Category Archives: Finance

#esanevent stimulates debate on consumer voice

On Wednesday 2 November, 18 speakers and 92 delegates came together at the iconic BT Tower for the ESAN Conference: How can the consumer voice be better heard in the regulation of essential services?  “Fantastic speakers, great content, excellently chaired”   #esanevent
Earth Hour

UKRN launches leaflet for vulnerable consumers seeking support services

ukrnThe UK Regulators’ Network has today launched an advisory leaflet to help ensure vulnerable consumers get the help they need to access essential services.

Produced through a collaborative effort between Ofgem, Ofcom, Ofwat, the ORR and the CAA, the leaflet highlights a range of free support services offered by utility, telecommunications and public transport providers.

The UKRN website gives details of how to get braille, audio and large print versions of the leaflet.

The value of being online

cash pileBT has commissioned independent research to try to establish the social
value of digital inclusion activities in the UK.  Find it here.

The value of being online to a new user is £1,064 per annum. This comes from having more confidence, making financial savings online, new job seeking skills and a reduction in social isolation.  Other figures for more experienced users are also given.

 

New figures on the cost of not being online

cash-1-editedThe Keep me Posted campaign have carried out research with the Centre for Economics and Business Research (CEBR) into the additional costs of being offline, which shows that people who are not online pay £440 more per year.  Read more here.

Findings:

•             Households who do not use the internet pay an average of £440 more a year for their goods and  services, equivalent to 4.4 per cent of their average household income

•             This equates to 5.4 per cent of the average household income for older people aged 65 plus and the most vulnerable people in society

•             Households that cannot take advantage of lower energy and telecoms tariffs for switching to online-only services miss out on a potential annual saving of £139

•             7 million people in the UK have never used the internet, with the vast majority (72 per cent) being the poorest 10 per cent in society

•             Almost half (48 per cent) of those 65 years of age and over have never used the internet

 

Wonga to pay compensation after sending letters from non-existent law firms to customers in arrears

cash-pile-editedThe FCA said 45,000 customers of the UK’s biggest payday lender would be compensated after it found that letters threatening legal action from non-existent law firms had been sent to customers, in an attempt to boost collections by increasing the pressure on people in debt.  In some cases customers had been charged for the letters.

The practice ended four years ago before the FCA had responsibility for payday lenders and credit, so it does not have powers to fine Wonga.   Which? welcomed the tougher line being taken by FCA on irresponsible lending.  The FCA stated that it “expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments”.

Shelter warns of families on financial knife-edge

why_cash_is_cool-editedShelter warns that almost 4 million families are living without any safety net.

Some 3.8 million families have only enough money to pay their rent or mortgage for a month if they lose their jobs, the housing charity has said.

Shelter, which surveyed 7,500 people, said high housing costs and stagnating wages meant many were living on a financial knife-edge.

The survey

Shelter’s findings were based on a YouGov survey of 7,500 adults who pay rent or a mortgage. It says 44% of working families with children under the age of 18 could be one paycheque away from losing their homes if they became unemployed because they have little or no savings.

Its researchers also found that 29% of families would immediately be unable to afford to pay for their home if they lost their income.

Read more here.

FCA wants financial services firms to stop charging expensive rates for calls

FCA_logo.2The FCA is concerned that customers are being charged high rates to contact financial services firms and will consult with industry, consumer organisations and consumers to ensure customer calls are more affordable.

According to FCA boss Martin Wheatley:

“We want to update our rules so that they best meet your needs as a customer. This means charges for both consumer helplines and complaint lines being capped at the cost of a basic rate call – so the same price as calling your neighbour or a family member on their landline”.

FCA will issue a consultation but wants firms to look at their practices in advance of this.

Consultation

The FCA’s consultation will propose the standardisation of the rules so that charges for consumer help, and complaint, lines are capped at the cost of a basic rate call. In a letter to consumer group, Which?, the FCA said it believed that the introduction of requirements in the Consumer Rights Directive, designed to ensure firms no longer charge a premium for calls, should apply to all financial services firms.  The Directive requires firms to offer basic rate numbers for enquiries but at present, this does not apply to financial services firms.

In the same consultation the FCA will also look at a number of proposals to improve complaints handling by financial services firms including looking at complaints reporting and responding to the recommendations of the Parliamentary Commission on Banking Standards.   The consultation will be published later this year.

Read more from FCA here.

FCA announces new rules for payday lenders

cash-1-editedThe Financial Conduct Authority has confirmed the final rules that will govern the £200bn a year consumer credit market, which includes approximately 50,000 firms, from 1 April 2014.

The rule changes will give consumers additional protection from rogue practices and put the onus on credit providers to ensure that they treat customers fairly at all times.

The biggest changes come for payday lenders and debt management companies, including:

  • limiting -overs to two
  • restricting (to two) the number of times a firm can seek repayment using a continuous payment authority (CPA)
  • a requirement to provide information to customers on how to get free debt advice
  • requiring debt management firms to pass on more money to creditors from day one of a debt management plan, and to protect client money

Consumer credit providers will need to ensure that they give customers the right information to make informed choices, that their services meet consumer needs, and that people in difficulty are treated fairly.  Read more here.

Thematic review

The FCA have also announced they will start a review of the market as soon as they take over responsibility on 1st April:

Payday lenders and other high cost short term lenders will be the subject of an in-depth thematic review into the way they collect debts and manage borrowers in arrears and forbearance, the Financial Conduct Authority announced on 12th March.

The review will be one of the very first actions the FCA takes as regulator of consumer credit, which begins on 1 April 2014, and reinforces its commitment to protecting consumers – one of its statutory objectives. It is just one part of FCA’s comprehensive and forward looking agenda for tackling poor practice in the high cost short term loan market.  Read more here.

Money Advice Trust welcomed the rules saying:

We believe the transfer of regulatory control to the FCA will provide a boost for consumer protections. We especially welcome rules that require customers with high-cost credit in clear financial difficulty to be referred to free debt advice services. Nine out of ten people who speak to a National Debtline adviser say they feel more in control of their finances as a result.

The new two tier regime of regulatory scrutiny should help ensure consumers are protected from some of the worst practices in the industry. Mandatory affordability checks have the potential to prevent much of the harm we see in some credit markets, and so it is important these are rigorously enforced.

FCA publishes review of mortgage arrears handling

FCA_logo.2The review looked at how firms treat customers in arrears or financial difficulty.  This is of particular concern as the possibility of interest rate rises looms.  The review finds that arrears management in firms has improved since the last review. However, mortgage lenders and administrators need to place greater emphasis on delivering consistently fair outcomes for customers based on their individual circumstances.

FCA is working with industry to help them improve their practices. This includes better support and empowerment of front-line staff and greater flexibility to support fair treatment of individual customers, based on their specific personal and financial circumstances.  FCA also wants firms to take proactive steps to identify borrowers who could be susceptible to potential interest rate rises and have strategies to treat these customers fairly.

 

Read more here.

CF launches “Next generation intermediaries”

Consumer-Futures-logo-editedLow levels of consumer switching characterise many essential services markets (think current accounts or energy suppliers) and mean that competition alone isn’t sufficient to drive improvements.  Two new reports from Consumer Futures have tackled this issue head on, introducing the concept of a new form of intermediary.

Next Generation Intermediaries (NGIs) are services that enable consumers to get better outcomes from complex markets by doing very little themselves – effectively outsourcing engagement to a new kind of intermediary service that works on their behalf. They would empower any consumer who lacks the time or inclination to trawl around for a better energy, financial services, or mobile phone package to instruct the intermediary find the offer that best meets the consumer’s declared criteria, and then to instigate and oversee the switch for them.

Let’s call it ‘do it for me’. It envisages a world where any consumer who lacks the time or inclination to trawl around for a better energy, financial services, or mobile phone package can instruct a new kind of intermediary service to ‘do it for me’. What’s more, once that service identifies the offer that best meets a consumer’s declared criteria, the consumer can again say ‘do it for me’ and have the service instigate and oversee the switch to the provider of that offer. And the consumer can then keep saying ‘do it for me’ in relation to related services that require decision support.

 This paper provides an overview of the Next Generation Intermediary (NGI) concept – outlining the potential that NGI type services offer and the qualities that set them apart from established intermediary services. It provides an overview of how NGIs would work in practice, the technological trends that make this kind of approach possible now, and some thoughts on who might come to offer NGI services.