Weekly Money

Isa warning; current account problems; payday lenders slammed: energy company break up hint; 2m excluded from banking; euro ruling could lead to cheaper shopping; pension scammers; the stories we noticed this week

13 March

Some 825,000 people have so far bought the government’s market-leading pensioner bonds. They are available to those aged 65 and over until 15 May and pay 2.8 per cent on a one-year bond and 4 per cent on a three-year bond, although the interest is taxed. There is an investment limit of £10,000 per bond per person and you can apply at nsandi.com/65-guaranteed-growth-bonds

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If you don’t make use of your annual Isa allowance, you lose an important tax advantage, warns Darius McDermott of Chelsea Financial Services.

“The Isa allowance has been raised to £15,000 in the current tax year but to take advantage you have to take up the allowance by 5 April. However that falls on Easter Sunday this year which means people may have even less time to choose what to do with their allowance as leaving it to the last minute could be problems,” he warns.

What investment opportunities does he tip for anyone thinking of investing now? Find out by watching a video of me interviewing him.

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More of us would switch current accounts if we could take our old account number with us, the City Watchdog reckons. Account number portability could help to reduce fears about something going wrong with the switching service, such as payments not being redirected properly to a new account number, the Financial Conduct Authority said.

But Andrew Hagger of Moneycomms said people aren’t switching because they can’t work out which is the best deal. “Confusion reigns, particularly when it comes to overdrafts - with banks between them offering daily fees, interest charges and monthly fees,” he pointed out. “It’s no wonder people are staying put.”

12 March

We’re all going to live much longer which is great news. But it will also bring financial problems, as pension expert John Lawson of Aviva explains.

“How long will your money last?” he asks. “It’s a problem that many people will have to face.” The Independent’s Personal Finance Editor interviewed him about factors that affect longevity and what you should do to prepare for your longer life, especially in light of the new pension freedoms that come into effect in April. Watch the video of the interview.

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Identity theft now accounts for more than half of all detected frauds in the UK, according to Experian. To help reduce the chance of becoming a victim you should improve online passwords and have different ones for different accounts.

The company also advises: “Don’t be tempted to open emails and links or attachments received from people you don’t know. If an email seems suspicious, contact the relevant organisation and don’t give out personal details.”

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Less than half of parents regularly discuss money with children, with many saying they lack the confidence to do so, according to the Money Advice Service. It found that just 52 per cent of parents chat to their children about financial matters.

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Whiplash claims are adding £93 to the average motor insurance premium, warns Aviva. It has called for new measures that would help those with genuine injuries while reducing bogus or exaggerated claims.

The Government has already introduced reforms to stop lawyers from doubling their fees at the expense of defendants and their insurers and banned “referral fees” between lawyers, insurers and claims firms.

11 March

The City Watchdog yesterday accused payday lenders of unfair practices, particularly when dealing with people in debt.

The Financial Conduct Authority’s thematic review marking a year of its regulation of the high-cost credit sector revealed “unacceptable practices from many lenders, including failures to recognise customers in financial difficulty, failure to direct people to free debt advice and firms offering inflexible repayment options”.

The FCA found serious non-compliance and unfair practices in all firms that it reviewed, leading to poor outcomes for many customers and in some cases, serious detriment and financial loss.

Its investigation revealed that three firms were still hounding vulnerable people for debts even after they had provided medical evidence and letters from debt advisors about why they were failing to pay.

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Could the Big Six energy companies be broken up? It’s one of the possibilities that could come out of the current energy investigation by the Competition and Markets Authority, reckons Ed Davey.

The Climate Change and Energy Secretary knows that he’s likely to be out of a job come May’s general election, but believes he has been involved in a period of major change – and improvement – in the UK’s energy industry, not least in tackling the problem of rising prices and fuel poverty.

The culmination of that will be the first major report from the Competition and Markets Authority before the end of the year. “I’m not going to second guess their recommendations but whatever they turn out to be they will be based on evidence and analysis.

“We should support their proposals and it’s going to be a very significant moment. It will be a solution that promotes competition. The solution maybe even be to break up some of the incumbent companies who’ve held onto their customer base from when they were previously monopolies.”

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Nearly 2 million adults don’t have a bank account leaving them excluded from mainstream financial services, a new report published today warns. The Financial Inclusion Commission warns that financially excluded pay a ‘poverty premium’ of £1,300 each year and many are forced into high-cost loans with no access to credit.

It wants a senior politician to be appointed Minister for Financial Health and for the Financial Conduct Authority to promote financial inclusion as a statutory duty and as a core objective.

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Older workers should stay in employment if they want or need to, says a new report. Ros Altmann believes that older workers could boost the economy.

“The over 50s are a major untapped resource - a hidden talent pool that can boost output, employment and living standards now and in the future,” she says. “Evidence shows that, far from damaging job prospects, keeping more older people in work is associated with rising employment and wages for younger people.”

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Good news, shopping could get to get cheaper after The European Parliament voted for a cap of 0.2 per cent of the transaction value retailers pay for debit cards and 0.3 per cent for credit cards.

The cap will apply to purchases paid in the EU, whether abroad or on the internet and is expected to take effect from October with the savings passed onto consumers.

10 March

The new pension freedoms will give people some great opportunities, but also present some problems, reckons Jamie Jenkins of Standard Life.

“The biggest risk is scammers,” he warns. “The worst thing that could happen to anyone under the new freedoms is that they take all their money out and hand it to someone who is scamming them.”

He explains more in a new online video interview with The Independent’s Personal Finance Editor.

Inheritance tax could be shaken up in next week’s Budget, predicts Sean McCann of NFU Mutual. He said: “We’re weeks away from the General Election and George Osborne will want to woo voters with a landmark announcement to follow last year’s changes to pensions and Stamp Duty.”

The Chancellor could introduce a system similar to the Irish model where, rather than taxing someone’s estate, the person or people inheriting are taxed instead.

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Government forecasts predict that money raised from inheritance tax will almost double by 2019/2020 to £6bn. The majority of older people whose estate might be hit are unaware that it is set at £325,000, says Canada Life International.

9 March

Calls for variable energy tariffs to be scrapped to reduce the number of people who overpay for heating and lighting have not been supported by the Energy Secretary.

Independent supplier First Utility today called for variable tariffs to be scrapped to help the 70 per cent of Big Six customers overpaying by up to £235 per year.

But Energy and Climate Change Secretary Ed Davey said: “Banning variable tariffs would be a major intervention in the market. To do that you would need evidence that it was the right solution. There could be other solutions that promote competition.”

The Competition and Markets Authority is investigating the domestic energy market and is set to publish its interim conclusions in June. Mr Davey said whatever solution proposed would be based on solid evidence.

Ian McCaig, First Utility’s chief executive, said: “The UK energy industry has contrived to put itself in a situation where around two thirds of its customers are on the most expensive energy tariff the industry has to offer, namely the ‘standard variable tariff’. That simply can’t be right and is even more inexcusable in a climate where wholesale prices have been coming down.”

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Councils have been accused of turning to bailiffs and the courts rather than helping people in council tax arrears. StepChange Debt Charity research suggests councils are more likely to engage in aggressive enforcement action rather than offer affordable payment options to tenants.

“It is shocking that many councils are less likely to be helpful to people in debt than banks are, and are more likely to take people to court,” said Mike O’Connor, chief executive of StepChange. “The growth in people struggling with their council tax bills is only outstripped by growth in problems caused by payday loans.”

The number of people contacting the charity with council tax arrears has increased 372 per cent in the last five years and the average amount owed has risen £157.

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It’s 10 years today that the first peer-to-peer lender was founded in a barn in Buckinghamshire in March 2005. That was Zopa which has lent £750m, and expects to hit £1bn this summer.

Meanwhile peer-to-peer finance has blossomed throughout the world with the global industry now worth more than $10bn. Zopa has lent money from 58,000 individuals across Britain to 107,000 individual borrowers for cars, home improvements and paying off existing debts.

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Four out of five people say the state pension will be important in funding their retirement, but the vast majority admit it won’t be enough, according to research published today by Zurich.

More than a third of all respondents assumed the maximum state pension was more than its current level of £113.10. The findings suggest an over reliance on the state pension could mean many savers face a shortfall in old age unless they invest more in their own private provision.