit the Ofgem website.

Fear of financial difficulties in 2011

Money Advice Trust — Fri, 07 Jan 2011 00:00:00 +0000

Samaritans’ annual survey of the nation’s worries shows that nearly 60 per cent of people in the UK fear they will not have enough money to live comfortably in 2011.

Samaritans’ surveyed more than 2,000 people as part of their annual poll. ‘Worries 2010’ identified money (debt and bank balance) as one of the nation’s biggest concerns of the past year as well, with more than half (53%) of the UK population saying it was one of their top-five worries of 2010, compared with 48 per cent in 2009.

The YouGov poll also found well over a third (37%) of respondents were worried about losing their jobs or having difficulty finding work.

The survey also found that 2010 was considered a bad year or the worst year ever by 30 per cent of the population – a rise from 24 per cent in 2009. It showed too that more than a fifth (21%) of people didn’t seek support from anyone to help them cope with their worries.

Other key findings were:

Well over half (56%) of people are worried they will suffer directly in 2011 from cuts in spending on public services;
Just over three-quarters (76%) of unemployed people and half (50%) of those who are retired are anxious they won’t have enough money to live comfortably next year; and
Nearly a quarter (23%) of households with children are concerned that they may lose their home.

For more information about ‘Worries 2010’ survey results visit the Samaritans’ website.

Bankruptcy increases amongst pensioners

Money Advice Trust — Thu, 06 Jan 2011 00:00:00 +0000

Data released from the Insolvency Service reveals that more pensioners are fastest growing group of bankrupt individuals in the UK.

The Insolvency service has reported a slight drop in the number of personal insolvencies in 2010. Despite this, the number of people entering into formal insolvency procedures remained relatively high, showing that more needs to be done to encourage people to manage their money better, and where possible, to avoid insolvency. In 2009 personal insolvency numbers were the highest for 20 years.

Latest figures from the Insolvency Service show:

Britain’s pensioners are shown to be the fastest growing group of bankrupt individuals in the UK. Although levels of bankruptcy among men and women aged over-65 are the lowest in the UK, the numbers of bankrupt individuals in this age group have increased six times in a decade and at a 50% faster rate than for other age groups;
Men still make up the majority of bankrupts (60% in 2009) but the proportion of women bankrupts is growing (from 29% in 2000, to 40% in 2009);
The average age of a bankrupt individual in the UK is 41, which is close to the average age of the population (39.5yrs); and
Since they started in April 2009 to the end of September 2010, 30,838 people have taken out Debt Relief Orders, to free them from unmanageable debt and support them in making a fresh financial start.

To encourage more people to deal with their debt, The Insolvency Service is running a week-long (3-8 January) ‘Dealing with your debt ‘ campaign, supported by charity sector partners, Citizens’ Advice, the Consumer Credit Counselling Service and the Money Advice Trust.

For more information on the ‘Dealing with your debt’ campaign visit the Insolvency Service website.

New funding to help fight illegal money lenders

Money Advice Trust — Wed, 05 Jan 2011 00:00:00 +0000

The Department for Business, Innovation and Skills (BIS) announced new funding to continue the fight against loan sharks and scams.

BIS announced last week that they will continue to fund specialist regional Illegal Money Lending (IML) and Scambuster teams run by Trading Standards. BIS will also be restructuring IML teams so that they can deliver better results and a more efficient service. The IML and Scambuster projects will be funded next year at approximately the same level as this year - receiving £5.2m and £3.2m respectively. Funding is expected to be similar in 2012/2013.

To date, the IML teams have:

Identified over 1,700 illegal lenders;
Arrested over 500 illegal money lenders (loan sharks);
Written off over £37 million of illegal debts (money victims would have paid back to illegal lenders if the Department had not acted);
Secured over 182 prosecutions, resulting in prison sentencing totalling over 107 years and one indefinite;
Helped over 16,000 victims of loan sharks including the most hard to reach individuals;
Seized over £1.3 million in cash; and
Referred over 600 victims to alternate (legal) sources of financial support.

The Scambuster teams have uncovered an estimated £55 million worth of fraud, made an estimated £23 million savings for consumers and seized £16.5 million worth of criminal assets. The project has also successfully prosecuted 58 defendants (including organisations).

For more information on the IML and Scambuster projects visit the BIS website.

New divorce and separation calculator

Money Advice Trust — Fri, 24 Dec 2010 00:00:00 +0000

Consumer Financial Education Body (CFEB) provides online help for people who are separating or divorcing.

CFEB have launched a new online divorce and separation calculator to provide anonynmous and confidential help. This is the first interactive calculator of its kind as it helps people to draw up a budget to stay on top of their finances, as well as enabling them to get a useful estimate of how they could split their finances from one household to two.

The divorce and separation calculator has been created with help from several experts in this field, including Relate, Resolution, National Family Mediation, Families Need Fathers and the Family and Parenting Institute.

The divorce and separation calculator helps explore options for:

How children will be provided for;
Living arrangements;
Sharing of assets and financial resources; and
How the individual will be affected financially.

For more information on the divorce and separation calculator visit the CFEB Moneymadeclear website.

UK mortgage lending fell in November

Money Advice Trust — Mon, 20 Dec 2010 00:00:00 +0000

Council of Mortgage Lenders (CML) says mortgage lending fell 5% in November compared with the previous month and was down 10% on a year ago.

Gross mortgage lending stood at an estimated £11.1bn in November, the lowest figure since April according to the CML. It was also the lowest total in the month of November for a decade, and is the fifth consecutive month where gross mortgage lending has been at its weakest since the equivalent month in 2000.

The CML recently published its predictions for the mortgage market in 2011. It predicts that there will be 40,000 homes repossessed in 2011, up from an estimated 36,000 this year.

For more information visit the CML website.

Forecasted unemployment increase would see debt advice demand soar to record high

Money Advice Trust — Wed, 15 Dec 2010 00:00:00 +0000

A new report launched today forecasts the likely future demand for debt advice from the free-to-client advice sector based on two future predictions for the UK economy.

The report, produced by Dr John Gathergood, an economist at The University of Nottingham, warns that if independent forecasts are right and unemployment rises by more than two per cent in 2011, the demand for debt advice by the middle of next year will exceed that seen at the peak of the financial crisis.

The report, entitled Demand, Capacity and Need for Debt Advice in the UK was based on the extensive ONS Wealth and Assets Survey and supplemented by data from the free-to-client debt advice sector. The report reveals that between 2008 and 2009, there was an increase of 350,000 individuals seeking free debt advice. In 2010, 1.4 million people have received advice from charities such as National Debtline, Citizens Advice and CCCS – one in every 33 UK adults.

For more information about 'Demand, capacity and the need for debt advice in the UK' visit the Money Advice Trust website.

Consumer Focus publishes energy complaints data

Money Advice Trust — Thu, 09 Dec 2010 00:00:00 +0000

Consumer Focus has launched a new complaints league table to help consumers decide which energy supplier will give them the fewest problems or best handle any problems that arise.

The new rankings are based on the most comprehensive energy complaints data available and will be published every quarter with energy companies monitored continually and figures updated. To present the figures in a transparent and user-friendly way, Consumer Focus has devised a model to award stars based upon a weighted score given to each of the ‘Big 6’ energy companies. This score is based on how many complaints the supplier received in relation to its market share, as well as the severity of each complaint.

During the last financial year, the six main energy suppliers received around 4.6 million customer complaints. In Consumer Focus research, nearly half of consumers said that having information to compare how companies handle complaints would be useful when deciding whether to switch provider.

For more information visit the Consumer Focus website.

Mental capacity guidance

Money Advice Trust — Tue, 07 Dec 2010 00:00:00 +0000

The Office of Fair Trading (OFT) says creditors should consider how they deal with borrowers whose mental capacity has been affected by illness or disability.

Following the consultation on irresponsible lending the OFT has identified a need to provide further clarity on the issue of mental capacity as it impacts on borrowing decisions. Mental capacity depends on people's ability to learn, remember and understand, and is different to mental illness. The OFT is consulting on how lenders should identify those who may struggle to make informed borrowing decisions. The consultation will close in March 2011.

The OFT said creditors needed to form a view on whether somebody was able, with support, to make informed borrowing decisions. This should ensure vulnerable consumers did not take on unsustainable or unsuitable credit commitments.

The draft guidance seeks to clarify:

What the OFT would expect from creditors, in terms of identifying borrowers who might lack the mental capacity to make informed borrowing decisions; and
What the OFT would expect from creditors, in terms of the practices and procedures they employ in dealing appropriately with borrowers where it is known or reasonable grounds exist for doubting mental capacity.

For more information on the mental capacity guidance consultation visit the OFT website.

R3’s quarterly ‘Business Distress Index’ reveals over 850,000 businesses are experiencing decreased profits.

Money Advice Trust — Mon, 29 Nov 2010 00:00:00 +0000

New research intended to ‘take the temperature’ of the financial situation of businesses across Great Britain reveals that decreased profits are the most common cause of distress.

The first of R3’s new quarterly research shows that 50% of all UK businesses experienced decreased profits in this quarter. 44%, or 750,000 had seen a reduction in sales volumes, whilst 32% had seen a fall in their market share.

Other key findings include:

26% of respondents said that one or more of their regular customers had stopped working with them;
24% have had to introduce pay cuts or freezes;
One in five (19%) admit to cash-flow difficulties;
18% say that some of their suppliers are insisting on payment in advance;
17% have been using their maximum overdraft facility fairly frequently;
One in ten (14%) are finding it difficult to pay invoices on time and
13% have had to make redundancies.

The ‘Business Distress Index’ is designed to rank early warning signs of distress to businesses and is also accompanied by practical advice on how to avoid company insolvency.

For more information visit the R3 website.

Advice for under 25s

Money Advice Trust — Fri, 26 Nov 2010 00:00:00 +0000

Citizens Advice launches new website for young people to address debt related issues.

Last year young people under the age of 25 sought help from Citizens Advice on nearly three quarters of a million problems. One third of the 729,825 problems brought by under-25s between April 2009 and March 2010 to Citizens Advice were debt-related.

Personal loan debts were the single biggest issue brought by under-25s to Citizens Advice, increasing by 10% on 2009 to 30,646. Credit, store and charge card debt-related problems increased by 6% to 26,828 problems. Overdraft problems experienced a significant increase of 17% to 25,472 problems.

Citizens Advice has launched a new website, Advice for under 25s, which covers advice on debt, employment, housing and benefits.

For further information visit the Advice for under 25s website.

Mortgage arrears and possessions fall

Money Advice Trust — Fri, 12 Nov 2010 00:00:00 +0000

Data published by the Council of Mortgage Lenders (CML) yesterday shows that mortgage arrears and possessions have dropped in the third quarter.

Data published yesterday by the CML shows that 8,900 properties (representing 0.08% of mortgages) were taken into possession in the third quarter of 2010. The total was five per cent lower than the 9,400 cases of possession in the preceding three months, and the fourth consecutive quarterly decline. The number of properties taken into possession was 27% lower than the 12,200 in the same period a year ago.

Since the start of the year, there have been 28,400 cases of possession, trending below the CML's revised forecast of 39,000 for the year as a whole, and significantly lower than the original forecast of 53,000 properties.

There has also been a modest improvement in the number of mortgages in arrears. CML data showed that 176,100 mortgages (1.55% of the total) had arrears of 2.5% or more of the outstanding balance at the end of September, down from 178,200 at the end of June, and from 203,800 a year earlier. This is consistent with the CML's prediction of 175,000 mortgages in arrears at the end of the year, and lower than our original forecast of 205,000 cases.

For further information about mortgage arrears and possession data visit the CML website.

Free independent online money advice

Money Advice Trust — Tue, 09 Nov 2010 00:00:00 +0000

My Money Steps has been developed by the Money Advice Trust in partnership with Barclaycard, to help tackle £1.5 trillion personal debt in Britain.

My Money Steps is being launched today by debt advice charity the Money Advice Trust. It’s a new interactive online tool to help the growing numbers who need debt advice. Developed in partnership with Barclaycard, it gives people access to advice online in their own time so that they can find the best solutions to get their finances back on an even keel.

The UK’s adult population currently carries £1,455 billion of personal debt. Latest figures show that 30.1 million adults in the UK access the internet every day. Those seeking the best way to repay their own personal share of our billion-pound debt burden, can now go online to solve their problems.

My Money Steps provides personalised advice based on the answers to a series of questions. Solutions are tailored to individual need and circumstances. The interactive website provides action plans and email reminders. It also stores details securely so that users can come back time and time again for ongoing help without having to load in all their information each time. It can be accessed 24 hours a day, seven days a week. Users can track their progress or get new suggestions on what action to take if their circumstances change. People who are in situations which are too complex for My Money Steps will be directed to sources of one-to-one advice.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“During the recession we saw demand for advice at National Debtline – run by the Money Advice Trust – almost double, so we needed to find other ways of giving advice. As people become more internet-savvy, banking and shopping online, it’s important that we enable them to get advice in a way that suits them best too.

“Your financial situation can change month by month or week by week, making it difficult to manage budgets and priority repayments. My Money Steps helps you to stay on top of changing circumstances and allows you to track your progress and develop good financial habits in the longer-term – in short, simple steps to a debt free future.

“This is an exciting new development in our relationship with Barclaycard and their support has been crucial in getting My Money Steps off the ground.”

David Chan, Chief Executive of Barclaycard Consumer Europe, said:

“Barclaycard has been a long term supporter of the free debt advice sector and the Money Advice Trust. The launch of My Money Steps means consumers will now have more choice around how they get the advice they need and I’m proud that Barclaycard has played an important part in bringing this service to consumers.”

Damian Hinds MP, of the All Party Parliamentary Group on Debt and Personal Finance, said:

“I’ve tried out My Money Steps and found it a practical and useful resource. Providing advice and guidance online for people struggling with their finances can go a long way towards reducing the cost of unmanageable personal debt. My Money Steps is going to be a very valuable tool in this.”

For more information visit the My Money Steps website.

New CML analysis shows effect of FSA proposals on current lending

Money Advice Trust — Thu, 04 Nov 2010 00:00:00 +0000

Council of Mortgage Lenders (CML) publish follow-up research looking at what effect the Financial Services Authority’s (FSA) responsible lending proposals may have had on lending levels in 2010.

The CML last month revealed research into the historical impact of the FSA responsible lending proposals, showing that they would have had a greater impact than the regulator indicated in its own analysis. The CML had carried out follow-up research looking at the effect of these proposals may have had – both in isolation and in combination – on lending levels in 2010. Amongst results, the CML highlight that the FSA’s core income-expenditure affordability assessment could have affected 11% of borrowers this year.

The FSA have referred to a set of “green” (tentative) proposals, which include:

Assessing a borrower’s ability to repay a mortgage on a full capital-plus-interest basis, even if some or the entire loan is interest-only;
Assessing ability to repay on the basis of a maximum term of 25 years, even if the actual repayment period is longer than this;
Applying a ‘buffer’ to the affordability test for borrowers with an impaired credit history; and
Applying an interest rate stress test, to assess the ability of a borrower to pay at higher rates.

The CML proposes that the “green” proposals would have had a significant impact on lending decisions this year, despite the more cautious criteria currently being applied to mortgage applications. The CML illustrate this in numerical terms, by stating that in a market of 567,000 of loans advanced to August 2010, some 260,000 may not have been granted on their current terms.

For more information on the research visit the CML website.

MP to introduce a bill calling for interest rate caps.

Money Advice Trust — Wed, 03 Nov 2010 00:00:00 +0000

Stella Creasey (Lab, Walthamstow) will introduce a Bill in Parliament which calls for caps on interest rates.

The Consumer Credit (Regulation and Advice) bill is a Ten Minute Rule Bill and will be debated on 3 November.

Ten Minute Rule Bills allow backbench MP’s to raise a bill and are heard on Tuesdays and Wednesdays after departmental questions and ministerial statements. The MP may give a statement of up to 10 minutes in support of their proposal, and any MP that objects can then make a 10 minute speech in response. The Government will rarely allow a ten minute bill to progress far enough to become law, so they are often used as a way to get publicity for a particular issue.

The bill calls for:

The total lending rate that can be charged for providing credit and imposing additional interest on late payment and default charges to be capped.

Local authority planning committees to have powers enabling them to restrict the provision of premises for licensed consumer credit agencies within the local area.

A levy on the sale of credit cards and store cards which will then be used to set up a fund offering grants for the provision of debt advice and financial management services.

Requirements for the Post Office network to integrate its services with credit unions, in order to help consumers gain access to credit union loans, current accounts and savings accounts via Post Office branches.

For more information on the bill visit the Working for Walthamstow site

OFT crackdown on illegal cold-calling.

Money Advice Trust — Wed, 03 Nov 2010 00:00:00 +0000

OFT takes action against illegal cold calling practices in the Debt Management sector.

The OFT has taken action against lead generation firm Compensation Professionals Network (CPN), to prevent what it described as unfair and improper business practices. These include sending automated messages without consent, implying that calls were made on behalf of the Government, misleading consumers by claiming to be able to write off debts, and claiming these services were free.

Lead generation firms source information from people looking for debt help or loans, and sell the details on to other businesses including debt management companies.

The action is part of a crackdown on illegal cold calling by the OFT and has resulted in CPN no longer holding a consumer credit licence.

This follows the OFT’s warning to the debt management industry to stop using unsolicited and misleading cold-calling practices to generate client leads. Working with trade associations Debt Managers Standards Association (DEMSA) and Debt Resolution Forum (DRF) the OFT is warning member debt management firms that failure to stop could lead to licencing action.

The OFT plans to publish revised Debt Management Guidance for consultation next year.

For more information on the OFT’s action visit the OFT site.

Debt judgments fall in Northern Ireland

Money Advice Trust — Thu, 28 Oct 2010 00:00:00 +0000

Registry Trust reports a £2m drop in the value of debt judgments for the third quarter of 2010.

According to figures released today, by Registry Trust for Northern Ireland, £7.7m of debt judgments was issued in the third quarter of 2010 compared with £9.6m in the same period of 2009. However, the latest figure represents an 18 percent increase on the previous quarter.

The Registry trust is the non-profit organisation that collects judgment information from all jurisdictions in the British Isles. All the information in the registers is public information and anybody may access them using the Trust Online site. The Register now contains the following four sections:

County court judgments, administration orders and Child Support Agency liability orders;
High Court Judgments;
Magistrates courts fines defaults; and
Tribunal awards.

The number of searches performed on the Register by people checking past judgment records exceeded the previous record, reaching 1,888 searches in one quarter.

For further information on Registry Trust visit the Trust Online site.

Number of Scottish insolvencies decline

Money Advice Trust — Tue, 26 Oct 2010 00:00:00 +0000

The Accountant in Bankruptcy (AiB) reports an overall four per cent drop in personal insolvencies.

The latest official Scottish figures released today show that from July to September, there were 5,168 awards of personal insolvencies and 247 notices of Scottish registered companies becoming insolvent or entering receivership. A total of 497 Debt Payment Programmes were also approved.

The AiB insolvency statistics in brief:

5,168 personal insolvencies show a four per cent drop on Q1 and a ten per cent drop on the same period 2009/10;
3,092 awards of bankruptcy show a one per cent drop on Q1 and a 12 per cent drop on the same period 2009/10;
2,076 Protected Trust Deeds (PTDs) were again down by seven per cent on Q1 and eight per cent down on the same period 2009/10;
2,224 awards of bankruptcy as a result of debtor applications which is 11 per cent down on the Q1 and 20 per cent down on Q2 last year;
756 awards resulted from petitions to the courts by creditors which was 35 per cent up on Q1 and 17 per cent up on the same quarter for 2009/10;
112 awards were made as a result of petitions to the court by trustees in a trust deed showing a 45 per cent increase on the previous quarter and a 23 per cent increase on the same quarter last year; and
497 Debt Payment Programmes (DPPs) were approved which was up one per cent on the previous quarter and up 60 per cent on the same quarter 2009/10.

For further information on Scottish insolvency statistics visit the AiB website.

OFGEM tells local power network companies to meet new customer service standards on connections, or pay compensation to customers.

Money Advice Trust — Thu, 21 Oct 2010 00:00:00 +0000

This press release gives on overview of new compensation arrangements when local power network companies do not meet targets for good customer service in connections.

A new scheme to compensate customers if local power network companies fail to meet new performance standards for providing network connections will be launched this month.

The standards set deadlines for the local power network companies when they provide quotes to customers wanting connections, for contacting the customer after quotes have been issued, and for completing the connection work itself.

If the companies breach any of the standards they must pay compensation to customers including from £10 per day if some standards aren’t met for providing certain connection quotes or repairing certain non-emergency unmetered faults.

For the full press release, visit the OFGEM web site.

Fuel poverty doubles in five years

Money Advice Trust — Fri, 15 Oct 2010 00:00:00 +0000

Official statistics show the number of households who are in "fuel poverty" has more than doubled in the last five years because of surging energy bills.

A household is defined as being fuel poor if it has to spend 10 per cent or more of its income on paying to keep the home adequately warm. With the average British fuel bill climbing to well over £1,000 a year – for many pensioners the largest bill they have to pay all year – a worryingly large number of people are struggling to keep their homes warm.

In 2003 the number of fuel poor households hit a low of two million, but it climbed to four million in 2007 and then 4.5 million in 2008. The figures were published yesterday by the Department of Energy & Climate Change (DECC) in their 'Annual report on fuel poverty statistics 2010'. This suggests that one in six households were fuel poor during 2008, a year which saw energy bills shoot up by 45 per cent.

The figures were released just a day after the Treasury laid out plans to cut the emergency cold weather payments from £25 to £8.50. The emergency payments are made when the average temperature in a specific area in falls to freezing or below for seven consecutive days. Those who receive who pension credit or income support qualify for the payout.

There are also fears that the Winter Fuel Payment, which all pensioners are eligible for, will be scaled back by the Government. It is understood it wants to change the qualifying age for the annual payment from 60 to at least 66. The basic winter fuel payment, made to more than 12 million people, are also expected to be cut by £50 for new recipients and £100 for the oldest.

For further information read the full 'Annual report on fuel poverty statistics 2010'.

New FSA power granted for effective redress

Money Advice Trust — Thu, 14 Oct 2010 00:00:00 +0000

The Financial Services Authority (FSA) has been granted a new power to deliver prompt and effective redress for consumers.

The new FSA power was activated on the 12th of October, along with other changes, by a Commencement Order laid in Parliament by HM Treasury, which was part of April’s Financial Services Act 2010. The new power would be used in instances when there is evidence of widespread or regular failings that have caused consumer detriment. The FSA would need to undertake cost-benefit analysis and consult each time it uses the new rule making power.

The Commencement Order included a number of other changes:

Removal of the FSA’s public awareness objective;
Introduction of a requirement to have regard to the information provided by the Consumer Finance and Education Body in pursuit of its consumer protection objective; and
The power to publish decision notices as well as final notices, allowing FSA to publicise enforcement actions earlier.

Sally Dewar, the FSA’s managing director of risk, said:

"This is an important new tool for the FSA, which increases our ability to get redress for consumers when firms have not followed our rules.

“The power would obviously be used proportionately. It is not a substitute for working with industry where there is the potential to bring an issue to a fair and speedy conclusion.

“The FSA will, however, seek to use this power where necessary to ensure consumers are fairly treated.”

For further information read the guidance note on operation of Consumer Redress Scheme, at the Financial Services Authority website.

UK unemployment drops to 2.45 million

Money Advice Trust — Wed, 13 Oct 2010 00:00:00 +0000

The number of people unemployed in the UK fell by 20,000 to 2.45 million in the three months to August.

The Office for National Statistics (ONS) has reported that the overall UK unemployment rate fell to 7.7% from 7.8%. Male unemployment fell by 56,000 on the quarter to reach 1.44 million but female unemployment increased by 36,000 on the quarter to reach 1.01 million.

However, the number of people claiming Jobseeker’s Allowance (the claimant count) increased by 5,300 between August and September 2010 to reach 1.47 million. This is the second consecutive monthly increase in the number of claimants. The increase in the total claimant count was mainly due to a rise of 4,200 in the number of female claimants to reach 431,000, the number of male claimants increased by 1,100 to reach 1.04 million.

Within the UK, the jobless rate in Wales fell to 8.2% from 9.1%, in England it dropped to 7.7% from 7.8% and in Northern Ireland it fell to 7% from 7.1%. The trend has no continued in Scotland where the rate increased from 8.2% to 8.6%.

Across the UK, the number of people employed increased by 178,000 in the three months to August, the ONS said. The ONS figures also showed that average earnings in August were 1.7% higher than a year ago.

For further information visit the Office for National Statistics website.

Business Debtline takes calls from 50,000 small businesses since the start of the credit crunch

Money Advice Trust — Fri, 08 Oct 2010 00:00:00 +0000

Business Debtline, run by the Money Advice Trust, announces that it has helped more than 50,000 businesses since the start of the credit crunch.

The collapse of Northern Rock in September 2007 precipitated an economic crisis that has hit small businesses across the UK hard. Business Debtline is the only business-focused, free debt helpline in the UK – offering small and micro businesses valuable advice on how to manage and repay their debts.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, the charity which runs Business Debtline, said:

“It’s been a very difficult three years for small businesses across the UK. The help Business Debtline offers small businesses is often crucial in ensuring not only their survival as a business, but also the well-being of their creditors, as well as the broader financial health of the UK.

“To have helped more than 50,000 businesses throughout the credit crunch is a huge achievement, and one we can be proud of. However, there are still many small companies seeking advice on how best to manage their debt – just last month alone Business Debtline advisers spoke to representatives of more than 2,200 businesses to help them through their financial worries.

“Independent evaluation of the service offered by Business Debtline helps to demonstrate the positive impact of debt advice for small businesses. 78 per cent of callers who set up an arrangement with their creditors report maintaining it; and a large majority of callers reported that they were more confident about managing their business finances, less likely to get into problems in the future, and more in control of their business after obtaining advice.”

Stephen Alambritis, Chief Spokesperson, Federation of Small Businesses said:

“Business Debtline provides a very good service to small businesses in dire straits. By helping to improve the financial capability of the UK’s small business owners, this service plays an important role in achieving wider economic stability.

“The UK’s 4.8 million small businesses are the lifeblood of the economy and we should do what we can to ensure they are protected, as far as possible, from the long shadows cast by a deep recession.”

For further information visit the Money Advice Trust website

Money Advice Trust comments on the Bank of England lending figures

Money Advice Trust — Wed, 29 Sep 2010 00:00:00 +0000

Joanna Elson OBE, Chief Executive of the Money Advice Trust comments on the August 2010 Lending to Individuals figures released by the Bank of England

Commenting on the August 2010 Lending to Individuals figures released by the Bank of England, Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“Whilst we can be pleased that the August figures demonstrate that consumers are, on the whole, choosing to reduce their unsecured debts, we have to be aware that the figures involved amount to little more than a drop in the ocean of unsecured credit. Unsecured consumer credit fell by £0.1 billion in August – this accounts for just 0.05 per cent of total outstanding unsecured consumer credit.

“It is now around three years since the start of the credit crunch. The Bank of England’s figures from August 2007 show that despite a three year period including banking collapses, deep recession and tight controls on credit lending, consumers have actually increased their unsecured debts by £1.8 billion.

“Credit can be an important tool to smooth the economic peaks and troughs of life, but our experience at National Debtline, which is run by the Money Advice Trust, also shows that people in unmanageable debt are hampered in many areas of their lives, and incur significant costs to society.

“It is important that people struggling to repay their debts are given every chance to do so. Yesterday’s OFT report demonstrated very clearly that fee-charging debt management companies are misleading people in debt and providing poor service. By ensuring free, independent advice is available to consumers suffering the turmoil of unmanageable debt, we can begin to make serious inroads into the UK’s personal debt mountain.”

People who do have concerns about their debt should call the National Debtline on 0808 808 4000, or alternatively contact one of the Money Advice Trust’s partners, such as Citizens Advice or the Consumer Credit Counselling Service (CCCS).

OFT crackdown on debt management companies

Money Advice Trust — Tue, 28 Sep 2010 00:00:00 +0000

The Office of Fair Trading (OFT) issues formal warnings today, following their review of the debt management sector which found widespread problems.

The OFT has told 129 debt management firms that they face losing their consumer credit licences unless immediate action is taken to comply with its Debt Management Guidance. Debt management companies are fee-charging firms that provide advice and solutions to consumers with debt problems, which sit alongside free Government funded and charitable services.

The OFT launched the review in November 2009. The methodology included an internet advertising compliance sweep of 100 debt advice and debt management websites, questionnaires, meetings with trade associations, consumer representative bodies and Government departments, on-site compliance visits, a mystery shopping study and a complaint form for consumers on the OFT's website.

Key findings from the review show:

Misleading advertising is the most significant area of non-compliance, in particular failing to disclose a fee is retained by the business and misrepresenting debt management services as being free when they are not;
Frontline advisers working for debt management companies are lacking in competence and are providing poor advice based on inadequate information; and
There is low industry awareness of the Financial Ombudsman Service (FOS) rules for resolving consumer complaints.

Today's OFT report sets out a detailed action plan to improve standards across the industry, and plans to update its guidance to take explicit account of new and emerging unfair business practices. The OFT will work with the two main trade bodies, the Debt Managers Standards Association (DEMSA) and the Debt Resolution Forum (DRF) to support their initiatives to introduce higher standards into the industry.

For further information read the full OFT report, ‘Debt management guidance compliance review’.

Recession has hit poverty and unemployment harder in Scotland than England

Money Advice Trust — Fri, 24 Sep 2010 00:00:00 +0000

A new report published by the Joseph Rowntree Foundation (JRF) shows Scotland’s unemployment rate back to 1996 levels, and poverty is now hitting childless adults harder than pensioners or children.

'Monitoring poverty and social exclusion in Scotland', is produced by the New Policy Institute, and is JRF’s fifth assessment of poverty in Scotland. It is built around a set of indicators and uses the latest official government data. The report assesses a wide range of indicators including unemployment, education, and health.

Key findings include

Unemployment in Scotland has now higher than in England, despite having been lower at the start of the recession.

The recession’s impact was also greater on men’s employment levels than women’s, with a shift from full-time to part-time jobs.

Scotland’s child poverty rate rose by 2 per cent in the last year during the recession, compared with just 1 per cent in England. However, the rate still remains lower than that of England.

The report goes on to identify areas in the Scottish Government’s anti-poverty programme that need improvement, including:

Essential services for low-income and other disadvantaged households;

Living standards for the nearly 600,000 working-age adults who receive out-of-work benefits; and

Help for those who have jobs but who still live below the poverty line.

The report finally concludes that where the Scottish Government has little direct control, its challenge is how to exercise influence both upward to the UK government and downwards to employers and service providers in Scotland.

For further information read the full report, 'Monitoring poverty and social exclusion in Scotland'.

My Home Finance scheme to help excluded borrowers

Money Advice Trust — Thu, 23 Sep 2010 00:00:00 +0000

Secretary of State for Work and Pensions launches a new scheme which aims to give financially excluded people, on lower incomes, a fair-priced alternative to doorstep lenders and illegal loan sharks.

My Home Finance is being led by the National Housing Federation and supported by the Department for Work and Pensions, the Royal Bank of Scotland, 26 housing associations and Wates Giving. Iain Duncan Smith launched the scheme today at the National Housing Federation annual conference, at the ICC in Birmingham.

The scheme will provide loans charging a typical APR of 29.9%, comparing favourably to the rates charged by doorstep and pay-day lenders, which can range from 200% to 2,000%. Loans of around £500 will usually last for a year, but borrowers can select a shorter or longer term if preferred. My Home Finance will start with 10 branches across the West Midlands by the end of October, and will roll out to the rest of the UK from next April if successful, writing up to 150,000 loans to people on lower incomes over the next 10 years. The branches will be located in busy high streets and shopping centres, providing easy access to those who have previously been turned away by high street lenders.

Commenting on the launch of the Government’s ‘My Home Finance’ scheme, Joanna Elson OBE, chief executive of the Money Advice Trust, said:

“We welcome this addition to the consumer credit market. Any initiative aimed at widening the range of options for people whose options for credit are so limited should be commended, and we applaud the National Housing Federation for taking this important step.

“Providing credit to those who are assessed as ‘high risk’, however, is expensive, and the proposed rate of interest as of April next year of 49.9 per cent APR is far higher than the unsecured loan rates we are used to seeing in the branch windows of our high street banks. Consumers considering applying for a loan through the scheme therefore need to be absolutely sure they can afford the repayments.”

For more information on the scheme visit the National Housing Federation website.

Bailiff 'mind games' devastating to mental health

Money Advice Trust — Mon, 20 Sep 2010 00:00:00 +0000

Mind reveals shocking new evidence about the impact a visit from the bailiffs can have on mental health.

One of the UK’s leading mental health charities, Mind, have released figures on the impact of bailiffs on mental health from a survey carried out earlier this year. The charity are concerned that in the current economic climate and as more and more people find it difficult to keep up with their bills the use of bailiffs will increase, and they are calling on the Government to act on its commitment to protect the public from aggressive bailiffs and urgently introduce robust regulation of the profession.

Amongst findings, the survey showed:

50% of people reported suicidal feelings after a knock on the door from bailiffs;
96% reported increased levels of anxiety after a visit from bailiffs and 87% reported increased levels of depression;
80% had experienced threatening behaviour;
Over 65% were subjected to aggressive behaviour; and
74% felt it had a negative impact on their family.

The previous Government had previously committed to introducing regulation in 2012 by the Security Industry Authority — the same body which covers bouncers and wheel clampers. However, Mind is concerned this body is not strong enough to stamp out bad practice. Leading bailiff companies and trade associations have also called for independent regulation of the bailiff industry to address bad practice by disreputable companies.

For further information on debt and mental health visit the Mind website.

Difficult times for workless households

Money Advice Trust — Thu, 09 Sep 2010 00:00:00 +0000

Further growth in unemployment could lead to a sharp rise in insolvency.

Commenting on the 2010 Work and Worklessness Households figures released by the Office for National Statistics (ONS), Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:

“Over the last two years there has been a 27 per cent increase in the number of workless households in the UK. Over the same period advisers at National Debtline, which is run by the Money Advice Trust, have seen the number of calls from unemployed people more than double. There can be no doubt that continuing high levels of unemployment are contributing to the personal debt problems faced by the British public.

“We have grave concerns that households witnessing a fall in income due to unemployment will start to default on debt repayments, and that we may start to see a sharp rise in personal insolvencies. Research undertaken by the University of Wales last year found there were two million ‘iceberg bankruptcies’ in the UK - employed people who could not afford any fall in income without defaulting on debt repayments.

“We are working closely with advice agencies, government and financial services providers to ensure that free independent debt advice is available, effective and rehabilitative.”

Calls to National Debtline from unemployed people increased more than double in the last two years. There were 23,886 calls (17.62% of all calls) from unemployed people in the first seven months of this year. Across the same period in 2008 there were 10,692 calls (10.85% of all calls) from unemployed people.

For more information on insolvency statistics quoted view the full press release on the Money Advice Trust website.

Ofgem launches investigations into misselling

Money Advice Trust — Mon, 06 Sep 2010 00:00:00 +0000

Ofgem has launched investigations into four energy suppliers to determine if they are complying with new obligations, put in place as part of Ofgems energy retail probe remedies.

Ofgem has begun investigations to establish whether four suppliers (npower, Scottish Power, Scottish and Southern Energy and EDF Energy) are complying with new obligations to prevent misselling, brought in following Ofgem’s retail market probe.

The regulator has also set up a hotline with Consumer Direct for consumers to provide evidence of misselling, and has urged customers to call if they are concerned about the sales approach any domestic suppliers have taken when selling energy contracts, either face-to-face or by telephone. The hotline is available on the standard Consumer Direct number 08454 04 05 06.

Last October Ofgem introduced tougher obligations meaning suppliers have to be proactive in preventing misselling to customers both face-to-face and by telephone. In addition, suppliers selling contracts face-to-face must provide customers with an estimate before any sales are concluded. In most circumstances customers should also receive a comparison of the suppliers offer with their current deal.

Ofgem and Consumer Focus have also published a leaflet with practical with practical information and advice for consumers when dealing with an energy sales person.

For more information on this investigation visit the Ofgem website.

CAB enquiries still increasing

Money Advice Trust — Sun, 05 Sep 2010 00:00:00 +0000

CAB report that enquiries are still rising, with queries about disability benefits and urgent debts showing the biggest increase.

Citizens Advice Bureaux across England and Wales dealt with 6% more benefits problems during the first three months April-June 2010, than they did in the same period last year. This was largely due to the increases in advice on sickness and disability related benefits.

Enquiries regarding Employment and Support Allowance (ESA) rose 77% in Q1 of 2010/11 compared with the same period on 2009/10. Carers Allowance rose by 17% during the same period, and Disability living Allowance (DLA) rose 11%.

Q1 2010/11 also saw a slight decrease in the number of enquires regarding credit debts. This is the first decrease in two years. However, significant increases continued in queries about priority debts, which are those where the consequences of not paying are most serious.

Key figures include an increase of 18% in the number of water supply debts in Q1 2010/11 compared with Q1 in 2009/10. Council tax queries rose by 7% in the same period, telephone debts by 7% and rent arrears to private landlords by 18%.

Other notable increases include Local Authority housing up 18% and actual homelessness up 13%.

Paying more for student loans

Money Advice Trust — Fri, 03 Sep 2010 00:00:00 +0000

Graduates will now start paying interest on their student loans again as new interest rates come into effect.

Each September the Students Loans Company sets interest rates on its loans, which are dependent on when the loan was taken out. Interest on student loans is based on either the Retail Prices Index (RPI) measure of inflation in March, or the highest base rate charged by a group of banks plus 1%, depending on which is lower.

Graduates have enjoyed interest-free student loans for the last year owing to the way the rates are calculated. As RPI was 4.4% in March, the rate for the coming year will be calculated from banks' rates in March, which were lower. Payments to the Student Loans Company include a 1.5% interest rate from 1 September for those who took out a loan after 1998.

The rate could increase during the year if there is a change to the Bank of England Bank rate, which is likely to be mirrored by the banks. About 3.3 million people have a student loan taken out after 1998, while 355,600 have one taken out before 1998.

For more information on interest rates on student loans visit The Student Loans Company website.

Bankruptcy restriction orders double in Scotland

Money Advice Trust — Fri, 27 Aug 2010 00:00:00 +0000

The Accountant in Bankruptcy confirms the number of bankruptcy restriction orders have doubled from six for the whole of 2009 to twelve for the year to date.

Normally a bankrupt can be discharged from bankruptcy after one year of being declared insolvent. Rules exist allowing the Accountant in Bankruptcy (AiB) to apply for a bankruptcy restriction order (BRO) against the bankrupt if it is felt that their behaviour has been dishonest in some way or there has been ‘unfit’ conduct.

Restrictions can apply for between two to fifteen years, continuing after the bankrupt has been discharged. It is also possible that BRO can arise due to behaviour either before or during the bankruptcy. Examples of behaviour that could lead to a BRO being made include incurring debts knowing that there was no reasonable chance of repaying them, giving away assets or selling them at less than their value and deliberately paying off some creditors in preference to others. A BRO means the bankrupt can not apply for credit of more than £500 without telling the lender they are subject to the order amongst other restrictions.

Earlier this year, after a Hearing at Dundee Sheriff Court, an application by AiB was granted issuing a four year BRO to a bankrupt. The bankrupt had taken out five contracts with different mobile phone companies within four days of each other, with no intention of making any payments towards them. This had resulted in an increased debt in excess of £4000.

For further information about BRO statistics in Scotland visit the AiB website.

Debt and financial difficulty in the Civil and Social Justice Survey

Money Advice Trust — Wed, 25 Aug 2010 00:00:00 +0000

A report which looks at the demographics and effects of debt, the relationship with debt and other problems, and the impact of debt advice.

This research is conducted by the Legal Services Research Centre (LSCR) on behalf of Money Advice Trust (MAT). It draws on three years of information (2006-2009) from the English and Welsh Civil and Social Justice Survey (CSJS), a face-to-face household survey of peoples experience of, and responses to, rights problems.

It sets out to identify those groups for whom debt has become a problem, and establish whether particular populations are more or less vulnerable to becoming over-indebted than others. It also seeks to understand how problems arise, and identifies possible triggers and consequences of over-indebtedness.

The work aims to enrich existing research regarding people in debt, with particular reference to advice seeking strategies, impacts of debt problems, and the relationship with other problems that arise.

Key findings from the research include:

Problems with debt/financial difficulty were associated with demographics and/or processes of social exclusion.
Problems with debt/financial difficulty were highly related to other civil justice problems.
People with debt/financial problems were more likely to report more problems overall.
People with debt/financial difficulty were more likely to suffer clusters of problems.
Problems with debt/financial difficulty lasted longer than other problem types.
Problems with debt/financial frequently led to adverse consequences, notably stress related ill health.

To read the full report, click here.

Tighter regulation required for payday loans

Money Advice Trust — Fri, 20 Aug 2010 00:00:00 +0000

New Consumer Focus research highlights the need for better controls on payday lending

Payday lending is a form of credit whereby a borrower either gives the creditor a cheque or authorisation to make an automatic withdrawal from their bank account. The payment is used as security for a short term loan to be repaid, typically, on their next payday.

According to research carried out by Consumer Focus the number of people taking out expensive payday loans has quadrupled since 2006 to 1.2 million people, borrowing a combined £1.2 billion per year. 'Keeping the Plates Spinning', estimates that two thirds of payday loan borrowers have a household income of less than £25,000 and on average take out 3.5 loans typically of £294 per loan.

Evidence suggests that a typical payday loan costs around £20 for every £100 borrowed, and if the loan was deferred or "rolled over" for six months the cost of repaying the loan would rise to as much as £660, generating APRs in the region of 1000% to 2000%. The report makes a number of recommendations for tighter regulation of the payday loans industry including:

Limiting the number of loans that can be taken out or rolled over to five per household annually;
Payday lenders should share information to avoid people borrowing from multiple lenders simultaneously and develop an industry code of practice; and
Alternative affordable credit from banks and social lenders such as credit unions to be further encouraged and promoted by both the financial services industry and the Government.

View the full report for further information, 'Keeping the Plates Spinning'.

Repossession Risk Remains

Money Advice Trust — Thu, 12 Aug 2010 00:00:00 +0000

Shelter urges the Government to keep funding for debt advice services to help the thousands of families at risk of arrears and repossession.

Kay Boycott, Shelter’s Director of Communications, Policy and Campaigns has stated that although repossessions have dropped slightly over the last year, they remain exceptionally high, with thousands of families experiencing loss of their home.

She warned that further threats such as interest rate rises, public sector unemployment and negative equity as a result of falling house prices, could cause people to fall into a dangerous spiral of debt, arrears and ultimately homelessness.

With advice being so crucial to keeping people in their homes, she has urged the Government to keep funding for debt advice services in the upcoming Comprehensive Spending Review.

Her comments followed new Council of Mortgage lenders (CML) figures, released 12 August 2010, showing that there were 9400 repossessions between April and June 2010.

Click here to read the article in full.

Homeowner help warning

Money Advice Trust — Fri, 30 Jul 2010 00:00:00 +0000

Shelter welcomes the Governments extension of schemes to support struggling homeowners, but warns that funding must be protected longer-term to avoid a ‘huge surge’ in homelessness.

Chief Executive Campbell Robb explained that Shelter has welcomed the new Governments recognition of the importance of the current Homeowner Mortgage Support (HMS) and Mortgage Rescue Scheme (MRS), along with the commitment to continue funding for them until the end of the year.

However, he has warned that the ongoing economic crisis could still pose a serious threat to the fragile mortgage market and push more and more people into arrears in the coming months and years. He went on to advise that it is therefore vital that the Government does not weaken the safety nets for struggling homeowners further or we could see a huge surge in homelessness.

Mr Robb went on to say that it is crucial that Support for Mortgage Interest, which currently helps 220,000 struggling homeowners must also be maintained to avoid thousands more homeowners being at risk.

Last week advice charities including Shelter and Money Advice Trust, sent a joint letter to Housing Minister Grant Shapps, urging the protection of funding for vital debt advice in the upcoming Comprehensive Spending Review.

The full news article can be viewed here: Shelter: Homeowner help warning

Essential living costs reviewed

Money Advice Trust — Fri, 16 Jul 2010 00:00:00 +0000

The Joseph Rowntree Foundation publishes its annual update, based on what members of the public think people need to achieve a socially acceptable standard of living.

Over time, changes in prices alter the cost of a basket of goods and services that represent a minimum standard of living. In addition, changes in social norms will alter the content of that ‘minimum basket’. JRF have published research, ‘A minimum income standard for the UK in 2010’ considering both elements, and updated the review of what people think is needed, in changed economic circumstances.

Key points from the research show:

A single person in the UK needs to earn at least £14,400 a year before tax in 2010, to afford a basic but acceptable standard of living;
A couple with two children needs £29,200;
Over the past decade, the rising cost of food, public transport and other essentials means that a minimum budget costs 38% more, despite general inflation at just 23%;
People have not reduced what they consider as necessities and include things that allow them to participate in society as essentials;
A computer and home internet connection are now considered essential for all non-pensioner households; and
With tax allowances and tax credit thresholds not being increased in 2010, people will need to earn substantially more to afford the increased cost of living.

View the full report for further information, ‘A minimum income standard for the UK in 2010’.

Advice helps people to stay in their homes

Money Advice Trust — Mon, 05 Jul 2010 00:00:00 +0000

New Shelter research published shows the outcomes of advice for struggling homeowners.

Since April 2009, Communities and Local Government (CLG) has funded Shelter and other providers to provide independent advice to homeowners wishing to apply for Homeowner Mortgage Support (HMS) or to seek more general advice about their mortgage debt. Shelter has set up a dedicated helpline, the Homeowner Helpline, as well as a team of designated advisers based in advice centres and courts around the country using this funding.

‘Results and Recommendations: Outcomes of advice for struggling homeowners’, includes information about the number of clients that Shelter has advised through the HMS advice funding stream and an analysis of the cost consequences of the advice. The research is based on the analysis of eighty case files and in depth interviews with thirty borrowers who sought advice from Shelter about their mortgage arrears. The report gives an insight into the real-life experiences of struggling borrowers by considering clients’ experiences of accessing and using advice services, the outcomes of that advice and clients’ housing hopes for the future.

Key findings from the report show between April 2009 and May 2010, Shelter has provided mortgage debt advice to over 7,000 households, of which more than 4,700 households were helped under Shelter’s Homeowner Mortgage Support contract. The report states each mortgage debt advice case costs the state £229 on average, making the provision of advice a low cost and a high value option. This is particularly important when compared to the cost of repossession, which is estimated to cost the Exchequer £16,000 (repossession of a vulnerable household).

Outcomes for clients are reported as:

In 63% of cases reviewed the client was helped to stay in their home;
In 18% of cases reviewed, Shelter was unable to help prevent repossession but assisted the client in another way;
The most common form of arrears assistance was to help or advise the client to agree a new mortgage repayment plan with their lender, which was evident in 44% of cases reviewed;
In a third of cases reviewed, immediate repossession was prevented; and
In a quarter of cases reviewed, clients were helped to apply for some form of Government support.

View the full report for further information, ‘Results and Recommendations: Outcomes of advice for struggling homeowners’.

Financial problems impact job seeking behaviour

Money Advice Trust — Wed, 16 Jun 2010 00:00:00 +0000

Research shows the low level of benefits paid to unemployed people gives rise to a wide range of problems that affect their ability to maintain a focus on, and pursue job seeking activities.

Reducing benefit levels has sometimes been justified on the grounds that this increases the incentive for people to find work. However, further reductions could be counter-productive as they would exacerbate the problems as identified in new research ‘Out of work, out of money’. In February, Inclusion and the Centre for Responsible Credit (CfRC) were jointly commissioned by Manchester City Council to determine how financial problems affect job seeking behavior and the ability of unemployed people to undertake job search/secure a job and sustain employment. The study identifies that money problems impact on job seeking behavior in four ways, by:

Distracting people from job search;
Constraining job search activity;
Creating disincentives to work, and
Reducing the chances of people sustaining their employment.

The report shows that more needs to be done to reduce the financial burdens on unemployed people and to join up debt advice, financial education, affordable credit, basic banking, and welfare to work services at the local level. Findings also show debt recovery policies and some insolvency procedures could affect job seeking behavior.

The report provides a detailed set of twelve recommendations to be taken forwards by national and local Government and its agencies, the financial services industry, including credit unions and community development financial institutions, welfare to work providers, and debt advice agencies.

View the full report for further information, ‘Out of work, out of money’.

Reduced mortgage repossessions but uncertainty remains

Money Advice Trust — Thu, 20 May 2010 00:00:00 +0000

The Council of Mortgage Lenders (CML) warn against complacency as a large number of households still remain vulnerable

The CML has reported that there were 9,800 repossessionsin the first quarter of this year, down from 10,600 in the previous quarter and 13,200 in the first quarter of 2009. The proportion of mortgages in arrears over the same period also fell with the number of loans in arrears down from 206,800 at the end of the first quarter of 2009, and 196,400 at the end of last year to 186,300.

However, the fall in arrears was more marked in the lower arrears bands than among those with more substantial arrears. The CML suggests that households with more entrenched debt problems are still struggling to restore their financial position and repay arrears. The CML strongly emphasised the need for ongoing commitment from Government to supporting home-owners facing financial difficulty, as the risk of higher interest rates or unemployment would tip a number of finely-balanced households who are currently coping into arrears.

The CML have written to the Chancellor, with Shelter and Citizens Advice to encourage a clear commitment in his first budget to extending current support measures for the borrowers in most financial difficulty.

For further information about the arrears and repossessions visit the CML website.

Mortgage and landlord possession actions decrease

Money Advice Trust — Mon, 17 May 2010 00:00:00 +0000

Ministry of Justice (MoJ) publishes statistics on mortgage and landlord possession actions for the first quarter of 2010

New figures published by the MoJ show a reduction in mortgage and landlord possession actions over the first quarter of this year. The report breaks down the numbers of mortgage and landlord possession claims issued and claims leading to orders provided by local authorities, as well as by county courts.

Amongst findings, the report shows:

18,504 mortgage possession claims were issued 24% lower than in the first quarter of 2009 and 8% lower than in the fourth quarter of 2009;
14,373 mortgage possession claims led to orders being made15% lower than in the first quarter of 2009 and 13% lower than in the fourth quarter of 2009;
33,180 landlord possession claims were issued 6% lower than in the first quarter of 2009 and no change from that in the fourth quarter of 2009; and
21,691 landlord possession claims led to orders being made 9% lower than in the first quarter of 2009 and 3% lower than in the fourth quarter of 2009.

Mortgage possessions statistics should be viewed with caution, as there would have been a reduction following the introduction of the Mortgage Pre-Action Protocol. The report also provides information by local authority for the highest and lowest number of mortgage claims and landlord claims per 1,000 households.

For further information view the full reports by MoJ, ‘Statistics on mortgage and landlord possession actions in the county courts - first quarter 2010.’

Insolvency statistics published for the first quarter of 2010

Money Advice Trust — Fri, 07 May 2010 00:00:00 +0000

35,682 individual insolvencies in England and Wales, and 5175 personal insolvencies in Scotland

The Insolvency Service published statistics today for the first quarter of 2010, showing an increase of 17.9% in personal insolvencies on the same period a year ago. 35,682 individual insolvencies were reported, which were made up of:

18,256 bankruptcies (which were down 10.7% on the corresponding quarter of the previous year);
11,782 Individual Voluntary Arrangements (IVAs) which were up 20.1% on the corresponding quarter of the previous year; and
5,644 Debt Relief Orders (DROs).

The Accountant in Bankruptcy (AiB) also published its statistics for Scottish insolvencies in the fourth quarter of 2009/10 today, which show a drop in personal insolvencies of 9% between January and March of this year. The reported 5175 personal insolvencies were made up of:

3,142 awards of bankruptcy (which were down by 6% on the previous quarter and by 17% over the same period last year); and
2,033 Protected Trust Deeds (which were down by 13% on the previous quarter and up 3 % on the corresponding quarter of last year).

For further information view the full reports by the Insolvency Service, ‘Insolvencies in the first quarter 2010’ and the AIB, ‘Statistics release: Scottish insolvencies in the fourth quarter 2009/10’.

Ethnic minorities at risk of exclusion

Money Advice Trust — Tue, 27 Apr 2010 00:00:00 +0000

Thinktank Runnymede publishes report with recommendations for Government money advice service

Runnymede’s report argues that people from Black and Minority Ethnic (BME) backgrounds are more likely to be unemployed or living in income poverty than the wider population and many are socially marginalized because of language and cultural differences. Against the backdrop of the recession, many BME people have serious money issues and a pressing need to access support from money advice services.

Runnymede’s new report, Seeking Sound Advice: Financial Inclusion and Ethnicity focuses on where BME people go for money advice, as well as the factors that encourage or discourage them from doing so. Using research gathered from within ethnic minority communities, the report also gives an insight into BME people's experience of advice in banks and charities.

The report comments on the Government's Money Guidance. The scheme aims to provide free and impartial advice on a range of money issues, and is currently being extended across the country. The following recommendations are made by the report for Money Guidance:

Enlist BME Money Guidance advisors To improve trust and communication with BME people in need of advice, making marginalized people more able and confident to take up the support and improve their situation;
Prioritise face-to-face advice Delivering more face-to-face service to help improve trust and communication and will meet people’s multiple needs; and
Engage with BME community centres Consumer Financial Education Body (CFEB) should engage with centres serving marginalized BME communities to help increase access to money advice and support.

View the full report for further information,'Seeking Sound Advice: Financial Inclusion and Ethnicity'.

OFT issues irresponsible lending guidance

Money Advice Trust — Thu, 08 Apr 2010 00:00:00 +0000

The Office of Fair Trading (OFT) has published guidance on the irresponsible lending element of the test of fitness to hold a credit licence.

The Consumer Credit Act 1974 requires businesses that offer goods or services on credit and/or are involved in activities relating to credit or hire to be licensed by the OFT.

The new guidance issued will come into effect in February 2011, providing clarity for businesses and consumers about behaviour the OFT considers may constitute irresponsible lending practices under the Consumer Credit Act. It covers each stage of the lending process, from the pre-contract stage of advertising credit through to the handling of arrears and default on agreements.

The OFT makes clear that creditors should:

Not use misleading or oppressive behaviour when advertising, selling, or seeking to enforce a credit agreement;
Make a reasonable assessment of whether a borrower can afford to make repayments in a sustainable manner;
Explain the key features of the credit agreement in order to empower the borrower to be able to make an informed choice;
Monitor the borrower’s repayment record during the course of the agreement, offering assistance where borrowers appear to be experiencing difficulty; and
Treat borrowers fairly and with forbearance if they experience difficulties.

For further information about the irresponsible lending guidance visit the OFT website.

Post Office banking expansion to address financial exclusion

Money Advice Trust — Wed, 31 Mar 2010 00:00:00 +0000

The Department for Business, Innovation and Skills (BIS) announced plans to increase the provision of financial services through the Post Office's 11,500 branches to tackle financial exclusion and 'bring banking services back to the heart of peop

The Prime Minister announced last September that he wanted a much bigger role for Post Office in providing financial services, to increase the accessibility of reliable financial products for consumers and small businesses.

With over 11,500 branches nationwide, the Post Office is the largest retail and financial services chain in the UK. The Post Office network is larger than all of the banks in the UK combined, and is the country’s number one foreign currency provider. The plans have been announced as part of the Government response published to their consultation on Post Office banking. The measures set out for individuals include:

Weekly budgeting account Aimed at helping people on low incomes manage their household budgets, save money by taking advantage of the discounts for using direct debit to pay their utility bills;
Children’s savings account Due to be launched in the next twelve months, which will complement the Post Office's existing Child Trust Fund offer;
Post Office Current Account The Post Office will launch its own current account that will be accessible from any Post Office in the country;
Access to accounts from other banks Detailed negotiations are taking place with RBS and Santander to give access to their current accounts - this would mean that around 86% of current accounts would be accessible at Post Offices;
Mortgages The Post Office will offer a new mortgage product with a 90% loan-to-value ratio aimed at first-time buyer;
Increasing affordable credit Plans to support a national distribution network with credit unions, ensuring that credit union savings, loans and current accounts can be accessed anywhere in the country; and
Saving Gateway Due to be launched this year, this new account for people of working age who are on lower incomes which aims to kick-start the savings habit, with Government adding 50p for every £1 saved.

For further information about the Post Office banking consultation visit the BIS website

Assisted self help scheme ‘CASHflow’ rolls out nationwide

Money Advice Trust — Thu, 25 Mar 2010 00:00:00 +0000

Consumer Minister, Kevin Brennan launched a new service to assist individuals who are keen to negotiate debt repayment plans yesterday.

CASHflow is a streamlined, assisted self-help service designed to increase the availability of help and support to over-indebted consumers who are able and willing to negotiate with creditors with minimal intervention from an advice agency.

The scheme has been developed by the Money Advice Trust (MAT) in partnership with creditors, trade bodies, the debt collection industry and the advice sector. CASHflow is available in all four administrations of the UK and has been piloted over the last six months under an initiative funded by the Department for Business, Innovation and Skills (BIS).

CASHflow enables licensed advice providers and their clients to agree an online financial statement that can be used to draw up manageable repayment proposals. This statement can then be used for individuals to negotiate arrangements with creditors without the need for an advice agency to act directly on their behalf.

For more information on CASHflow visit the MAT website.

Total number of 'economically inactive' hits 8.16 million

Money Advice Trust — Tue, 23 Mar 2010 00:00:00 +0000

The Office for National Statistics (ONS) report the number of people who are economically inactive is the highest since they started recording this measure in 1971.

ONS statistics show those who are out of a job, or economically inactive totals 10.6 million, or 28 per cent of adults of working age. Factors that are contributing to this figure include people are choosing instead to study, go on sick leave or just give up searching for a job. ONS also reports that of the 8.16 million economically inactive people, 2.3 million have said they would like a job.

A record 149,000 left the workforce and became economically inactive, between November last year and January according to ONS statistics. The biggest rise in economic inactivity was down to the increase in students, with nearly 100,000 deciding to study in the last three months.

There was also a 18,000 increase in the number of people staying at home to care for children or parents hitting 2.3 million, while those who are long-term sick has remained at 2 million. Added to the economically inactive, were a further 1.04 million part-time workers that were on reduced hours because they could not find a full-time job.

For further information about labour market statistics visit the ONS website.

BIS announces five new rights for credit card consumers

Money Advice Trust — Mon, 15 Mar 2010 00:00:00 +0000

The Department for Business, Innovation and Skills (BIS) response to January's credit card consultation includes new rights to give consumers more control over their credit and store cards.

The Government launched a review of credit and store cards in a consumer White Paper in July last year. Following a three-month consultation, BIS are setting out five new consumer rights which they believe will give consumers a fairer deal to consumers with credit and store cards. The Government and the card companies have agreed that the key consumer benefits will come into effect by the end of the year, meaning that consumers do not have to wait for legislation to be passed to benefit from these measures.

The five new rights are:

Right to repay: consumers’ highest rate debt first will be paid off first when repayments are made;
Right to control: consumers will be able to opt out of credit limit increases, reduce their limit at any time and have better automated payment options;
Right to reject: consumers will be given more time to reject increases in their interest rate or their credit limit;
Right to information: all consumers will be given clear information on increases in their interest rate or their credit limit including the right to reject; and
Right to compare: consumers will have an annual statement that allows for easy cost comparison with other providers.

For consumers opening new accounts the minimum payment will always cover at least interest, fees and charges, plus 1% of the principal to encourage better repayment practice. Also consumers who are at risk of financial difficulties will be given guidance on the consequences of paying back too little and be protected through a ban on increases in their credit limit as well as increases in their interest rate.

For further information about the regulation of credit and store cards review visit the BIS website

The Chancellor of the Exchequer launches Moneymadeclear national money guidance service

Money Advice Trust — Fri, 12 Mar 2010 00:00:00 +0000

The FSA, in partnership with Government, launched the national money guidance service yesterday following its successful pathfinder project.

In March 2009 a one-year pilot was launched by the Financial Services Authority (FSA), in partnership with the Government, to test delivery of a money guidance service in the North West and North East of England, using the Moneymadeclear brand. The service provided impartial guidance on personal finance, tailored to individuals’ needs and circumstances. The Moneymadeclear service originally was set up in response to the Thoresen Review, commissioned by the Treasury in 2007, looking at how to bring generic financial advice to everyone in the UK.

Yesterday the Chancellor of the Exchequer Rt Hon Alistair Darling, alongside Chris Pond, FSA Director of Financial Capability, visited a money guidance session at Liverpool Mutual Homes to thank those involved with the pathfinder and to launch the national Moneymadeclear service.

Moneymadeclear aims to help people be able to be confident and informed when making financial decisions. The service also hopes to encourage them to take action before money worries become unmanageable money problems, though it will never recommend products or try to sell anything.

Moneymadeclear does this by helping people to:

Cope with changing circumstances, like a sudden drop in income;
Get the most out of a budget;
Save for a special event, or just a rainy day;
Borrow wisely;
Plan for retirement;
Understand tax and welfare benefits; and
Explain financial jargon.

Further information is available about national money guidance service on the FSA Moneymadeclear website.

New research shows the pressures faced by low earners

Money Advice Trust — Wed, 10 Mar 2010 00:00:00 +0000

The Resolution Foundation has published two new reports evidencing that low earners have struggled more in the recession compared to benefit dependent groups and higher earners.

The Resolution Foundation’s reports ‘The low earners audit’ and 'Behind the Balance Sheet’ highlight the vulnerable position low earners find themselves in and how they have particularly affected by the recession.

The reports show that low earners have:

Experienced reduced income than other groups ‐ 66% of 25‐34 year old low earners reported a fall in income compared to 50% in the benefit dependent group and 33% amongst the higher earning group;
Worked less hours ‐ the number of low earners citing lost income due to reduced working hours as a factor in difficulty meeting payments doubled from 2008 (rose from 3% in 2008 to 7% in 2009); and
Higher levels of personal inflation than higher earners ‐ low earners spend 41% of their income on essential items such as food and fuel, which have been the biggest drivers of price increases in recent years versus only 27% amongst higher earners.

View the full reports for further information, ‘The low earners audit’ and 'Behind the Balance Sheet’

Five steps to achieve best practice in debt collection

Money Advice Trust — Thu, 25 Feb 2010 00:00:00 +0000

Leading money advice charities are calling on the credit industry to join them in a conversation about how debt collection practice can be improved.

AdviceUK, Citizens Advice, the Institute of Money Advisers and the Money Advice Trust have published a report exploring debt collection practices. ‘Do the right thing’ argues that helping people in debt to pay back debts in a way that suits their circumstances is also advantageous for creditors and advice agencies.

The report is based on the experiences of advisers from across the free-to-client debt advice sector as well as interviews with creditors, and sets out five steps creditors should take to achieve best practice in debt collection:

Setting the right organisational culture;
Achieving the right motivation for debt collection staff;
Developing clear and encouraging communications;
Providing information and support; and
Being willing and able to maintain and develop best practice.

Further information about the report is available on the Citizens Advice website.

Strength Against Shocks: Low income families and debt

Money Advice Trust — Tue, 16 Feb 2010 00:00:00 +0000

IPPR research shows that the main cause of a household falling into problem debt, arrears and repossession is a drop in income.

The Institute for Public Policy Research (IPPR) has published 'Strength Against Shocks: Low income families and debt', which explores what the expansion of household debt has meant for the lives of low income families. In the decade to 2008, average household debt in the UK increased from 93 to 161 per cent of disposable income. The profile of borrowers widened to include lower income groups, but low-income households are the ones that are most vulnerable to debt problems.

Research was conducted with 58 low-income families in London, Newcastle, Nottingham and Glasgow, whose expenditure was tracked over a four month period to investigate patterns of income, spending, and borrowing. Amongst findings, IPPR research shows:

The main cause of a household falling into problem debt, arrears and repossession is a drop in income.
Not all low income families use consumer credit or get into debt but poverty and job insecurity increase vulnerability to debt problems.
Saving in advance can help families deal with fluctuations in income and expenditure.
Mortgage holders are particularly vulnerable when there is a fall in household income.

The report concludes that debt problems are rarely a result of 'bad' money management, makes a number of policy recommendations to address this.

Further information about the report is available on the IPPR website.

Mortgage Rescue Scheme has helped 1200 households

Money Advice Trust — Mon, 15 Feb 2010 00:00:00 +0000

Mortgage Rescue Scheme has helped 1200 households stop the immediate threat of repossession, with 276 homeowners having completed the full process since the scheme's launch last year.

Mortgage Rescue Scheme has been put in place by Government to support the most vulnerable homeowners facing repossession to remain in their home. It targets those families with dependent children, elderly and vulnerable groups at risk of repossession (that is, their lender is actively seeking possession of the property through the courts) who can no longer afford their repayments, and who would be entitled to homelessness assistance if repossessed.

Statistics published by Communities and Local Government for the October to December 2009 quarter report 4,310 households approached their local authority with mortgage difficulties and received free advice during this period.

Since the launch of the scheme in January 2009, 15,232 households have approached their local authority and received free advice. Around two-thirds of these households were provided with tailored advice or referred to their lender and/or a money adviser.

Further information about the statistics published on the Mortgage Rescue Scheme is available on the Communities and Local Government website.

Number of repossessions in 2009 lower than forecasted by the CML

Money Advice Trust — Fri, 12 Feb 2010 00:00:00 +0000

46,000 possessions were taken last year, which is lower than the CML's most recent forecast of 48,000, and significantly fewer than the 75,000 forecasted at the start of 2009.

The Council of Mortgage Lenders (CML) reported yesterday that mortgage arrears and possessions had declined in the last quarter of 2009.

Mortgage lenders took 10,200 properties into possession in the fourth quarter of 2009 - 13% lower than in the third quarter, and 2% down on the fourth quarter of 2008. The total possessions taken in 2009 were less than forecasted by CML but still 15% higher than the 40,000 in 2008.

Statistics published suggest that the numbers of households with lower levels of arrears are improving whilst numbers are little changed in cases with higher levels of arrears.

Further information about the statistics published on mortgage arrears and possessions is available on the CML website.

Helping over-indebted consumers

Money Advice Trust — Wed, 10 Feb 2010 00:00:00 +0000

A survey by the National Audit Office (NAO) survey found that 81 per cent of people who received the advice said it helped compared to 69 per cent for advice received from a fee charging professional and 59 per cent for advice received from a bank.

The NAO has published a report examining the cost effectiveness of the Department for Business, Innovation and Skills’s (BIS’s) face-to-face advice project and the coordination of BIS’s debt advice with other sources of advice in supporting the over-indebtedness strategy. The support provided by BIS covers both:

free face-to-face advice delivered exclusively through a project working with third sector providers, such as Citizens Advice, and delivered through 16 national and regional sub-projects; and
National Debtline, a telephone advice line funded by government and the private sector.

NAO reports that UK consumers had some £1,459 billion of outstanding debt as at November 2009, and personal borrowing represented 160 per cent of household annual pre-tax income. Over-indebtedness means that an individual is no longer able to service their debts.

Findings show that BIS’s face-to-face advice project is delivering good value for money, and makes recommendations for further efficiencies supporting the wider over-indebtedness strategy.

Further information on the report is available on the National Audit Office website.

Advice has a key role to play in improving mental health

Money Advice Trust — Thu, 21 Jan 2010 00:00:00 +0000

Youth Access today launches the results of the first ever study focussing on the relationship between social welfare problems, mental health and youth.

The Youth Access report 'With rights in mind' reviews evidence on whether advice about social welfare law problems may have a positive impact on mental health, among young people aged 13 to 25.

The key findings from the report include:

There are strong associations between social welfare problems (such as homelessness and debt), mental health and youth, regardless from which direction the relationship is viewed.
Social welfare problems and mental health problems tend to co-occur and can exacerbate each other.
Particularly strong associations were found amongst NEET (not in education, employment, or training) young adults and where homelessness was involved.
The provision of social welfare advice may have a significant beneficial impact on young people's mental health and well-being.

Barbara Rayment, Director of Youth Access, says:” This study provides tremendously important evidence for policy makers to take into account in formulating cost-effective responses to the impact of the recession. For the majority, the worst of the recession may be over, but Youth Access remains deeply concerned that the continuing rise of youth unemployment will lead to major increases in both social welfare problems and mental health problems in the medium to long term."

For more information visit the Youth Access website

New Centre for Responsible Credit Launched

Money Advice Trust — Thu, 14 Jan 2010 00:00:00 +0000

The Centre for Responsible Credit is an independent not for profit company that is being established with the support of the Centre for Economic and Social Inclusion

The Centre for Responsible Credit aims to:

Monitor the development of credit markets and financial services
Research models of responsible provision
Promote policies to protect the long term interests of households and support sustainable economic growth

Over the past thirty years households have become more reliant on credit as the means to secure homes, invest in education and skills, and smooth out fluctuations in income and expenditure. Taken together these uses of credit can be a powerful driver for economic growth. Ensuring access to credit is therefore vitally important.

One of the primary concerns for the Centre for Responsible Credit is ensuring that future credit provision is inclusive, balancing high levels of demand for credit with responsibility in its supply and use.

Further information on the work of the Centre for Responsible Credit , including details of its subscriptions package comprising weekly e-bulletins and our bi-monthly journal, can be found on their website www.responsible-credit.org.uk

Insolvency Service publish IVA protocol impact review

Money Advice Trust — Mon, 21 Dec 2009 00:00:00 +0000

The Insolvency service has now published its report into the impact of the Individual Voluntary Arrangement, (IVA) protocol, introduced in February 2008 as a voluntary code of conduct to facilitate the efficient handling of straightforward consumer IVAs.

The report looks at how well IVAs have been working since the protocol was established paying particular attention to

Compliance rate amongst IVA providers;
Creditors opinions of the protocol; and
Impact of the protocol on access to IVAs and levels of fees charged.

The report found that the top ten IVA providers accounted for almost 80% of the IVA’s processed during the period of the review.

The report draws attention to the high levels of modifications that are requested by creditors before an IVA can be agreed. IVA providers reported dissatisfaction about the limited impact of the protocol in this respect. In total, 97 per cent of IVAs were subject to a modification before being accepted and modification requests relate to three main areas; fees, contributions and terms of the proposals.

As part of the review, 2500 questionnaires were sent to individuals who had gone through the IVA process and had an IVA approved during the period 1 April 2008 to 31 March 2009.

80 per cent of those who had an IVA accepted during this time had been through one or more alternative debt remedies before embarking on an IVA and 71 per cent had been advised formally on alternative forms of debt relief available to them.

View the full report 'Review of the impact of the IVA protocol'.

New FSA figures show increases in both mortgage lending and repossessions

Money Advice Trust — Thu, 17 Dec 2009 00:00:00 +0000

New mortgage lending figures paint a mixed picture for UK homeowners. The FSA’s latest report on mortgage lending showed a 2.8% increase in the number of repossessions during the third quarter of 2009.

Conversely, the number of borrowers in arrears has fallen by 2% since the second quarter of 2009, but is up 16% on the third quarter of 2008.

The FSA data also indicates that lenders are loosening their purse strings, albeit very cautiously. Total lending is growing at a modest rate, but the proportion of lending that might be classified as “risky” continues to decline. Mortgage advances to those with low deposits and low incomes have declined over the last 12 months and this trend continued apace between July and September.

Overall, there are signs that the market is stabilising, without suggesting that there will be any swift return to the trends which preceded the global banking crisis.

Shelter responded to the repossessions figures positively, its director of policy and campaigns declaring: “Our new report out today shows that in eight out of ten cases where people got free legal advice through court desk schemes they avoided repossession. This is why the government must keep funding free independent advice in court.”

These figures cover a period which follows the introduction of Government schemes to help struggling homeowners, namely Homeowner Mortgage Support (HMS) and Mortgage Rescue Schemes. The effectiveness of these initiatives is being evaluated on an ongoing basis.

View the full FSA statistics on mortgage lending December 2009.

Report warns of more people being needlessly repossessed unless help for homeowners is strengthened

Money Advice Trust — Tue, 15 Dec 2009 00:00:00 +0000

Turning the tide? is based on detailed research into hundreds of cases seen by advisers who give last minute advice to people at court on the day of their repossession hearings.

AdviceUK, Citizens Advice and Shelter say the government package of support for homeowners is making a difference, but the report shows there are still gaps and too many homeowners are falling through the net. They are calling for urgent action by lenders, regulators and the Government to tackle these.

Turning the tide, found in a third of recorded cases the lender had failed to comply with new rules – known as the ‘pre-action protocol’ - requiring them to take court action only as a last resort after offering borrowers other options for dealing with their arrears. Despite this, judges took action to address this in only a handful of cases.

In general, sub-prime lenders who specialise in lending to riskier borrowers were found to be taking court action earlier than high street lenders, and a few sub-prime lenders in particular had many more court cases listed than their share of the mortgage market would suggest.

Job loss and other loss of income were the most common reasons given for mortgage arrears, and low income households were the most likely to lose their homes. While Support for Mortgage Interest (SMI) is a benefit specifically designed to help in these circumstances, many borrowers who ended up in court were paying higher monthly interest rates than would be covered by SMI payments and there was some evidence of shortfall in take-up.

The research shows that the advice provided by court duty desk advisers is crucial in helping people with a chance of recovery to avoid repossession. Almost eight out of ten (77%) of people whose cases were analysed in the survey avoided the immediate loss of their home But their circumstances suggested that up to half could find it difficult to sustain the repayments set by the court unless their incomes recover quickly, so they remain at high risk of repossession at a later date.

The report calls on all lenders to comply fully with the mortgage pre-action protocol. It also calls for a fundamental review of private and state safety nets, along with more flexible powers for courts to help borrowers stay in their homes. Funding for free, independent advice in court for people facing repossession action must be maintained as a priority, it adds.

View the full report 'Turning the tide?'.

Consumer Council for Water launch new online research resource

Money Advice Trust — Fri, 11 Dec 2009 00:00:00 +0000

The Consumer Council for Water (CCWater) is piloting a new research database which is a collection of research resources on consumer related and utility industry topics.

Currently, the database contains documents and research reports published by CCWater and in time will also hold reports, documents or links relating to research by our stakeholders and other bodies. Each reference contains the title and date of publication and a short abstract.

For more information visit the CCWater research database pilot.

135,000 householders benefit from improved lender forebearance

Money Advice Trust — Wed, 09 Dec 2009 00:00:00 +0000

The new figures provided by homeowner mortgage support (HMS) lenders and money advisers show;

Over 33,000 loans are in arrangements paying less than the contractural monthly payments or loans have been modified to make monthly payments more affordable for the borrower
6,000 of these loans are deferring interest as part of an arrangement equivalent to HMS, and only 15 have so far needed the formal backstop of HMS and have been registered for the Government-backed guarantee following the 5 month qualification period
Over 7,000 households have received free, independent money advice where HMS and other options were discussed since April 2009.

Lender forbearance and HMS has supplemented the additional measures designed to safeguard homeowners; including tighter rules so repossession is always a last resort, tougher tests for lenders in court so they must prove they have exhausted every possible option before taking repossession action, £130m for debt and advice services and the Mortgage Rescue scheme, (MRS).

Secretary of State for Work and Pensions, Yvette Cooper said:

"We know that families are struggling with their housing costs during this recession and we want to do everything we can to help. That's why when the recession hit, we shortened the waiting period and froze the rate at which we pay Support for Mortgage Interest at 6.08 per cent. We're now going to maintain that rate for a further six months, so that vulnerable families continue to get the help they need with their mortgage interest payments."

Credit Unions weather the recession

Money Advice Trust — Mon, 07 Dec 2009 00:00:00 +0000

A policy survey of its members carried out by ABCUL earlier this year, showed that 66% of credit unions had seen an increase in demand for loads from those on low incomes over the last year.

Reports indicate that it is not just those on low incomes who are making use of credit unions as there has been a 46% increase in demand from those on middle and higher incomes.

At the same time, the number of credit union members depositing money into credit unions has increased dramatically with 62% of members surveyed reporting 'slightly more' or 'significantly more' deposits than this time last year.

Despite this indication of a shift in consumer behaviours from a reliance on credit to increased levels of savings, credit unions are not immune to the impact of the recession.

The ABCUL survey also showed that 73% of credit unions had reported an increase in the number of people struggling to repay since the credit crunch and credit unions are being advised to be vigilant about bad debt.

For more information visit ABCUL's website

Private tenants are the hidden victims of the recession

Money Advice Trust — Fri, 27 Nov 2009 00:00:00 +0000

New research from Shelter and Money Advice Trust shows that a massive 1.3 million low-income households are struggling or falling behind with their finances and many feel under mental and emotional strain.

The research ‘Taking the Strain: The Private Rented Sector and the Recession’ also shows many landlords are finding it hard to cope, with more than 40 per cent either struggling sometimes or in constant financial difficulty. Some are even questioning their future in the sector which could leave many tenants vulnerable if landlords need to sell their properties suddenly.

Shelter and MAT commissioned YouGov to survey 745 renters on household incomes below £20,000 (£25,000 in London) and 440 landlords from the National Landlord’s Association to get a unique insight into the impact of the recession across the private rented sector.

The results show the daily battle tenants and some landlords are facing, yet many are failing to access advice and support. Among tenants:

90 per cent of respondents, equivalent to 1.3 million households across England and Wales, are struggling with their household finances - an increase of 56 per cent since a similar sample taken in 2006
Four in ten (39%), equivalent to around 600,000 households, feel their debts are harming their physical and mental well-being, rising to almost 50 per cent in households with children
60 per cent of tenants in receipt of housing benefit or local housing allowance receive less in payments than the cost of their rent, with almost a quarter making up a difference of more than £49 per week
Almost half of tenants (46%) falling behind with their finances had not received advice about their debts in the past year, with a quarter saying they were too embarrassed to ask.

Although most landlords said they were managing to ride out the recession, a significant minority are struggling or falling behind - with potential consequences for tenants:

41 per cent are struggling sometimes or are in constant financial difficulty
Close to half (47%) have tenants in arrears, rising to 57 per cent among landlords struggling or falling behind with their finances, and highest among those letting to housing benefit or LHA tenants (65%)
Almost a quarter (23%) expect to have to evict tenants because of rent arrears, while 30 per cent are now asking for bigger deposits
Almost one in ten (9%) of struggling landlords could not see themselves being landlords in 2010

With a range of Government schemes introduced over the past two years to help struggling homeowners, Shelter and MAT are calling on the government to address the issue of affordability in the private rented sector and invest in targeted advice and support for tenants.

The charities are also urging the government to take forward proposals for a national register of landlords which would help professionalise the sector.

Kay Boycott, director of policy and campaigns at Shelter, said: “This research paints a depressing picture of the daily battle faced by tenants at the lower end of the private rented sector, with many barely able to keep their heads above water.

“While we welcome the help that’s available for homeowners in arrears, private tenants who are struggling to keep their homes should not be forgotten.

“The government must recognise the significant role the private rented sector is playing in bearing the brunt of this recession by increasing funding for advice and support services, and setting out a long-term vision for the sector.”

Ms Boycott added: “Shelter and Money Advice Trust will be taking forward the results of this research by working together to better promote services targeted to those in the private rented sector. We urge anyone who is struggling to contact our free advice services as soon as possible to get professional advice and support.”

Joanna Elson, chief executive of Money Advice Trust, said:

“It is clearly a matter of concern that so many tenants and landlords are facing financial difficulties and don’t know where to turn. MAT and Shelter will be working to raise awareness of the availability of high quality independent free advice which we know can be a lifeline for those in debt.”

View the full report‘Taking the Strain: The Private Rented Sector and the Recession’.

Loan delays leave students in financial crisis

Money Advice Trust — Wed, 18 Nov 2009 00:00:00 +0000

A BBC survey has shown that universities are having to step in and hand out emergency ‘hardship loans’ in order to cover essential living costs such as rent and food bills after severe delays to the issuing of loans and grants to first year students.

Tens of thousands of students are still waiting for their loans due to delays after the Student Loans Company (SLC) took over from local authorities the job of processing applications for first year students. This coincided with an unprecedented rise in applications for loans fuelled by higher student numbers in the recession.

Many students without money have been forced to rely on bailouts from their families and friends for food and rent, or to lean on universities for financial assistance as they face the potential of having to drop out of their courses.

The Students Loan Company chief executive Ralph Seymour Jackson has provided no clear answers to when the present crisis will be resolved. In April this year, SLC explained the delay by pointing to technical problems with their scanning equipment. Despite having had several months to fix this, technical issues continue be blamed for the current crisis.

The higher education minister David Lammy has now ordered an independent inquiry into the issue whilst HM revenue and customs will be leading a review of the SLC in light of the delays in processing this years student loans.

More than 20 million people are over-indebted in Europe

Money Advice Trust — Tue, 03 Nov 2009 00:00:00 +0000

European Consumer Debt Network (ECDN) calls upon European decision-makers to take urgent action in tackling European levels of over-indebtedness

A European alliance of over 40 debt advice organisations, consumer agencies and researchers known as the European Consumer Debt Network (ECDN), have written an open letter to EU Prime Ministers and Head of States urging them to tackle over-indebtedness as part of the European action day financial inclusion.

Hans Grohs, President of ECDN says, "With the increasing unemployment rates the number of people with debt problems can be expected to grow substantially over the next months". Investments in preventing and tackling over-indebtedness have scarcely been included in the several billion of Euros that were spent on measures designed to tackle the current crisis. Measures have been put in place to help businesses access financing and cut red tape in order to survive the downturn and thus keep more people in work. These are effective measures for the prevention of over-indebtedness, but more are required."

In 2008 ECDN launched a European action day on financial inclusion to be held each year on the 31st of October. This year the emphasis is on reminding EU leaders that many countries across Europe still lack specific debt regulation, legislation and specialised debt advice services as well as effective credit laws and regulations for responsible lending.

ECDN’s letter includes several recommendations aimed at strengthening financial inclusion in Europe through;

Introducing and improving debt settlement legislation;
Improving access to free independent advice services;
Campaigning for the right to a basic bank account and access to adequate banking services; and
Developing guidelines on responsible credit, financial education and robust data collection on over-indebtedness.

View the open letter on the European Consumer Debt Network website.

Public attitude towards bankruptcy has softened

Money Advice Trust — Thu, 29 Oct 2009 00:00:00 +0000

Research published by the Insolvency service which examines attitudes to bankruptcy shows that overall, there has been a reduction in the percentage of respondents who agree that there is a stigma associated with going bankrupt.

The numbers of respondents who agreed with the question, ‘Is there a stigma associated with bankruptcy?’ fell from 71% in 2004 to 64% in the 2009 survey.

When asked about their perceptions, members of the public who had not been made bankrupt were more likely to report lower levels of stigma in 2009, (43%) when compared with those who had been made bankrupt, (77%).

The report highlights the main factors contributing to the creation of stigma as:

the advertisement of a bankruptcy order;
attending court;
being unable to repay debts;
problems in obtaining a bank account; and
an adverse credit rating.

The research is based on a survey of bankrupt individuals, bankrupt businesses and non bankrupt members of the public undertaken in January 2009. This research provides an update to previous surveys undertaken in 2004 and 2006/7 as part of the overall evaluation of the changes to insolvency provisions introduced as part of the Enterprise Act 2002.

View the full report ' Enterprise Act 2002: Attitudes to Bankruptcy 2009 Update.'

Gamblers in debt need better education and joined-up help

Money Advice Trust — Wed, 28 Oct 2009 00:00:00 +0000

Research which examines the links between gambling and debt has shown that debts up to £60,000 might be commonplace amongst problem gamblers.

The research, a groundbreaking collaboration between Gamcare, the Money Advice Trust (MAT), Manchester Metropolitan University (MMU) and the Salvation Army, found that:

Understanding of problem gambling amongst money advice agencies and in the NHS is extremely low
Awareness of the help available to problem gamblers amongst these agencies and in the NHS, particularly GPs, is equally poor
There is an urgent need to improve education about gambling for young people, alongside or as part of work on financial literacy and understanding chance and risk.

Gamcare Chief Executive Andy McLellan said;

“The way in which we and our partners in this research came together to tackle the problem shows that there is a commitment to being joined-up, and demonstrates the importance of co-operation rather than competition between agencies. We must and will build on this.”

Money Advice Trust Chief Executive Joanna Elson said:

“This is ground breaking work because very little research exists about the links between problem debt and problem gambling. A practical outcome of this work is the development of a simple “screen” that advice agencies might use to help them identify when problem gambling is a cause of debt. This will help us with our vision: reducing the number of people with unmanageable debt”.

The research report also recommended:

Action for banks and the credit industry, including publicising helplines
Linking with the Youth Justice Service and the criminal justice system
A joined-up approach to self-exclusion within the gambling industry
Improving awareness amongst employers of problem gambling and the measures they can take to help their employees, eg using blocking software to prevent employees from gambling at work.

The executive summary of the 'Gambling and Debt Pathfinder Study' is available on the information hub and the full report will be updated shortly.

New debt advice pilot project goes live across the UK

Money Advice Trust — Tue, 20 Oct 2009 00:00:00 +0000

The Money Advice Trust is working in partnership with lenders, the debt collection industry and the advice sector to develop a streamlined, self-help debt advice service to increase the availability of debt advice.

Currently, demand for debt advice outstrips capacity and advisers are seeing more clients who are able to work on resolving their own debt problems. This new initiative, CASHflow, is being funded by The Department for Business Innovation & Skills.

CASHflow is an assisted self-help debt advice resource, which will support clients to make repayment offers directly to their creditors, with assistance from a third-party money advice agency. The project builds on the work carried out by a self-help Debt Advice Services Working Party, comprising advice providers, major lenders and trade bodies. The forum was set up to take forward recommendations made in a report by the national charity Citizens Advice. View the full report 'With a little help from my friends'.

Important features of CASHflow include;

Use of a logo that will be easily recognised by both lenders/creditors and clients to provide reassurance that the advice provided is independent and that clients have received holistic money advice.
Consistent working practices and standards of advice across all CASHflow advice providers.
An agreement from lenders/creditors to treat offers made by people using CASHflow in the same way as those made by third party debt advice agencies.
Development of a streamlined advice process which should free up advisers’ time to deal with other clients whose debt problems are not easily addressed through the assisted self-help route.

Joanna Elson of the Money Advice Trust has stated “The CASHflow, self-help route will enable people in financial difficulty to ‘self-help’ and will free up advisers’ time to work with clients who require on going face-to-face support. This week, the pilot project goes live in 24 advice agencies across England, Wales, Scotland and Northern Ireland, which we expect will help many more people with unmanageable debt going forward”.

Kevin Brennan MP, Minister for Consumer Affairs welcomed the initiative saying: “The Government is determined to put consumers back in the driving seat of their finances. CASHflow is an important project giving people who are having difficulty dealing with their debts access to a streamlined web-based, phone and face-to-face advice service to help them to help themselves."

Changes in the behaviour of low-income families in the recession

Money Advice Trust — Wed, 14 Oct 2009 00:00:00 +0000

At a time when the next Government will be looking to make savings in public expenditure, initiatives to encourage families to save must be expanded not cut argues leading think tank the Institute for Public Policy Research (ippr).

Research published by the ippr looks at how the recession has changed the spending, saving and borrowing habits of low-income families in London, Newcastle, Nottingham and Glasgow.

The research shows that although many low-income families want to save money, they are struggling. This is because increases in the price of necessities like fuel and food, and rising unemployment have disproportionately affected low-income families.

ippr found when speaking to low-income families around the country, that most parents felt considerable pressure and anxiety about their ability to provide for their children now and in the future.

ippr argues that at a time when public expenditure is under scrutiny, initiatives to encourage families to save must be expanded, not cut.

The Conservatives have recently announced that they would drastically cut back the Child Trust Funds (CTFs), so only the poorest third of families and disabled children would get one in future. This would mean that children in families with an annual household income of just £18,000 would no longer have this asset.

Kate Stanley, Programme Director at ippr said:

“Our research shows that parents want to save for their children’s future. The Child Trust Fund offers a way for parents to know that their children have some savings – and it may be the only way to ensure all children have a stake in society when they enter adulthood.

“Conservative Party proposals to cut the Child Trust Fund so that only the poorest one third of families and disabled children get one in future is entirely inconsistent with George Osborne saying at every stage the Conservatives will support a culture of savings.

“ Our research shows that families on low and modest incomes consider saving for their children very important but really struggle to do so.”

ippr's spending and debt research also shows:

Many families are using community based and informal approaches to saving, as a result of hostility towards and a lack of trust in the banks – particularly as guarantors of savings. The research has found that knowing and trusting the people who worked in the credit union or run the savings scheme is seen to be an important factor for the families.
Many families feel less financially secure compared with the same time last year and are concerned about their future financial stability.
Families told us how they prioritise their children’s needs – often using sophisticated budget and coping strategies - to make sure that their children are not going without.

View the full report 'When Times are Tough'.

Half of adults in debt may have a mental health problem

Money Advice Trust — Thu, 08 Oct 2009 00:00:00 +0000

New research published today states that one in two British adults in debt may also have a mental health problem.

A literature review which has been endorsed by Stephen Fry and Alastair Campbell was published by The Royal College of Psychiatrists and Rethink, funded by the Money Advice Trust and the Finance & Leasing Association.

This report considers the published evidence on the relationship between debt and mental health problems.

The report shows that plausible evidence exists from longitudinal research studies that indebtedness is often subsequently followed by mental health problems, whilst cross-sectional surveys indicate that the greater the number of debts a person has, the higher their risk of also having a mental disorder.

The report makes several recommendations on what the financial services sector, the money advice sector and health and social care professionals should do to support individuals with both debt and mental health problems. The recommendations include:

The need for creditor codes of practice to recognise, at a minimum, the existence of customers with mental health problems.
Money advisers to provide appropriate signposting to relevant organisations for clients who are not already receiving therapeutic support
Primary care professionals to routinely assess for depression and other common mental disorders for clients who report over indebtedness.

Joanna Elson Chief Executive of the Money Advice Trust stated “Half of adults in debt may have a mental health problem. The findings of today’s report illustrates the vital role the advice sector has in ensuring that vulnerable clients are able to access appropriate sources of advice and support”.

Adam has bipolar disorder and has spoken about his experiences of debt and mental health. "Through my experience of the health care services I think it’s crucial that health care professionals areable to help get to underlying debt problems. If I had been correctly diagnosed when I first made contact with my GP and referred to a free independent debt advice charity, I would have found the situation much easier to cope with. Having access to independent free advice would have alleviated my fears of bailiffs and the situation could have been resolved much earlier."

Strategist and communications expert Alastair Campbell, Mind champion of the year, also supports the research “One in four of us will directly experience mental illness during our lifetime. For many, those problems are exacerbated by financial problems, sometimes in part caused by the mental health problems. It cannot be entirely a coincidence that the word depression has aneconomic as well as a health meaning. According to Credit Action, personal debt in the UK stands at £1,457bn. This report emphasises the need for all the relevant agencies to work together to ensure that both mental health and financial difficulties are identified so appropriate support can be provided”.

Comedian and writer Stephen Fry commented. “My own bipolar condition has caused me to go on many giddy spending sprees so I have first-hand experience of the difficulties of debt brought on by poor mental health. I fully support the new research in this area and the recommendations which have been made to both the health care and the financial services sectors. An understanding of the relationship between mental health and unmanageable debt should ensure that appropriate advice and support is provided to those who need it”.

View the full report 'Debt and mental health. What do we know? What should we do?

Numbers of new mortgage arrears cases fall

Money Advice Trust — Mon, 28 Sep 2009 00:00:00 +0000

Statistics from the Financial Services Authority (FSA) show that the numbers of new mortgage arrears cases have fallen for a second quarter spurred on by low interest rates

The key findings from the FSA include;

a 14 per cent reduction in the number of new mortgage arrears cases when comparing Q1 and Q2 2009 statistics
lower levels of mortgage lending advanced to consumers with an impaired credit rating and,
a nine per cent drop in the numbers of new mortgage possession cases when comparing Q1 and Q2 2009 statistics.

Despite these signs of improvements, homeowners already in arrears with their mortgages are struggling to repay their lenders and the total number of loan accounts has been steadily on the increase since 2007.

In response to the plight of homeowners the government recently launched a new national campaign to help struggling homeowners take control of their finances and make the most of the support available for them to avoid repossessions and stay in their homes.

Homeowners can visit Directgov www.direct.gov.uk/mortgagehelp for sources of free independent advice or contact National Debtline on 0808 808 4000 for free, confidential and independent telephone advice.

Most borrowers with mortgage arrears stay in their home

Money Advice Trust — Wed, 16 Sep 2009 00:00:00 +0000

Research published this week by the Building Societies Association (BSA) finds that the majority of borrowers that fell into arrears in their mortgage over the last two years either have repaid or are currently repaying their arrears.

97% of borrowers that went into arrears during the last two years have not faced repossession and remain in their homes.

Borrowers that spoke to their lender promptly were more likely to repay their arrears than those who waited to make contact.

Paul Broadhead, Head of Mortgage Policy at the BSA, said:

“While falling into mortgage arrears is always a worrying experience for the individuals involved, most borrowers do manage to repay their arrears and stay in their homes.

“The results highlight the importance of borrowers contacting their lender as soon as they face potential payment difficulties, and seeking independent advice. Doing so enables the lender to consider all reasonable options to assist the borrower.

“Borrowers that have been in arrears believe that their lender has been helpful and has treated them fairly. Those that face payment problems should therefore not be daunted by their arrears, but should take control of the situation by seeking help as soon as they can.”

Joanna Elson, Chief Executive of the Money Advice Trust which runs National Debtline, added,

“I welcome the BSA’s research findings. At National Debtline we assist many people with mortgage arrears, and we know that those who seek early independent advice often have more options.

“This is supported by today’s research which found that of the borrowers surveyed; those that had received independent money advice were more likely to have either repaid their mortgage arrears or to be in the process of doing so.

“We also know from our own independent evaluations that those who seek independent advice feel more empowered to deal with their finances going forward.”

The findings are the result of a survey of 451 borrowers who had missed two or more consecutive payments on their mortgage over the last two years.

Main findings:

The majority of borrowers that have been in arrears have stayed in their homes, and have repaid or are repaying their arrears.

Borrowers that spoke to their lender promptly were more likely to repay their arrears.

Borrowers that sought independent debt or money advice tended to have repaid their arrears.

Arrears were frequently due to fluctuations in income or expenditure.

Most borrowers believe they have been treated fairly by their lender, and think that their lender was helpful through the arrears process.

The most common source of the funds to repay arrears was to work more.

View the full report: 'Undertstanding Mortgage Arrears'

Debt and benefits enquiries soar as recession takes hold

Money Advice Trust — Tue, 08 Sep 2009 00:00:00 +0000

As the Citizens Advice Bureau service turns 70 record numbers of people are turning to the charity for help with recession-linked problems of job loss and debt.

New figures show Citizens Advice Bureaux in England and Wales dealing with 9,300 new debt problems and 8,000 new benefit problems every working day.

Debt problems shot up 27% and enquiries about welfare benefits leapt by 22% in the three months to the end of June 2009 compared with the same period last year. At 1,671,183 the total problem count for the three months April – June 2009 was up by 17% on the same period last year.

Enquiries about job seekers allowance doubled (up 99%) and redundancy-related problems went up by three-quarters (74%), while problems with mortgage arrears were up 44% and fuel debts up 53% compared with the same period last year.

View the full press release from Citizens Advice.

Rent and mortgage arrears information goes online

Money Advice Trust — Tue, 01 Sep 2009 00:00:00 +0000

People behind with payments on their home will have a new way of finding the best solution to their arrears problems, with the publication of new information and advice by the Ministry of Justice.

New animated videos, interview clips and articles featured on DirectGov, go from the point where there may be a problem, to communicating with landlords or mortgage lenders, how to prepare for court and what happens during and after a court hearing.

The videos and articles are designed to answer questions asked by people in arrears. A key point is how you can avoid having to go to court altogether, as well as who may be able to help you deal with any debt or financial problems you are facing. There is also practical information on the court process, the kinds of question the judge may ask, and what can happen after a court hearing.

Follow this link to visit the mortgage arrears guide on DirectGov.

Follow this link to visit the rent arrears guide on DirectGov.

Right-to-buy owners struggling to pay their mortgages

Money Advice Trust — Wed, 26 Aug 2009 00:00:00 +0000

Mortgage repayment problems and having additional loans secured on their properties are likely to leave right-to-buy owners at increased risk of losing their homes, according to a new survey commissioned by Consumer Focus.

A survey of 1,800 mortgage holders in Britain found right-to-buy homeowners are:

twice as likely as non-right-to-buy homeowners to have had problems paying their mortgage in the last three months
50 per cent more likely than others to have additional mortgages or loans secured on their homes.

Consumer Focus is calling on Government, with the help of Local authorities and housing associations to implement a dedicated campaign targeting this group.

It is hoped this would raise awareness of the recently introduced government schemes to support homeowners and provide a signposting service for additional sources of advice and support.

View the full Consumer Focus Briefing.

Mortgage Rescue Scheme: slow but steady progress

Money Advice Trust — Fri, 14 Aug 2009 00:00:00 +0000

Communities and Local Government has published fresh statistics today on the progress of the £200 million pound ‘Mortgage Rescue Scheme’ initiative.

The scheme was set up in January to help vulnerable families at risk of having their home repossessed.

The scheme has processed 15 applications since its launch in January. During June, 282 households applied for the scheme. Forty-six of these applications were accepted, with only nine households signing up by the end of the month.

In response, Housing Minister John Healey said people most at risk would be able to get help quicker in future.

"To make sure families are getting the support they need, I can confirm that from next month a new central team will operate to manage and fast-track the cases of those most at risk of repossession," he said.

View the most recent statistics on the information hub.

A new way of paying for fuel could help thousands of people avoid falling into the fuel poverty trap, according to leading charity National Energy Action (NEA).

Money Advice Trust — Mon, 03 Aug 2009 00:00:00 +0000

A new NEA report, funded by the Money Advice Trust gives details of a new payment model that NEA says would help vulnerable households better manage their fuel bills greatly reducing the risk of fuel poverty and fuel debt.

By combining schemes that are already in use such as Fuel Direct, simple accessible cash accounts and direct debit payments that open up preferential tariffs, the numbers of people experiencing difficulty in paying their fuel bills could be significantly reduced.

Although recent action by energy regulator Ofgem has seen unfair payment differentials associated with pre-payment meters reduced they still do not offer the best deal, costing up to £290 a year more than the best online tariffs.

This leaves many poorer households out of pocket as they are less likely to have access to the internet and may not have a bank account so cannot take advantage of direct debit discounts.

Significant increases in fuel prices over recent years and the surge in redundancies due to the ongoing credit crunch, has pushed the number of households in fuel poverty, defined as when a household is required to spend more than ten per cent of its income on total fuel use, to almost five million.

Maria Wardrobe, Director of Communications at NEA said: "It is vital that vulnerable households are not paying more for their fuel because an optimal payment method has not yet been developed.

"It's essential that consideration is given to other payment methods in order to improve access to the energy market and the lowest available tariffs, giving back control to the end user through their improved financial and social inclusion".

Joanna Elson , Chief Executive at the Money Advice Trust said: "At National Debtline we've seen almost a tripling of the proportion of clients with fuel debts in the last three years and other advice agencies have seen a similar trend.

With five million families across the UK in fuel poverty we clearly need to look at ensuring payment methodsfor fuel are as affordable as possible. This research is a useful contribution to that debate".

View the full report ' What scope is there for the development of a new fuel payment method in the UK?'

A growth industry? An independent review of the fee-charging debt management industry.

Money Advice Trust — Fri, 24 Jul 2009 00:00:00 +0000

Almost ten years since the first independent research into fee-charging debt advice and management, the Money Advice Trust commissioned this review to provide an update on the fee-charging debt management industry in the UK.

The fee-charging debt management sector has grown over three fold in the last ten years, customers and creditors have a very mixed experience of the sector and the OFT should require these companies to be clear when they promote their services that beyond initial contact, their services are provided at a cost.

These are the three main conclusions of an independent review of the fee-charging debt management industry published today by the Money Advice Trust.

Other Key findings of the report, carried out by the Personal Finance Research Center at University of Bristol are that both customers and creditors described a mixed picture of working with fee-chargers, identifying both good and poor practice. Some creditors had good working relationships with some fee-chargers, and some customers were satisfied with the service they received. However, poor practice identified includes:

Customers noting that some fee-chargers told them the level of fees very late in the process, some feeling they were in a worse financial position than before they contacted the company
Customers noting that creditors were being paid late by the fee-charging company, or not at all
Creditors noting that there was considerable variation in the standard of financial statements received
Creditors’ concern about high levels of fees and charges

Publishing today’s report, Joanna Elson, Chief Executive of the Money Advice Trust said

‘Free independent debt advice offers a holistic service to those in debt, seeking to ensure clients receive the best advice for their situation. Fee-charging debt management companies may also aspire to give best advice, but their motivation and business model - in aiming to sell products - are different.

Consumers can of course choose to pay for debt advice – and this research shows that between two and three times as many are on feecharging debt management plans as those from the free sector - but this should be an informed decision. That’s why we recommend that the OFT ensures that customers are clear about fee levels and cost structures - including upfront fees - before they enter into an agreement with a fee-charger.

This independent review of the fee charging sector highlights a mixture of both good and bad practice experienced by both consumers and lenders when working with this sector. We applaud the good practice and are keen to work with the fee-charging sector to drive up standards, including ensuring better use of the Common Financial Statement. We also want creditors to build on the good practice many of them already adopt to ensure that customers know about free alternative early in the debt management process.’

View the executive summary: An independent review of the fee-charging debt management industry.

View the full report: An independent review of the fee-charging debt management industry.

A cultural shift in how lenders manage mortgage arrears?

Money Advice Trust — Fri, 17 Jul 2009 00:00:00 +0000

A new report launched by Shelter examines the changing forbearance tactics of lenders and finds that there is a cultural shift in lenders’ management of mortgage arrears, prompting a move away from ‘pay or possess’ to a increasingly client centric a

A positive headline finding from this report is that lenders are recognising the benefits of making contact with clients in arrears earlier. This gives lenders the opportunity to explore a greater range of forbearance tactics to help their customers repay their arrears including:

Greater use of payment holidays
Greater willingness to extension mortgage terms
Reductions of monthly instalments
Waiver of redemption fees
Offering access to advice services
Pre empting arrears through early risk assessment and pro active contact with clients

This reflects a shift change from lenders’ previous approach to arrears management which often included the offer of a remortgage or a secured loan to clear arrears. This saw loan-to-value ratios of 90% or more peak in 2007.

One area of concern is whether the changes in arrears recovery policy and practices will be sustained when the housing market recovers.

Presently, lenders’ responses to the market downturn and the Government’s expectations of lenders are largely synchronised. However, as the economy moves out of recession, the current business case supporting the shift towards forbearance may be challenged.

View the full report, 'Uncharted Territory'.

Better protection for those struggling with debt. The Money Advice Trust welcomes today's consumer white paper

Money Advice Trust — Thu, 02 Jul 2009 00:00:00 +0000

The consumer white paper released today has been drafted through consultation with various money advice sector agencies, including the Money Advice Trust

The new legislation includes a range of measures aimed at protecting vulnerable consumers during these difficult times. These include measures such as;

New legislation to fill a gap in protection for private renters whose landlord is getting repossessed.
Ban on unsolicited credit card cheques.
Office of Fair trading to review high cost credit, defined as 50+% APR including both sub prime products i.e. payday loans, home credit ect and mainstream overdrafts with high APR’s.
Tighter regulation for Bills of Sale from Spring/Summer 2009.
Early implementation of a self-help debt advice pack.

CEO Joanna Elson has welcomed today’s white paper, "We feel greatly encouraged; today’s Consumer White Paper is the result of a thorough and detailed consultation process and I am delighted that our recommendations, along with other sector providers have been included.

We estimate that over 4 million people will need debt advice during 2009 and we have been working with lenders, advisers and Government to ensure that the help they need is available. We welcome the measures announced by ministers today to help people further through the downturn.

In particular, we have been working towards an ‘assisted self help’ project, aimed at helping in particular those made newly redundant to cope with their debts, with a little support from advisers, and the Government’s financial support announced today for this will be key in making it happen. The project has received £500k funding from the Department for Business, Innovation and Skills. We estimated this would save about three hours of precious advice time per client (i.e. reducing an average five hour input from a face to face money adviser to a little over 90 minutes)

We have also been talking to lenders and advisers about ensuring there are sensible measures in place to assist those in debt who also have mental health problems, and would strongly support the Government’s call for these tried and tested guidelines to be actively progressed by lenders, building on current good practice by some.

When we met with the Prime Minister in March we asked that the thirty day ‘breathing space’ that was being extended by lenders to assist those in financial difficulty should also be available to those with council tax and other debts and the Government’s announcement today that they are pursuing this idea via a council tax collection protocol is clearly further good news".

Citizens Advice issue warning over increasing use of Charging Orders

Money Advice Trust — Thu, 25 Jun 2009 00:00:00 +0000

Citizens Advice reports that some creditors are using the threat of court action, in particular the use of charging orders, as a business practice to intimidate people in financial difficulties to pay more than they can reasonably afford.

The evidence for this report is made up of real cases from Citizens Advice Bureaux accross England and Wales.

More recently, bureaux have started to report that creditors are asking courts to enforce charging orders through an order for sale, to recover the debt by forcing the sale of a property.

Citizens Advice Chief Executive David Harker said:

“The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors.

Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors.”

The charity welcomes the Office of Fair Trading review into the use of charging orders but is now calling on the Ministry of Justice to look at the law and restrict access to enforcement when debtors are doing all they can.

David Harker added: It is vital that people who are doing their best to repay their debts should be protected from further debt collection or enforcement action and from enforcement related costs that are disproportionate to the size of the debt. The current law on charging orders urgently needs reviewing and appropriate protection put in place.”

Citizens Advice is also calling on the Government to implement the debt management provisions of the Tribunals Court and Enforcement Act 2007 to restrict the creditors’ rights to enforcement action and enable debtors to make affordable repayments to their creditors which are binding.

Follow this link to view the full evidence report: 'Out of Order'.

New housing debt helpline launched in Wales

Money Advice Trust — Wed, 17 Jun 2009 00:00:00 +0000

The Wales Co-operative Centre and the Consumer Credit Counselling Service have launched a new housing debt helpline to support people vulnerable to losing their homes. Funded by the Welsh Assembly Government, the ‘Housing Debt Helpline Wales’ offers support to home owners and those in rented property who are finding it difficult to meet their mortgage or rental payments.

Follow this link to visit the 'Housing Debt Helpline Wales' homepage.

Citizens Advice launches online debt advice campaign for young people

Money Advice Trust — Mon, 15 Jun 2009 00:00:00 +0000

Young people who have struggled with debt problems and sought advice to overcome them have created two entertaining documentary style short films in a bid help others in the same situation.

The films focus on issues which relate specifically to the debt experiences of younger people.

One is a tale recounting how going overdrawn by £1 quickly resulted in a £600 debt.

The second focuses on a young, self confessed shopaholic who succumbed to the lure of student loans, overdraft limits and store cards to fulfil a void of unhappiness.

The films were made as part of the Advice Changing Young Lives project, a pioneering three year initiative funded by HBOS foundation. Citizens Advice and YouthNet are working together to provide money advice to 16-25-year-olds both online and via mobile phones.

In all, more than 50,000 under 25s visited a CAB in England or Wales in 2008/09 to get help on debt and recent research undertaken by Citizens Advice and young people’s charity YouthNet showed a quarter of 16-24 year olds have suffered mental health issues because of their finances.

Follow this link to view the short films.

The Council of Mortgage Lenders publishes new guidance on buy-to-let arrears

Money Advice Trust — Wed, 10 Jun 2009 00:00:00 +0000

The new guidance will reinforce the message that lenders should act fairly when dealing with cases of arrears on buy-to-let mortgages, taking individual circumstances into account before deciding upon a particular course of action.

The guidance will apply only to buy-to-let loans for England and Wales when both the borrower and lender clearly understood that the property was to be let to a tenant.

The new guidance will strengthen the protection to tenants in buy-to-let properties in cases where a tenancy was already in place prior to the buy-to-let mortgage being agreed. In cases of this nature lenders will normally only take possession subject to the terms of the tenancy.

The Council of Mortgage Lender guidelines also comment on situations where there is a non buy-to-let tenant. In these instances a home-owner will have been granted a tenancy without the lender’s consent. The CML has given the following guidance,

‘Where this occurs, the lender should, however, consider carefully whether seeking vacant possession is the right option. In deciding what to do, the lender should also take into account the position of the tenant as well as their primary obligation to the borrower.

It is quite likely that the tenant may not have known there was a mortgage on the property and will therefore be unaware of any lender requirements for letting it. In this case, the lender needs to look at the tenant’s position carefully and be sensitive to the fact that, if they choose to seek vacant possession, the tenant could end up losing his home because the borrower has acted wrongly’.

Overall, the new guidance reinforces that lenders are flexible and do not adopt a “one size fits all” approach to dealing with cases of arrears. Instead, lenders are encourages to use the full range of available options.

Mortgage Rescue Scheme has yet to make an impact.

Money Advice Trust — Tue, 09 Jun 2009 00:00:00 +0000

Communities and Local Government has recently published data on the impact of the recently introduced ‘Mortgage Rescue Scheme’ which was designed to help the most vulnerable homeowners avoid possession.

Early indications show that the scheme has yet to make an impact assisting just two families since its launch in January.

The existing mortgage rescue scheme has two elements,

1. the 'Government Mortgage to Rent' option which involves a RSL purchasing the homeowner's property, enabling the household to remain in the property as a tenant on an assured short hold tenancy, paying an intermediate rent; and

2. the 'Shared Equity' option which involves a RSL providing a loan to the homeowner to enable the homeowner's monthly mortgage payments to be reduced

The scheme, predicted by the government in January to help up to 6,000 households avoid possession over the next two years is likely to gather momentum as more households seek advice on mortgage related debts. To date, 4200 households have sought advice from local authorities on the Mortgage Rescue Scheme and 376 applications are currently being processed.

The scheme has specific entry criteria meaning it is only an option for those who are at risk of homelessness and have dependant children, are pregnant or vulnerable due to old age, physical or mental health. This means that of the 1084 people that sought advice from local authorities on mortgage debt in April, just under half were considered eligible to be referred for the scheme.

200,000 people in Britain are at risk from illegal loan sharks because they cannot access credit from traditional lenders

Money Advice Trust — Tue, 26 May 2009 00:00:00 +0000

A new report from the New Local Government Network has highlighted the role that local authorities can play in supporting credit unions and increasing the supply of affordable credit union loans within their communities.

Circling the Loan Sharks - Predatory lending in the recession and the emerging role for local government points out that the current climate is ripe for loan sharks to thrive with high levels of unemployment, a growing proportion of the population excluded from mainstream credit and the diminishing availability of regulated sub prime credit meaning that a sizeable number of people have little option but to borrow from illegal lenders.

The report predicts that an additional 35,000 people are likely to have to use loan sharks during the recession but admit that the figure could be even higher. The think tank is urging local authorities to put additional resources into local credit unions and even to use new Council Banks to offer affordable credit to people who can’t access high-street loans.

According to the New Local Government Network, local government is best placed to deal with the practice of legal lending and aid the most vulnerable residents in their communities.

The report recommends a number of policy options local authorities should adopt to support credit unions including offering premises, sharing facilities and offering marketing support; offering adequate financial support to provide capital for affordable lending; establishing new credit unions and acting as a catalyst where third sector lending is insufficient.

View the full report Circling the Loan Sharks - Predatory lending in the recession and the emerging role for local government

Some lenders still not doing enough to prevent repossession, despite improvements

Money Advice Trust — Fri, 15 May 2009 00:00:00 +0000

New research by leading advice agencies shows mainstream lenders’ practices have improved, whereas some lenders are still not fully using Government schemes to help struggling homeowners, in particular those in the sub-prime and second charge sector.

AdviceUK, Citizens Advice, the Money Advice Trust and Shelter have conducted a survey of their advice experts to see how Government mortgage repossession schemes are working on the ground.

The survey has found that while 51% of advisers surveyed reported an improvement in mainstreamlenders practices since the Pre Action Protocol came into force, only 20% of advisers report that sub-prime and second charge lenders’ arrears collection practices have improved since the new guidance for judges was established.

National Debtline also conducted a survey of its clients, which reflects the experiences of advisers. 58% of callers in arrears with their first charge loan said the solution offered to them by their lender was affordable when told about repayment problems. This contrasts with only 39% of callers in arrears with their second charge loan who were offered an affordable solution.

AdviceUK, Citizens Advice, Money Advice Trust and Shelter are calling on all lenders to fully comply with the Pre Action Protocol and industry guidance to help prevent rising repossessions.

The surveys come ahead of new repossession and mortgage arrears figures due out today from the Council of Mortgage Lenders and the Ministry of Justice. Other findings from the adviser survey include:

74% of advisers agree that following the launch of the Pre-Action Protocol judges are asking more questions about lenders’ attempts to reach the borrower before taking court action (compared to 24% who disagree)
46% of advisers surveyed report no real difference in lenders’ practice following the changes to Support for Mortgage Interest; yet
30% report that lenders are less likely to proceed with possession action through the courts following the changes to Support for Mortgage Interest
80% of advisers surveyed report that clients move into the private rented sector following repossession
82% of advisers report that clients need debt advice after being repossessed.

Joanna Elson, chief executive of the Money Advice Trust said: “Money Advice Trust applauds the improvements that many lenders have made in their practices. In the current climate, where 800 repossessions happen a week, it is vital that lenders adhere to the standards in the protocol. I welcome the fact that 51% of those surveyed found mainstream lenders’ practices have improved; clearly we need to ensure that this applies to alllenders.

“One of the findings was that a major obstacle to accessing the government mortgage to rent scheme was the bar on those with negative equity; and we therefore welcome the Government’s announcement in the Chancellor’s Budget that this scheme will now apply to those in negative equity.”

Citizens Advice Chief Executive David Harker said: “The results of these two surveys show that currently, mainstream lenders are doing much more to help struggling homeowners than sub-prime and second-charge lenders.We want all lenders to be doing as much as possible to prevent people losing their homes. This means providing an understanding and constructive response and helping their customers come to a manageable solution.

Citizens Advice Bureaux in England and Wales saw a 49% increase in the number of new enquiries about mortgage and secured loan arrears last year. People who are struggling to pay their mortgage should speak to their lender straight away and seek advice.”

Steve Johnson, chief executive of AdviceUK said: “The members of the AdviceUK network have reported a significant increase in the demand for debt advice over recent months, especially from homeowners who have either been made redundant or made to reduce their working hours.

“The Government’s initiatives aimed at helping homeowners who are experiencing financial difficulties are therefore very welcome. It is clear from the research, however, that some lenders could do a lot more to help borrowers remain in their homes.

“Advisers are also struggling to cope with this increased demand for debt advice. I hope that the Government recognises that additional resources are needed across all parts of the free money advice sector to ensure that all clients receive the advice and support they need, not only in the current economic climate but in the long-term too.”

Sam Younger, chief executive of Shelter said: “The research paints a mixed picture of how lenders are reacting to Government schemes to help homeowners. Unless all lenders urgently sign up to and consistently implement these or equivalent schemes and strictly adhere to the pre-action protocol many people will fall through the gaps and repossessions will continue to rise.

“The demand for advice services like ours has never been greater but we urgently need the Government to provide further resources for vital debt advice, so that everyone can get free advice when they need it. In the meantime we would urge people to contact their lender for advice.”

View the full report on the information hub

1 in 3 landlords currently have tenants in arrears

Money Advice Trust — Mon, 11 May 2009 00:00:00 +0000

The National Landlords Association (NLA), the leading representative body for private-residential landlords in the UK, has recently undertaken research which reveals that 37 per cent of landlords currently have tenants in arrears.

Looking back over the last six months, 44 per cent of landlords have experienced rental arrears. This goes some way to explaining the significant rise in repossessions and why a growing number of landlords are having problems meeting their mortgage repayments.

When faced with arrears, only 50 per cent of landlords attempted to recover the loss of earnings through the courts. For the most part, landlords found the court system straight forward but many reported waiting times of over three months before their case was even heard.

David Salusbury, Chairman, NLA, commenting on the rise in this significant rise in rental arrears, said:

"This is becoming a serious problem for landlords all over the UK. Paying the rent has to be right at the top of tenants' priorities as even one month's arrears, in this climate, could be the straw which breaks the camel's back. The mortgage has to be paid and the vast majority of landlords do everything in their power to make sure this happens.

"It is important to remember that only about 35 per cent of rental properties are secured on existing buy-to-let mortgage finance. Contrary to recent reports, most landlords are not expecting to be repossessed and lose their asset. Landlords and tenants need to communicate and work together to tackle financial problems before they result in a loss of rent and a potential default on mortgage repayments."

Government scheme to support homeowners launched today

Money Advice Trust — Tue, 21 Apr 2009 00:00:00 +0000

Today Government has launched a new scheme to help home owners remain in their homes if they fall on difficult times.

Homeowners Mortgage Support (HMS) will enable eligible households to reduce their monthly mortgage interest payments to affordable levels for up to two years to help them get back on track with their finances if they suffer a temporary loss of income.

This new support will be available across the UK and builds on a range of measures the Government has already put in place to ensure that repossession is considered only as a last a resort.

HMS does not provide consumers with a payment holiday. The mortgage interest payments that have been deferred will eventually have to be paid back. That’s why as part of HMS, borrowers will get independent money advice to help them decide if it’s the right option for their circumstances.

HMS is part of a package of support put in place by government to give more protection to households at risk of repossession. This includes the introduction of a mortgage pre-court action protocol, the mortgage rescue scheme launched in January to help families at risk of possession stay in their homes, a reduction in the waiting time to claim Income Support for Mortgage Interest (ISMI) from 39-13 weeks and a major extension of free debt and legal advice.

View the full press release from Communities and Local Government (CLG).

CCCS Voluntary Arrangements publishes its IVA statistics for 2008.

Money Advice Trust — Thu, 09 Apr 2009 00:00:00 +0000

In an effort to improve transparency within the industry CCCS has published its 2008 figures for IVAs and urges other IVA providers to do the same.

CCCS Voluntary Arrangements (CCCSVA) is a wholly owned subsidiary of the Foundation for Credit Counselling, which runs the Consumer Credit Counselling Service.

CCCSVA serve CCCS counselling clients for whom an IVA is one of the best solutions.

Statistics for 2008 show that:

The average level of debt among clients was £59,936.
The average write-off by lenders was £34,691
Clients repaid an average of £421 per month towards their IVA

CCCS chairman Malcolm Hurlston challenged other providers to match CCCSVA transparency on statistics commenting:

“We are the only leading provider of IVAs to publish all our data and welcome public scrutiny. Today’s publication is a challenge to other providers to match our transparency.

“We release quarterly and yearly all the necessary figures to maintain transparency. In 2010 we are considering publishing the names of lenders who reject IVAs that in our view are compliant.”

The full release from CCCS can be found on their website and includes a quarterly breakdown of key statistics for 2008.

Audit shines spotlight on overlooked group

Money Advice Trust — Thu, 02 Apr 2009 00:00:00 +0000

The Resolution Foundation has published its’ first Low Earners Audit which illustrates the highly vulnerable position of Britain’s 13.4 million low earners .

‘Low earners’ is the term the Foundation uses for the group of people who are ‘too rich’ to qualify for state support yet often ‘too poor’ to access the benefits of private markets. Low earners are ‘squeezed’ in the mixed economy and are a group whose needs, until now, have been overlooked.

The Low Earners’ Audit seeks to rectify this by putting low earners’ precarious position under the spotlight. The recession gives further impetus to why their highly vulnerable situation must be understood to prevent them joining the ranks of the long-term unemployed, and becoming reliant on state benefits. The Foundation is today calling on policy-makers to assess the impact on Britain’s low earners of the forthcoming economic adjustment.

78% of low earners were in bad financial health prior to the recession. A YouGov poll carried out last week showed that this situation is likely to be worsening with:

· 71% of low earners saying they have stopped managing their finances correctly, making cut backs on paying off credit cards or saving in pensions

· 40% of low earners saying they were not confident or not sure about their job security

· 85% of low earners saying they had made cut backs on their household spending such as on heating, food and clothes

The Low Earners Audit illustrates the critical role that public policy plays in improving the well-being of low earners who are on the threshold of state support. The introduction of tax credits and an increase in investment in public services since 1997 has benefitted the group.

View the executive summary 'Squeezed: the low earners audit'.

View the full report 'Squeezed: the low earners audit'.

Private renters in the economic downturn

Money Advice Trust — Fri, 27 Mar 2009 00:00:00 +0000

Today the Council of Mortgage Lenders has published its response to the campaign to protect private tenants from repossession.

The CML agrees that there is a need to review current arrangements for giving notice to occupiers, to seek to ensure there are no “nasty surprises” for private tenants, and to review what would be a reasonable period to enable occupiers to move out in cases where the lender is entitled to possession.

The majority of private tenants will have a landlord who has taken out a buy-to-let mortgage. These renters are particularly at risk where the landlord fails to keep up their mortgage payments.

Recent arrears and possession figures released by the Council of Mortgage lenders for Q4 2008 show that 26,800 buy-to-let mortgages are >3 months in arrears and 1,300 buy-to-let properties were taken into possession.

A significant number of private tenants are unknowingly renting properties under owner-occupier mortgages without the lenders’ knowledge or consent. These customers can be disadvantaged through no fault of their own. Landlords with owner occupier mortgages will be in breach of the terms of the mortgage and potentially acting fraudulently.

The recent information hub e-bulletin included information about a joint Shelter and Money Advice Trust research project which aims to better understand the financial pressures on private sector landlords and tenants in the context of the economic downturn.

This research will seek to identify solutions for targeted advice to private tenants and landlords and better understand how the advice sector can contribute to resolving these problems in the future.

The work will combine a quantitative survey of private tenants and landlords and in-depth interviews with both groups. The research is planned for completion in Q4 2009.

Prime Minister unveils real help for consumers

Money Advice Trust — Tue, 17 Mar 2009 00:00:00 +0000

The Prime Minister today announced a package of help and protection for consumers struggling to make ends meet because of the global downturn.

Speaking to an audience of consumer groups and money advice agencies, he announced action to prevent people getting trapped in a cycle of debt, measures to ensure fair treatment by courts and debt-enforcement agencies, and a crackdown on scams and get rich quick schemes.

He also set out his commitment to a stronger regulatory regime for banks and announced a White Paper on modernised consumer rights law to give people a fairer deal.

Prime Minister Gordon Brown said:

"The changes we're dealing with as a country right now are enormous. But we are determined to do our bit - when we see hard-working, hard-pressed people being buffeted about by a storm not of their making, we will never pass by on the other side."

Chief Secretary to the Treasury Yvette Cooper said:

"It is vital that people who are facing money worries know where to turn to for help. Today's announcement will boost the substantial help and advice we are already providing, so people can get help to cope with the downturn and to plan for the future."

Consumer Affairs Minister Gareth Thomas said:

"Many people are already struggling to stay on top of their bills and pay their debts. We want anyone in difficulty to be able to access the advice they need. We are taking action to ensure consumers are treated fairly and to put them back in control of their finances."

The Government today set out a package of real help to benefit consumers during the downturn:

Fair rules for debt enforcement - new measures will be introduced to provide clarity for debtors and certainty for creditors in advance of full independent regulation of the bailiff industry. Bailiffs' powers of entry and force will not be extended and reforms to charging orders will not be introduced. There will be consultation which will set out the new rules and the way forward.
Credit cards - the Government will stop lenders from raising credit card borrowing limits where customer have not requested the increase, and it will end the practice of firms sending unsolicited credit card cheques. The Government will legislate at the earliest opportunity.
National Fraud Strategy - later this week the Government will set out the action it will take to tackle fraud which costs the UK £14 billion a year, and protect consumers from mass marketed frauds such as bogus lotteries, get rich quick schemes and investment scams.
Debt Relief Orders - from April, people on low incomes with limited debts who could not previously afford to go bankrupt will able to write off their debts and start again after a period of 12 months. This is not an easy option for people in debt - the insolvency will be a matter of public record and creditors will be able to apply to have the order revoked. But it will help those trapped in poverty.
The Money Guidance pathfinder - impartial sales-free advice on money issues will be available in the North West and North East of England from next month. It will help people stay in control of their finances, help them cope with income shocks and avoid the distress of problem debt.
Debt advice - the Government is currently reviewing the provision of debt advice to tackle any gap between capacity and demand and ensure we get the most out of the existing network of providers. This work will conclude before the summer. The Government invested £15.85 million in the debt advice sector at the last Pre-Budget Report in addition to the £130 million invested since 2006.
Mortgage advice - making £2.5m available for advice agencies to support the delivery of the new Homeowners Mortgage Support scheme.

And to safeguard a fairer deal for consumers in the future, the Government will:

Lead the way internationally with reform and regulation of the banking sector to clean it up and make it deliver for consumers. The Turner Review will set out proposals for further strengthening the FSA and protecting savers' deposits, the Treasury will publish a White Paper on financial services regulatory reform around the time of the Budget, while the forthcoming Walker Review will make recommendations to improve corporate governance, with particular regard to risk management and remuneration.
In light of the Turner Review and the current OFT consultation on strengthening consumer protection, we will review the split of responsibilities between the FSA and the OFT for the regulation of second-charge mortgages.
Publish a White Paper on action to help consumers in the summer - with proposals to simplify and modernise consumer rights.

No quick-fix for the economy say consumers

Money Advice Trust — Thu, 12 Mar 2009 00:00:00 +0000

Research conducted by Which? reveals that consumers believe it will be at least eighteen months before the economy improves.

With four in five people (80 per cent) believing it will take at least a year and almost a quarter (23 per cent) saying it will be more than two years before we see an upturn in the economy, it seems consumers aren’t expecting a quick recovery.

Almost half of people (49 per cent) think that the Government is best placed to fix the crisis while just one in eight (14 per cent) say the banks can change the economic climate for the better.

The amount of public money ploughed into the economy is also a major concern for consumers, with four out of five people (81 per cent) saying they are worried about future tax levels as a result**.

Which? personal finance campaigns manager, Doug Taylor, says:

“Consumers aren’t under any illusions – they know the financial crisis will take time to sort out. The banks may have caused much of this mess but consumers think the Government is best-placed to fix it.

In the meantime, banks should be doing everything possible to help their customers through the financial crisis, such as taking a responsible approach to repossessions and putting a stop to unfairly high unauthorised overdraft charges.”

Follow this link to discover more about the Which? campaign on the 'credit crunch and the banking crisis'.

OFT seeks closure of 'look alike' debt advice websites

Money Advice Trust — Sat, 07 Mar 2009 00:00:00 +0000

The OFT has told 11 financial management businesses with 'look alike' websites posing as official or charity advice sites to close them down immediately.

The sites use similar or slightly amended domain names which imply that they are affiliated to organisations such as Citizens Advice, Advice UK, National Debtline or the Consumer Credit Counselling Service. Some of the website names also imply that they have some official status or sanction from the Government.

Parts of the content of these 'look alike' websites are often copied from legitimate sites offering free advice, despite the companies involved charging fees.

The OFT has told the companies to stop using the trading names immediately and for those companies who were trading without a licence to stop trading completely or face prosecution. The OFT is also working closely with internet service providers to ensure that the websites are taken down promptly.

The action followed complaints from a number of debt advice charities including Citizens Advice.

Consumers are advised to take particular care when searching for terms such as 'citizens advice' or 'government advice' to ensure that they are dealing with a genuine charity-based help and advice service. Consumers should also be careful not to deal with traders who are unlicensed.

Most businesses that offer credit or lend money, including those that offer advice on debt, must be licensed by the OFT and they must notify the OFT of all the trading names they intend to use. Trading names should not be misleading or otherwise undesirable. Failure to comply with an OFT warning can result in a business being subject to licensing action or criminal prosecution for unlicensed trading.

"If people aren't sure if the advice really is free and independent, they should look carefully at the website", Joanna Elson Chief executive, Money Advice Trust.

The OFT have not named the 13 companies, but Citizens Advice has been worried for some time about debt management companies which use words that could give the impression they are connected with government organisations or the CAB.

"We are very pleased the OFT is now taking action," says Teresa Perchard, director of policy at Citizens Advice. "For several years now, we have been getting reports from people approaching the CAB who have been worried about sites and telephone calls they have had from people operating advice sites who have names very similar to ours. This action should mean that we see an end to that."

British couples keeping up to £30 billion worth of debt secret

Money Advice Trust — Fri, 27 Feb 2009 00:00:00 +0000

New research by shows that one in five Britons are keeping their money worries secret from their partners.

The CreditExpert research was carried out to establish the extent of financial secrecy in British relationships and reveals that despite the majority of the population (89 per cent) agreeing that financial honesty is important in a relationship, in practice things are very different. As well as hiding debt and keeping secret accounts, the research also revealed:

More than a quarter (27 per cent) admit to reading a partner’s bank statements or pay slips without them knowing
One in ten British adults (10 per cent) have admitted to making a secret purchase from a joint account or savings account
13 per cent do not own up to their current partner about the amount of credit/store cards they hold
15 per cent of British adults currently in a relationship keep information about their bonus or level of earnings from their partner

Darryl Bowman, Director of CreditExpert.co.uk, said: “If you have something to hide, you might want to consider that one joint application for credit with your partner creates a ‘financial association’ on both of your credit reports and that means your financial behaviour could impact your partner’s finances, including their ability to get credit. Couples should be honest about money, particularly if you are already financially linked and if you plan to have joint accounts in the future.”

Shame and embarrassment appear to be the main reasons for people holding back about financial matters with one in ten admitting they are ashamed of the state of their finances. Nearly one in five (18 per cent) simply state that the reason they do not share information is that they do not want a partner knowing everything about their financial situation.

Arrears and posessions in 2008

Money Advice Trust — Fri, 20 Feb 2009 00:00:00 +0000

Full year figures for 2008, published today by the Council Of Mortgage Lenders, show a sharp rise on 2007, but many steps are being taken to help borrowers facing difficulty

5,000 fewer repossessions than forecast in 2008
40,000 repossessions in the year - 1 in 290 mortgages
10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages
1 in 64 mortgages in arrears of 2.5% or more
1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates)
75,000 repossessions forecast for 2009 remains unchanged.

Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders. The total number of first-charge repossessions in the year was an estimated 40,000. This was 5,000 lower than the CML's original forecast for the year.

Follow this link to view the full range of mortgage possession statistics from the Council Of Mortgage Lenders.

Are UK consumers shifting their reliance on unsecured credit to overdrafts?

Money Advice Trust — Thu, 12 Feb 2009 00:00:00 +0000

A recent report published by PricewaterhouseCoopers, (PWC) suggests that UK consumers are progressively using ‘revolving’; unsecured credit as a result of lenders tightening their lending criteria for loans and credit cards.

The report presents an emerging picture of clients making up shortfalls in their monthly expenditure by relying on overdrafts that were granted prior to the credit crunch.

“Gross new lending on non-revolving unsecured credit in the 12 months to August 2008 fell by 15% compared with the same period to August 2007 whereas the use of revolving credit for the same period increased by 2.4%”.

It appears that many UK consumers have not yet fully understood the reality of the current economic climate. In addition to the 'Credit Confidence Survey' conducted by YouGov on behalf of PWC on 5^th September 2008, a follow-up survey was instigated following the collapse of Lehman Brothers. In this survey only 21% of respondents claimed to be concerned about credit supply, compared with 26% in the original study.

Follow this link to view the full report: Precious Plastic 2009

The Money Advice Trust (MAT) has recently published a report on a quality of money advice baseline survey project

Money Advice Trust — Fri, 06 Feb 2009 00:00:00 +0000

The project was to provide a snapshot of the current standard of money advice delivery in England and Wales and the processes used to promote, monitor, and evaluate good-quality advice.

This work was undertaken to inform a multi-agency partnership initiative let by MAT – The Money Advice Quality Model (MAQM)

Key findings from the survey, which was conducted by two money advisers with extensive knowledge of the subject matter, in conjunction with twelve advice agencies include:

Little evidence of evaluation of advice quality feeding into service planning
Thorough recruitment, selection and induction processes in place
Training programmes that often met the needs of less experienced members of staff better than the more experienced advisers.

Good-quality advice was observed across most agencies, with a clear focus on the presenting needs of the client. However, there were also instances of poor advice being provided to clients.

Examples of good practice include: successfully assisting clients with benefit and grant claims, representing clients in court, assisting with bankruptcy applications and providing advice on unenforceable contracts.

Examples of poor practice include: some areas of advice knowledge being missed out and partial understanding of conflict of interest issues .

Areas for further consideration include, better processes to evaluate closed cases and more attention needed in monitoring telephone services.

Follow this link to read the executive summary.
Follow this link to view the full report: Quality of Money Advice Baseline Survey.

Dealing with debt in Northern Ireland

Money Advice Trust — Thu, 22 Jan 2009 00:00:00 +0000

Two reports published by Citizens Advice Northern Ireland provide an insight into the scale of demand currently facing money advice services in Northern Ireland.

From 2007-2008, the Dealing with Debt Money Advice Service provided assistance to almost 2,000 individuals in dealing with over £13,000,000 of debt. The 33% increase in house repossession cases reported by the Northern Ireland Court Service is mirrored by the 71% increase in the number of clients seeking advice relating to secured loan debts.

A further research report launched in January 2009 by Citizens Advice Northern Ireland provides a detailed account of almost 6,000 clients of CAB debt advice services in Northern Ireland.

Analysis of the Citizens Advice client database reveals that owner occupiers are the largest single group of clients seeking support from advice services making up just over a third of the total. Furthermore, unemployed people make up a quarter of those on the CAB database, which are a significant percentage considering the unemployment rate in Northern Ireland as of November 2008 was less than five percent.

Another significant finding, common to research across the UK, is the identity of the two social groups most susceptible to debt, namely people on very low incomes vulnerable to ‘expenditure shock’ and those with relatively high incomes and high levels of commitment.

Follow these links to visit these reports:

Dealing with debt in Northern Ireland: PSC Research Report.

Annual Report 2007 – 2008. Dealing with debt in Northern Ireland.

Thousands helped by debt advice services.

Money Advice Trust — Mon, 05 Jan 2009 00:00:00 +0000

Government funded face to face debt advice services have helped over 100,000 people in 2008, and the national telephone debt advice line has seen a significant increase in demand for advice.

Calls to the Government funded debt advice telephone service, the National Debtline, have increased by 40% since 2007, and demand for Business Debtline, the service specifically for business, has doubled comparing autumn 2008 with autumn 2007.

The charity now receives approximately 23,000 calls a month (November 08) compared to 16,000 during 2007.

Meanwhile this year the Government funded face to face debt advice services estimate that they have helped around 100,000 financially excluded over-indebted clients.

Consumer Affairs Minister Gareth Thomas said: It is imperative that when people are struggling with debt, they seek assistance as soon as possible. There are a wide range of organisations who provide expert advice and can really make a difference when it comes to resolving debt problems. We have made a firm commitment to support these services so they can continue to help those most in need In the recent Pre Budget Report the Government announced an additional £5.85 million for the National Debtline advisory service to help cope with the additional demand.

Chief Executive of National Debtline, Paul Mullins said:

“We have helped over 90,000 National Debtline clients this year including 8,000 struggling with mortgage arrears. We have seen an increase of 30% in clients who have mortgage or secured loan arrears compared to 2007.”

“Thanks to additional funding (£5.85 million funding over two years) from HM Treasury we are currently recruiting for advisers, managers and support staff on both National Debtline and Business Debtline. No previous experience of giving debt advice is necessary as we provide a full training programme. There have been various large scale redundancies announced in the West Midlands and it is important that people know that there is support and advice available, including various job opportunities.”

Interim findings on research into the fee charging debt management sector launched at Speakers House, House of Commons.

Money Advice Trust — Tue, 16 Dec 2008 00:00:00 +0000

The Money Advice Trust (MAT) commissioned the Personal Finance Research Centre (PFRC) at Bristol University to conduct an independent review of the fee-charging debt management sector in Spring 2008.

The emerging findings of the research were shared at an event sponsored by Alliance and Leicester, at the House of Commons last Tuesday 9th December 2008.

The initial phase of the research concentrated on a desktop study to identify the scale of the current fee-charging debt management sector. Over 150 companies were identified as providing a fee-charging debt management service to the public, with 130 being direct providers of debt management plans (DMPs), and the remainder acting as brokers or intermediaries.

A variety of research methods were used to supplement the desktop research in order to ascertain the experiences of both customers of fee-charging debt management companies (DMCs) and creditors who engage with fee-charging DMCs in debt repayment negotiation. This research included:

In-depth telephone interviews with ten representatives of major organisations in the credit industry
Telephone surveys with fee-charging debt management companies
Collection and analysis of money advice practitioner evidence
Face-to-face interviews with customers of commercial fee-charging debt management companies.

Highlights of the findings include:

An estimate that there are between 320,000-375,000 people currently repaying debts on a fee charging debt management plan.
Significant differences between the projected and actual duration of DMPs, with the former typically being between five and ten years and the latter three years or less.
Mixed responses from creditors when dealing with fee charging DMCs. Their experiences ranged from good working relationships with the larger, established DMCs to concerns about the practices and transparency of smaller, newer entrants to the DMP market.
Concerns from the creditor sector regarding the charges levied by fee-charging DMCs, which tended to vary widely and often included high set-up fees.

The full report from which the emerging findings are drawn will be published on the information hub in early 2009.

Largest ever recruitment campaign from Birmingham based debt advice charity to help cope with growing number of recession casualties.

Money Advice Trust — Wed, 03 Dec 2008 00:00:00 +0000

Birmingham based debt advice charity National Debtline, run by the Money Advice Trust (MAT) is preparing to embark on the largest recruitment campaign since the charity started in 1987.

Thanks to last weeks pre-Budget announcement the charity will receive an additional £5.85 million funding over two years from HM Treasury to recruit and train 45 – 50 debt advisers during 2009. The additional funds have been given to keep up with the demand for debt advice next year as the recession deepens. Many UK consumers will be facing redundancy or the threat of mortgage repossession whilst struggling with credit debts.

Chief Executive of Money Advice Trust Joanna Elson said today "Struggling homeowners and people in debt have been given a real helping hand from the Pre-Budget Report. Additional funding for National Debtline and Business Debtline will allow us to expand capacity and help 175,000 people compared with around 115,000 this year and 22,000 people compared with 15,000 this year at Business Debtline".

Chief Executive of National Debtline, Paul Mullins "We have helped over 90,000 National Debtline clients this year including 8,000 struggling with mortgages arrears. We are currently recruiting for advisers, managers and support staff on both National Debtline and Business Debtline. No previous experience of giving debt advice is necessary as we provide a full training programme. There have been various large scale redundancies announced in the West Midlands and it is important that people know that there is support and advice available including various job opportunities".

For further information about positions at National Debtline and Business Debtline please call 0121 410 6258 to request an application pack or email recruitment@nationaldebtline.co.uk.

An Open Day will be held for prospective employees at the National Debtline offices at Five Ways, Birmingham City Centre on 12^th January between 12pm – 8pm. Candidates will have the opportunity to meet staff, listening to calls on the debt helpline and meet some of the debt clients that have been helped over the years.

Deadline line for applications will be 19^th January 2009.

Peace of mind for homeowners as Natwest and RBS commit to six month grace period for customers falling into mortgage arrears.

Money Advice Trust — Mon, 01 Dec 2008 00:00:00 +0000

NatWest and RBS have today given homeowners a much-needed financial breathing space with a firm commitment not to start repossession proceedings for a full six months after a customer first falls into arrears.

The Bank has given a guarantee that will help lift the pressure on those homeowners struggling to meet their monthly repayments and give them more time to talk and work with the Bank and gain the support and advice they need.

The Bank already works with each customer to understand their specific circumstances and to determine which options may best help their specific situation, including payment holidays, extended terms and reduced payments.

We have also trained our frontline staff to provide helpful and practical money management advice, including the active promotion of our acclaimed MoneySense initiative.

Announcing the move, Craig Donaldson, MD Retail Banking, said: "We fully understand that one of the biggest worries facing homeowners in financial difficulty is the thought of losing their home, this is especially true given the current economic climate. We hope that our commitment will reassure our customers that we are committed to providing them with enough time, professional support and the assistance they need to resolve their financial difficulties.

"Our policy has always been to encourage those customers facing financial difficulty to talk to us so that we can work together, understand their individual circumstances and jointly resolve their financial problems. The repossession route is always a last resort and one where all other reasonable attempts to resolve the position have failed and one that we look to avoid where at all possible."

HMRC has improved how it manages debts owed to it by taxpayers, according to a report by the National Audit Office.

Money Advice Trust — Thu, 20 Nov 2008 00:00:00 +0000

The report, "Management of Tax Debt", published today, analyses trends in debt levels using figures from HMRC debt management systems.

The amount of money owed has reduced from 4.3 per cent of tax collected in 2005-06 to 3.8 per cent in 2007-08. The age of the direct tax debt has also reduced. Over the past year the level and age of debt has increased on some taxes, however, and the total number of debts has risen by 22 per cent.

HMRC collected around £450 billion in 2007-08 in tax and National Insurance contributions from the UK’s 35 million taxpayers, ranging from individuals to large multinational corporations. In March 2008, £21.5 billion was outstanding on its debt management systems. £17.3 billion was in outstanding tax, interest and penalties whilst the remainder was overpayments of benefits and tax credits.

The total number of debts has risen by 22 per cent, from 13 million to 15.8 million in the past year. In part the increase reflects an increase in the number of taxpayers and wider trends in consumer debt; but it also reflects a change in HMRC’s priorities as it focuses on higher value debts with fewer resources.

In 2007-08, HMRC’s Debt Management and Banking directorate collected around £310 for every £1 spent, an increase of 10 per cent on the year before. But HMRC cannot reliably measure the relative cost-effectiveness of different debt collection activities.

HMRC has yet to introduce some of the measures recommended by the Committee of Public Accounts in its previous report on debt, which have also helped other organisations to improve their debt management. Measures include risk profiling; managing debt through a single IT system; linking and pursuing together debts owed by an individual taxpayer on different taxes; innovative methods for communicating with customers; and a more efficient telephone centre operation. HMRC has developmental work underway, but the scale and pace of change has been restricted as other programmes take higher priority on funding. Such measures could however save money, through getting in more revenue and lower collection costs, and could help the Department better manage the growing level of debt.

Tim Burr, head of the National Audit Office, said today:

“HMRC has improved the way it manages tax debt. But it has made limited progress in implementing some measures recommended by the Committee of Public Accounts in 2004 that would help it manage the growing level of debt in a more difficult economic climate. To manage tax debt more effectively, HMRC should link different debts owed on each tax by the same taxpayer and prioritise debts which are less likely to be paid without action by the Department.”

18 million UK adults planning to recycle old gifts to beat crunch this Christmas

Money Advice Trust — Wed, 12 Nov 2008 00:00:00 +0000

As the UK braces itself for Christmas in the wake of the credit crunch, more than 18 million (39 per cent) UK adults intend to recycle old presents. An increase of 16 % compared to 2007 according to new research by Experian

More than half (53 per cent) of UK adults admit to struggling more financially due to the current economic climate. 40 per cent are planning to spend less this year on Christmas presents. In fact, the average amount spent by Britons on Christmas presents is set to reduce by £83 (22 per cent), from £384 last year to £301 this year. Just over one in ten (12 per cent) people expect to pay for this year’s festivities by trying to get a pay rise or by doing overtime.

For many, this Christmas will be a difficult time with nearly half (45 per cent) admitting to being very concerned about how the extra expense will affect their financial situation. The research also found that a significant number of adults may find themselves getting into debt or using their savings account to cover this year’s Christmas costs:

- 28 per cent admit they are going to celebrate Christmas as they usually do and think about the financial consequences in the New Year
- Nearly one in five (18 per cent) will be putting their Christmas purchases on their credit card
- 8 per cent will be funding their spending by going overdrawn
- Almost a quarter (23 per cent) will be dipping into their savings account to pay for presents

Jim Hodgkins, Managing Director, CreditExpert.co.uk, says: “How much we spend this year on Christmas is a concern for many of us and recycling presents might seem like an attractive option. Just be careful you keep a close track of your gifts so you don’t end up in the sticky situation of the present landing back in the hands of the person originally giving it – or anyone they know! Whatever you do spend this Christmas, you can improve your finances by remembering the crucial thing is to borrow responsibly. To give yourself the best chance of getting a good deal with a lender, it’s important to check your credit report to make sure you have a good credit status.”

Working hard to finance Christmas in Wales
The Welsh are the most likely to recycle Christmas presents this year (48 per cent), compared to those living in the South East (33 per cent) and East of England (35 per cent). The Welsh are also the most likely to finance Christmas by trying to get a pay rise or by doing overtime (20 per cent), in comparison to just 7 per cent of those people in the South West of England.

In comparison, Londoners and those living in the South East are the most likely to put their purchases on their credit card (both 20 per cent), compared to 12 per cent in Wales and 14 per cent in the West Midlands.

Frugal festive females
When it comes to the sexes, women are planning on being more financially careful than men this year. Nearly half of all women (46 per cent) are much more likely to recycle old Christmas presents than men (32 per cent) and are also more likely to fund the season by reducing their spending on other things (27 per cent), compared to men (18 per cent).

Age is significant factor
As far as the different generations go, 18-24 year olds are the most likely to recycle presents (51 per cent). 45-54 year olds are the least likely to spend more on Christmas this year compared to last year (7 per cent), in contrast to almost a quarter (23 per cent) of 25-34 year olds and 16 per cent of 35-44 year olds.

Understanding your credit report can put you in a stronger position to address your Christmas borrowing needs. CreditExpert.co.uk provides you with a summary of your credit history and alerts you to significant changes on your credit report.

Advice agencies and banking industry join forces to help people regain control of their finances

Money Advice Trust — Tue, 04 Nov 2008 00:00:00 +0000

A report out today from national charity Citizens Advice, on behalf of the money advice sector, proposes a new way for people in debt to regain control of their finances and set up affordable repayment plans with all their creditors.

The report 'With a little help from my friends' is calling for an overhaul of the 'self-help' debt system.

Self-help debt advice involves giving debt clients who are willing and able to take on negotiations themselves the initial advice, information and support they need to draw up a realistic budget. It also supplies them with the letter they need to make offers of repayment.

This approach is welcomed by advice agencies as a way of empowering more people to take ownership of their finances as well as ensuring that the agencies can provide a more intensive service for those in greater need of support.

The process for those who negotiate debts themselves is exactly the same as that which a Citizens Advice Bureau or another agency would follow if they were acting on the clients behalf. Nearly half (45 per cent) of all the people surveyed for the report wanted to take control of their debt problems themselves and one in five people were able to get all their creditors to accept their offers. However, nearly 60 per cent of people surveyed for the report said their offers had been rejected.

The report is based on research from the credit industry and advice agencies who will continue to work together to make the system as effective as it can be.

The report highlights that the current problems with self-help debt advice services are down to a number of factors including:

the large number of self-help debt advice services currently on offer, and
a somewhat inconsistent approach to self-help by the advice sector

Citizens Advice Chief Executive David Harker said:

"Personal debt in the UK is growing and it now accounts for one in every three problems dealt with by the CAB services in England and Wales. As the current credit crunch and rising food and fuel costs are likely to result in more people needing help managing their finances it’s important that those who want to and are able to can negotiate with creditors directly without the risk of being treated unfavourably.

"We are recommending that a working party consisting of representatives from the credit, debt collection and advice sector should work together to agree a set of proposals for a model of practice for ‘self-help’ and implement these by 2010."

The report specifically recommends that:

the advice sector develops a consistent way of delivering self-help debt advice
the credit industry changes the way it processes accounts that fall into arrears and assesses offers made by customers who use self-help debt advice services, and
the credit and debt collection industries work with the advice sector make these changes a reality

Joanna Elson, Chief Executive of the Money Advice Trust said:

"There has been a lot of progress made over the years between the money advice sector and lenders, one example being agreeing on a Common Financial Statement. This report is an opportunity to improve the self-help options for money advice clients and we look forward to working with lenders and money advisers to make them work in practice."

Follow this link to view the full report 'With a little help from my friends'.