Universal Credit – The Changes have Begun

02. May 2013 · Write a comment · Categories: Finance, Financial News · Tags: , , , ,

A number of benefits including tax credits, housing benefit, income support, jobseekers benefit, and employment and support allowance will be replaced by one universal credit. This roll-out began last month with new claims in Ashton-under-Lyne,  Warrington, Oldham, and Wigan in July 2013. All existing claims will be transferred in springtime 2014 and hopefully by 2017 everything will have transferred.

The government believe that, although this scheme will initially cost £100m, it will eventually save money as approximately 2.8 million homes will be paid less while 3.1 million homes may be entitled to more money. But this system should also minimise fraudulent activity and there should be a lot fewer mistakes as all universal credit claims will need to be completed and managed online.

Doubts have arisen from this as to whether the computers which help deal with claims will be able to handle the amount of new claims and also take into account that the internet is not readily available to everyone.

The frequency and method of payments will also change to only being paid on a monthly basis direct to a bank account. This may also cause issues as some people could have problems with managing their money monthly. Even though the majority of jobs pay their staff monthly.

One of the benefits of this new venture is that the amount of money a claimant receives will depend on what they earn, which will show on the system and so if someone is used to working different hours such as agency workers, they will not keep having to update the system as it will already be reflected, which will save them time.

The general idea is that this new system has been created to make the current system cleaner and easier to manage.  Whether it will actually do so remains to be seen.

FSA replaced by FCA: a new, tougher agency for financial sector regulation

04. April 2013 · Write a comment · Categories: Financial News · Tags: ,

The last few years have revealed unparalleled scandals in the British banking industry. From PPI to Libor, to bankers’ bonuses, the financial industry has breached regulations and good financial and customer conduct time and time again. In the midst of such scandals, the Financial Services Authority (FSA) has sought to regulate, discipline and investigate each fresh scandal, all the while helping to keep the major banks financially solvent amidst tough economic times and bank acquisitions by the state.

In a bid to shake up and tough regulation for the financial services industry, in December last year the Financial Services Act (2012) received Royal Assent. One of its provisions is that the a new banking regulatory body, the Financial Conduct Authority (FCA) will come into being from 1 April 2013. Headed by Martin Wheatley, 54, former chief regulator in Hong Kong, the agency will replace the FSA. Its remit will be to regulate the conduct of the financial services industry, and it will have greater powers than the now defunct FSA.

Whilst ensuring more competition in the financial sector, it will still be an advocate of consumer rights. Amidst its powers will be the ability to oversee the design of financial products, impose minimum standards , and to have oversight over marketing and selling of financial products. It will additionally be able to ban financial products for up to a year, while considering a permanent ban.

An emphasis of the new FCA will be to get more competition on the financial sector. To that end, a new Competition Department will be part of the agency’s Canary Wharf offices, which will be able to to take  affirmative action if there is found to be too little competition, and a lack of consumer choice, in a financial market. To this end, the incoming chief welcomes the introduction of new, smaller, start up banks and financial service providers; he is seeking to relax capital rules for small banks, and to reduce the authorisation and approval process to encourage this.

In an interview, Mr. Wheatley stated that he wants to “create something very different from the problems of the past.”

“For starters, we will be much more sensitive to information we receive about financial products and the way they are being sold… And if it’s not the product that’s the problem, we’ll take a look at the way it’s being sold… As part of our new plan to check on firms, we will look at how they make their money and scrutinise where their margins are. Of course, businesses need to be profitable. But we will be interested to see where the highest margins lie…. What’s new is that we won’t just be relying on regulatory reports back from firms, but on reports from consumer bodies, internet monitoring, the media and even on Twitter.”

“In the past, the emphasis was on firms’ regulatory reporting. We will be much broader in our approach.” Of competition and aiding new financial service providers getting started, he is greatly supportive of increased competition, adding that “we want to extend this philosophy to other parts of the financial services industry.”

The new FCA officially came into being on April 1st- and will be anything but an April Fools’ joke, having the authority and power to firmly bring banks into regulatory line after a nearly a decade of excess and scandals.

The financial sector should watch out- there’s a new sheriff in town in the City.

 

Guest post provided by Amelia of fabulousfinance.co.uk.

Keep to a tight budget to reduce debts

14. March 2013 · Write a comment · Categories: Budgeting, Debt · Tags: , , , , ,

Many people struggle with debt, especially if they don’t start making payments on debts that they owe immediately, and let interest accumulate. But if you want to know the secret to a debt-free existence, it’s simple. Just follow the principle of spending less than you earn, and eventually, you’ll get on the right side of debt.

That’s not to say it’s easy, and there will be many setbacks along the way, but if you abide by this guiding principle, you’ll eventually be free of debt and be able to save up for the future instead.

Start off by drawing up a household budget. Whether you do this on a spreadsheet or a piece of paper doesn’t matter. At the very simplest level, have a column for outgoings (expenses) and a column for income. Once you’ve put down everything you can think of, run it by your partner or friend and see if they can see anything that might be missing. For example, do you have grown up children who are living at home, earning, but not paying any rent or board?

When you know what you’re spending, you’ll be able to look at what you could be making savings on. Check that you have the best tariffs available for utilities, telecoms and other regular bills like insurance and groceries. Each saving you may make may only seem small, but added together with other cost cuts and running forward over months and years, it all adds up.

There are some things you won’t be able to change – like taxes – and you may not be able to switch your mortgage. But anything you can make a saving on is worth going through the admin for.

Analyse the non-essentials that you currently pay for and decide whether you could do without them until you are debt-free. Things like gym memberships, nights out with friends and holidays are the classic non-essentials to cut back on.

Of course, if you already have significant debts, it may be that you need to go further and talk to a specialist debt management company which will be able to provide credit card debt advice and explain options such as a debt management plan or debt consolidation loan. But if your debts aren’t huge, then see what you can do for yourself first.

Important things to consider when buying a health insurance plan

07. March 2013 · Write a comment · Categories: Finance · Tags: , , , ,

If you are thinking about securing a health insurance plan for yourself, make sure you do your homework right. “Homework” here implies solid research. Please invest due time in finding out about the basics of a health insurance plan and then figure out all the things that you possibly would want the health insurance plan to cover. Find out from reliable sources whether those needs are generally covered by health insurances or not. Then try to adjust your needs a little with the requirements that are generally met by the insurance plan carrier.

Before getting in to the detail of things to consider when buying a health insurance plan, here is the primary thing you should know about a health insurance. Generally people are guided by the misconception that a health insurance plan only covers expenses related to a prolonged stay at the hospital. But do know for a fact that daycare procedures entitle the person to receive financial assistance even when he is not needed to stay back for more than a day in the nursing home or hospital.

Things to consider when buying a health insurance plan

Have a clear idea of your needs:

Decide for yourself what kind of coverage you want. If you zero in on a basic health insurance cover, you will get the related benefits only during some complicated or prolonged illness. On the other hand, the more consolidated or comprehensive coverage will also cover associated claims on maternity, eye care or eye treatment, prescription drugs, etc. Please remember that while you can opt for the consolidated coverage if you want to use your insurance on a frequent basis, its premiums will be more expensive than those of the basic health insurance plan. Additionally decide whether you want a long or a short term coverage. It is advisable that you opt for long term coverage if you are self employed. Whereas if you are switching jobs frequently go for a short term health insurance coverage.

Find out whether the insurance will benefit you while you are travelling:

Some of the plans are based on network, meaning you will not be able to avail their benefits once you transcend the geographical limits as specified by your insurance plan. It will be better if you opt for the ones which are not bound by such restrictions. Additionally try to find out the differences in premiums that you will have to shell out for the insurances.

Ask how fast the reimbursement process will be:

When a terrible misfortune has befallen you or your family in the form of some sickness or an accident, you probably will not want to run from pillar to post to retrieve your insurance policy amount. Thus clearly ask the insurance company about the reimbursement time and process.

Ask your insurance company how many ailments it will cover under the plan. It does not necessarily mean that a plan carrying the highest number of cures is the best in the market.

Also find out about the coinsurance and co-payment costs, the term of the insurance (till when should it cover you), and do not forget to wisely make use of the insurance quotes.

Author’s Bio: Sam has been actively involved with loans and insurances about family income benefit policy long time. She derives the confidence to dissect the pros and cons of each of the insurance plans in her finance blogs and articles, from her long associations with several insurance companies throughout her professional career. She hardly misses an opportunity to throw light on various financial aspects whenever she observes major discrepancies around.

Pensioners should reclaim thousands on tax before benefit is cut

05. February 2013 · Write a comment · Categories: Finance, Financial News · Tags: , , , , ,

The Office of Tax Simplification (OTS) has published recommendations for the taxation of pensioners in the UK. The report called for the 10 percent tax rate to be abolished. Whilst this would indeed make the country’s taxation system less complex, thousands could lose interest on their savings. Campaigner Jason Middle of Save our Savers has criticised the government’s decision to remove this benefit for the elderly and those on low incomes, stating: “This is a real slap in the face for low-income savers, who have already seen the interest they get on their savings collapse by 60pc since the start of the financial crisis.”

The official report acknowledges that for those who are retired, paying taxes is particularly stressful.  Pensioners tend to have a “combination of multiple sources of income, ranging from pensions to interest on savings and investment dividends”.  Consequently, there is much confusion over how much tax they should be paying. As it stands, when a person’s income is more than their personal allowance, 20 per cent of interest must be paid in taxes.

Furthermore, the majority of people entitled to the tax break do not actually claim it. HM Revenues and Customs have reported that up to 3.5m Britons should only pay the 10% rate on their savings – however, only just over 700,000 people who knew of this last year applied for tax rebates.

Saving’s campaigners encourage the elderly who are entitled to the 10 percent rate to claim back their money before the benefit is abolished. Financial experts have suggested that those on low incomes  and pensioners maybe owed up to £1200 each if they back dated their claims by up to 4 years.

As well as calling for the 10 percent tax to be asked, the report has also recommended: “That every April the DWP issues a P60 type form …stating the amount of taxable income which a pensioner was entitled to in the previous tax year.”  This would give pensioners accurate information about just how much they should be paying in taxes yearly.

Review to be had on Bank’s Interest Rate Swaps

31. January 2013 · Write a comment · Categories: Banking, Financial News · Tags: , , , ,

11 Banks including HSBC, Lloyds, Yorkshire Bank, Bank of Ireland, and Santander have agreed to review sales of interest rate hedging products (IRHPs) to small and medium sized businesses. The news comes after the Financial Services Authority (FSA) conducted a pilot study which found 90% of sampled sales ‘did not comply with one or more…regulations’. The first wave of investigations was carried out on Lloyds, Barclays, HSBC and the Royal Bank of Scotland. Independent investigators were called in alongside banking staff to review 173 sales of IRHPs on an individual basis. The FSA reported that independent reviewers played a vital role in the exercise.  Failings in the selling of these financial products included ‘failure to ascertain customer’s assessment of risk’ and ‘poor disclosure of exist costs’.

IRHPs are sold with the aim of protecting customers from interest rate risk. Customers can purchase IRHPs to minimise fluctuations in interest rates over the life of their loan. IRHPs work by either fixing interest rates, limiting any interest rate rise completely or within a range which may or may not be specified. When the recession struck and the interest base rates plummeted, businesses who had purchased these interest rate swaps were stuck into paying the higher costs, and many couldn’t afford to pay to remove themselves from this financial product that banks had often convinced them into purchasing.

Banks are therefore being criticised for selling ‘complex varieties’ of IRHPs to ‘non-sophisticated’ business owners. In some cases purchasing an IRHP resulted in business owners paying more than the initial cost of the product.  Banks have however agreed to ‘fair and reasonable redress’ for customers who were sold interest rate hedging products unfairly.

The head of the Financial Conduct Authority, Mark Whitely, commented “But it is important to remember that this review is firmly focused on the particular circumstances of each sale.  These will determine whether there were failings in the sales process and, if so, whether redress is due.”

The Royal Bank of Scotland, Santander, Clydesdale and  Co-operative banks among others will also be reviewing their sales of interest rate hedging products with FSA appointed investigators.  40,000 cases are expected to be evaluated.  If you think you might have a claim or want more information, go to InterestRateSwapsClaim.co.uk.

Credit card bill consolidation – Pay off your outstanding debt and improve finance

24. January 2013 · Write a comment · Categories: Finance · Tags: , , , , , ,

Are you spending sleepless nights due to the fact that you have incurred excessive debt? Do you find it difficult to make the payments on time? If your answer is yes, then you must be looking for suitable debt solution so that you can come out from the clutches of debt problems. Such problems arise when you use the credit cards frequently to buy every small item you see around and don’t repay the bills at the right time. With the help of credit card bill consolidation, you will be able to pay down the credit card debts easily and become stress free. This will help you improve your personal finances in a better way.

Credit card consolidation – Possible help to manage finances efficiently

If you have the habit of swiping the credit cards unnecessarily, then you must have fallen into credit card debt problems. Read on to know how credit card bill consolidation is a possible help to manage finances efficiently.

Manage the monthly payments – With the help of bill consolidation, you have to make one payment each month on your outstanding debts. Your multiple bills get merged when you choose this program to eliminate credit card bills. As such, you do not have to pay the different creditors individually. This gives you the chance to pay down your outstanding debts in a better way and thus, improve finance.

Enjoy reduction in interest rate – The debt consultant takes the initiative to negotiate with your creditors in order to avail you reduction in the interest rate on your outstanding dues. When you have low interest rate on your outstanding debts, you find it much convenient to pay them off. This will provide you the opportunity to deal with your money sensibly.

Debt expert negotiates with creditors – When you enroll with a bill consolidation program, you do not have to negotiate with your creditors but rather, your work is being done by the debt consultant. With their negotiation capability, they somehow manage to convince your creditors to decrease the interest rate on your dues. Thus, you’ll repay the debts and, in turn, deal with personal finance in the most efficient manner.

Improve your credit score – Your credit score gets hurt when you don’t pay down the bills on time. If you’ve missed any payment, then it will hurt your credit score. You should enroll with a bill consolidation program and pay down your dues with ease. You will be able to boost credit score soon.

Falling into credit card debt is the most traumatic situation that you face in your life. As such, if you have fallen into credit card debt trap, it’s advisable that you take the help of credit card bill consolidation and come out of debt problems. You will be able to improve your financial condition and enjoy a stress free life. For more reference, you may visit http://www.debtconsolidationcare.com/forums/bill-consolidation.html

The future- mobile cash transactions

16. January 2013 · Write a comment · Categories: Financial News · Tags: , , , ,

Banking giants HSBC, Barclays, RBS (Royal Bank of Scotland), Lloyds and Santander have signed up to the future of mobile cash transactions.  This means the enabling of payments that can be made by mobile phone with no need to have any bank account details.  Other large banking groups including Metro Bank, Danske Bank and Cumberland are also participating in the scheme.  In the UK this means 90% of people with current accounts will be able to enrol.

The Payments Council, which launched the scheme, insist the technology will be safe for users.  There will be strict service standards and a set of minimum technical requirements for use.  For security there will be measures such as passwords to allow payments to be made, and if there is suspicion of wrongful use then the banks will have the authority to remotely disconnect an account.  According to the Chief Executive of the Payments Council Adrian Kamellard, this new service ‘will offer a simple, secure way to split a bill for dinner, receive money from a friend or pay a tradesman without needing to remember or share account details’ (Source: The Telegraph).

 

The scheme won’t be up and running for another year or two still and will be reliant on already established money movement processes.  Its announcement follows the coming together of a central database that securely records the connection of bank users mobile phones to their accounts.  Smartphone users have been among the first to express their anticipation of the scheme and desire to enrol onto the new service when it goes live.

CPP Causes The Next UK Financial Problem

19. November 2012 · Write a comment · Categories: Finance · Tags: , , , ,

As the PPI crisis in the UK begins to settle down, a new financial scandal surfaced announced by news outlets last Friday. Credit Protection Plan Limited, who had worked with Barclays, RBS, Santander and HSBC, was fined £10.5 million by the Financial Services Authority for mis selling credit card insurance that customers did not need.

The City watchdog confirmed that CPP worked with banks to sell their insurance. HSBC and Santander used CPP’s card activation process where the insurance company took time to advertise their insurance plans to customers. Customers believed they were buying insurance directly from banks. The FSA objects to the £100,000 cover for credit cards because banks will often compensate for fraudulent transactions through identity theft and card loss.

According to experts, the CPP insurance was not entirely expensive, but it was widely mis sold. The company faces a total bill of £33.4 million aside from their fine from the Financial Services Authority. The company is estimated to have mis sold 4.4 million credit card policies between January 2005 and March 2011.

The Financial Services Authority states that once again, the bank representatives and salesmen of CPP were “given incorrect incentives”. Based on the watchdog’s investigation, CPP encouraged their salespersons to urge people and be overly persistent, having more customers purchase the insurance that they did not need at all.

It is estimated that millions of people would be making claims once the CPP claims system is in place. Claims management companies, such as MisSoldPPIClaimsCo.co.uk, have already helped thousands of people in recovering their money.

Banks will also be fined for their part in the scandal as they also received commission through every purchase of insurance by CPP for every purchased and renewed insurance policy. Also, a great number of banks introduced customers to CPP through their contact sticker on new debit or credit cards.

Retirement Investment: What You Need to Know

12. November 2012 · Write a comment · Categories: Investments · Tags: , , , , , , ,

Investing in the stock market is a great way to at least know your savings will continue to nourish your finances and make them grow for the long run but you will need to know more about the investment market before you retire. During retirement, you have all the time to learn about the stock market, but at a young age, you could get more experience in handling at least a large amount of money before you go all in with some of your savings.

One thing that investors should accept is that there is an infinite uncertainty in the stock market and it never goes away. Prices can fall, stocks can rise, bonds can default, new presidents can affect the economy and business stakeholders can bring down the boat. Knowing this reality in the stock market is what will test your mettle as two kinds of investors.

You could choose to be a dynamic investor. Dynamic investors have more adventures and learn faster, but also have the highest risk of losing more money in the process of investing. A dynamic investor reacts to the latest economic movements, estimating which investments would be placed at high risk, going for gold or antiques and other rare items during inflation and will likely shift their attention to stocks and long-term bonds during an economic recession or poor economic growth.

Defensive stocks and long term bonds, which help the stock market defend itself from any potential plummet, has greater yields when the economy fails to provide. However, they also have a high risk of defaulting depending on the credit rating of issuers.

Systematic investors are those who only stay in equilibrium with enough profit from stocks and occasional bonds and gold in the process. They understand that they do not need to react to all financial movements in the market and would likely adjust their investments to re-balance and return their investments to an earlier state.

Whoever you may be upon your retirement, these two personas of investors can definitely help you figure out the type of investment and the amount of money you would invest in the market.

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