Money News: 'Free' broadband - or a 'marketing stunt'?

The battle for broadband customers is expected to intensify over the next few weeks after Carphone Warehouse launched a "free" service linked to a telephone landline deal.

The retailer is offering free broadband at speeds of up to 8MB - enough to download music rapidly or watch films online - to those customers prepared to take out TalkTalk's £9.99-a-month Talk 3 International Call deal.

This allows unlimited free calls to any landline in the UK (apart from premium and national-rate 0845 numbers) and 28 other countries including Australia and the US.

Carphone Warehouse estimates that this offer could save between £250 and £400 a year on broadband and phone deals, depending on customers' existing packages and providers.

However, critics have pointed out that there are plenty of other costs to consider.

The TalkTalk deal also carries a monthly £11 line-rental fee, a one-off £29.99 connection charge and a minimum 18-month contract. If they try to leave the deal early, consumers will have to pay a fee of up to £70, depending on how many months are left.

The offer will be available at first to only 70 per cent of the UK because of delays in the rollout of its service to some of BT's local exchanges. People in these areas will have to pay an extra £9.99 a month to be connected.

Rival BT branded the deal a "marketing stunt", while Tiscali, the internet provider, said "nothing is ever really free" and stressed customers would have to move their landline rental away from BT and would still be charged for calls to mobile phones.

However, industry analysts said they expected rivals to slash their own broadband prices in response.

Broadband costs have fallen over the past 18 months as BT has been forced to give other companies access to its landline network, bringing fierce competition.

Some 10 million UK homes now have broadband.

With-profits policies: Royal Liver penalised for mis-selling

Royal Liver Assurance was fined £550,000 by the Financial Services Authority last week for mis-selling with-profits savings policies to elderly customers.

The policies, which carry an element of life insurance, were sold to more than 3,100 people aged over 59 between 1999 and 2003.

Royal Liver's failing, the City regulator said, was to sell policies to customers who had no "demonstrable need" for life cover (as part of a savings policy), or to those for whom the insurance was not suitable.

The effect was that older savers who wanted an ordinary savings policy were sold a product that, due to the expense of the life cover, risked returning less than the total value of their premiums.

Margaret Cole, the FSA's director of enforcement, called it a "serious case" of mis-selling.

"A significant number of [the company's] customers were nearing retirement age and did not need the cover they were sold," she said. "The failings were systemic and arose from weaknesses in the firm's sales and compliance processes."

Royal Liver accepted the fine and said it had contacted every one of the 3,154 customers to repay £2.25m in premiums as well as £246,000 compensation for lost interest.

With-profits policies invest in the stock market and aim to "smooth out" returns by holding back profits made in good times to compensate for periods of bad performance. But their popularity waned when market falls forced many insurers to cut annual bonuses, and mis-selling scandals tarnished the sector.

Energy prices: 'Misleading' British Gas ad taken off the air

British Gas has been ordered to withdraw a TV ad after the advertising watchdog declared it had misled consumers on fuel prices.

A handful of viewers from England and Scotland had joined rival company Scottish Power in complaining about the ad, featuring an animated gas flame.

In the commercial, the flame character - representing a customer - said energy prices were going up everywhere and that staying put with Scottish Gas (part of British Gas) was a good decision.

"Last year, I heard prices were going up ... and I thought if we change, the other provider might change and put theirs up as well," it said.

"So we just sat tight. The other provider did put their prices up and I believe it's all balanced out... We stayed put and we were happy about that."

At this point, a pair of weighing scales appeared on screen. Other ads were worded similarly but didn't feature the scales.

The complaints concerned the implication that British Gas prices were broadly comparable with those of competitors - and that prices would not be lower elsewhere.

The Advertising Standards Authority upheld the complaints and ruled that the ads "misleadingly implied there was no ma-terial difference in price between energy suppliers, and that customers were unlikely to save money shopping around to compare prices".

A British Gas spokesman said the ads were based on the genuine opinion of a customer, and were designed to highlight that costs were rising at all suppliers.

Insurance: Customers enlightened on critical illness cover

Literature for critical illness (CI) protection policies is to be made more transparent to help consumers gain a better understanding of the limits of the product.

A "statement of best practice" launched by the Association of British Insurers aims to ensure that consumers have a clearer idea of what CI does and doesn't cover - so there are fewer declined claims.

The literature will now include a standard description of CI for consistency and a clearer definition of the illnesses covered by the policy.

The industry has been dogged by complaints from consumers who have taken out policies and later made claims, only to find their conditions didn't qualify for a payout.