Money Advice Update - September 2019

The Guardian reports Bedtime browsing trend fuels night-time shopping at John Lewis

John Lewis says duvet covers are the most popular item, with flights and holidays the most common credit card purchase. Bedtime browsing by sleepless Brits in the middle of the night has resulted in a 23% increase in nocturnal spending over the last year alone, according to John Lewis. They said that online shopping between midnight and 6am now accounts for around one in 15 purchases that use its credit card. Women are much more likely to spend the early hours shopping than men, according to the data. It found that women account for 66% of purchases made between midnight and 6am, although their average spend was below that of men. Two decades ago, Saturday afternoon was the peak spending time on cards in the UK, but online shopping has revolutionised spending habits.
 
To read the full article click here
 
 

Credit-connect reports that credit card spending hits all-time high.

Spending on UK credit cards hit an all-time high in July according to new figures from the trade body for UK banking and financial services UK Finance. The figures show credit card spending totalled £12 billion in July – the highest on record, an increase of 8.2% on July 2018. The findings may fuel fears that the UK economy is being propped up by an unsustainable consumer spending bubble. Consumer spending has been a key driver of GDP growth in recent years but have been spending more than they earn. Data published earlier this month showed that UK wages were growing at the fastest pace in 11 years, which may help to ease pressure on consumer finances. Overall, credit card borrowing grew by 3.8% in the year to July 2019. Personal loans and overdraft spending also rose in the month, by 9.3% and 1.7%.
 
To read the full report click here

 

Daily mail reports BBC host Helen Skelton was scammed out of her £70,000 life savings

Speaking on Lorraine, the 36-year-old was scammed out of £70,000 of savings. Skelton is now preparing to host a new show warning about phone scamming. She revealed she was conned out of £70,000 by telephone bank scammers after answering questions on the phone to someone who claimed to be from her bank. The TV and radio presenter said it was naive to think only elderly people fall victim to such fraud, as many others were too embarrassed to admit it had happened to them. Miss Skelton said she was looking after her children when she received a ‘dodgy’ phone call from what she believed was her bank. A week after answering ‘a few questions’ she made the horrific discovery that her account had been drained of her life savings, of which she has recovered only a small amount.
 
To read the full article and watch the interview click here.
 
 

UK Finance release the Northern Ireland Mortgage Trends Update

Northern Ireland mortgage market sees continued growth. There were 2,810 new first-time buyer mortgages completed in Q2 2019, 4.1 per cent more than in the same quarter in 2018. Additionally, there were 1,780 new homemover mortgages completed in Q2 2019, 4.7 per cent more than in the same quarter in 2018. Most notably there were 2,750 new homeowner remortgages completed in Q2 2019, 16.5 per cent more than in the same quarter in 2018.
 
To view all the statistical infographics click here
 
 

The Guardian reports Danish bank launches world’s first negative interest rate mortgage

Jyske Bank will effectively pay borrowers 0.5% a year to take out a loan; they are the first mortgage lender to offer a negative rate. Some banks are considering moving to negative rates on deposits. Negative interest rates effectively mean that a bank pays a borrower to take money off their hands, so they pay back less than they have been loaned. Jyske Bank, Denmark’s third largest, has begun offering borrowers a 10-year deal at -0.5%, while another Danish bank, Nordea, says it will begin offering 20-year fixed-rate deals at 0% and a 30-year mortgage at 0.5%. The mortgage is possible because Denmark, as well as Sweden and Switzerland, has seen rates in money markets drop to levels that turn banking upside-down. However, the flipside is that savers will see nothing paid in interest on their deposits – and may suffer as they go negative. While the Bank of England’s base rate is 0.75%, and the European Central Bank’s main rate is zero, in Denmark (which is not in the eurozone) the equivalent rate is -0.4%. In reality, the Jyske mortgage borrower in Denmark is likely to end up paying back a little more than they borrowed, as there are still fees and charges to pay to compensate the bank for arranging the deal, even when the nominal rate is negative.
 
To read the article in full click here.
 
 

Are 15-year fixed-rate mortgages a price worth paying for security? Asks the Guardian

With the value of sterling a fraction of what it was three years ago, the threat of post-Brexit food shortages and the prospect of a recession looming, British households could be forgiven for seeking some sense of calm and consistency in their finances. A number of 15-year fixed interest rate mortgages have hit the market offering just that security, meaning homeowners will know exactly what their spend will be from now until 2034. Virgin Money announced it was offering a 15-year fix at the end of July, the first time such a loan had hit the market since 2009, in the midst of the financial crisis. Its offering gives rates of between 2.55% and 3.75% depending on loan-to-value ratio. Yorkshire building society then followed this with a 15-year fix offering 2.79% to 3.65% depending on the loan-to-value ratio. These loans are best suited to people who are in their “forever homes” and have no plans to leave.  However, for others who want to move or where a relationship has broken down, this could result in a substantial cost at a difficult and emotional time.
 
To read the article in full click here
 
 

The Mirror reports a quarter of people aged 55 fear making mortgage repayments into their 70s.

More than a quarter of people aged 55 believe they will still be shelling out mortgage repayments well into their 70s, and more than one in 10 fear they will never clear the debt, according to investment firm Hargreaves Lansdown. The Financial Conduct Authority (FCA) predicts two in five first-time buyers in 2017 will still be repaying home loans when they are 65. A mix of circumstances has led to people being unable to clear mortgages at a reasonable age, nearer their 50s, which was more the norm for past borrowers. From sky-high property prices and people taking on home loans later in life to borrowers stuck on interest-only mortgage deals they cannot afford to repay and others starting all over again and trying to get finances back on track after divorce.
 
To read the full article click here
 
 

Financial Ombudsman Service (FOS) launches their Annual Review 2018/2019

The past 12 months have been the busiest for five years. People brought more than 388,000 complaints to FOS - up 14% on the year before. They dealt with nearly 1.7 million phone calls, emails and letters from people concerned about their money. One of the trends behind the rise is complaints regarding consumer credit products and services – which grew by a further 89%, following last year’s 40% increase. When PPI is excluded, they represented one in every three new cases received.  FOS acknowledge this sector has been unacceptable: too many cases, customers were left to struggle with unsustainable debt. Looking at short-term lending in particular, the proportion of complaints that were upheld – around six in every ten – shows diligent lenders have been the exception. At the end of a volatile year that saw lenders collapse as a consequence of past unfairness, it’s vital that those remaining don’t allow history to repeat itself.
 
To read the full report click here
 
 

StepChange launch their impact report Stepping UP

StepChange had an incredibly busy year in 2018. In fact, they helped more people than at any time in their 26-year history. At the same time, they have made excellent progress in building the foundations so they can positively change the lives of twice as many people by 2022.
 
To read the report in full click here
 
 

Citizen’s Advice reports nearly half of benefit claimants hit by the benefits freeze can’t afford essential bills

New data from Citizens Advice shows 49% of benefit claimants affected by the benefits freeze have struggled to meet essential costs such as rent, household bills and food while 40% have lost sleep due to money worries in the past 12 months. The findings are worse for Universal Credit claimants, with over half (55%) having gone without essentials such as food, and 51% saying they have lost sleep because of their finances. The charity is calling for increased financial support for people claiming benefits as it finds almost two in five (39%) people who claim have less than £100 at the end of each month, after paying for rent or their mortgage, food, council tax and household bills. Disabled people and people with children were more likely to have gone without essentials such as food and toiletries. Around 44% of disabled people’s households and 45% of households with children went without in the past 12 months.
 
 

Christians Against Poverty (CAP) temporarily stops taking new debt clients

Debt advice charity CAP has announced that it has temporarily stopped taking new debt clients as their debt service is at full capacity. The announcement comes in the context of growing demand across the sector; last year's Decade in Debt Report from the Money Advice Trust reported an increase in both the number of people seeking help with problem debts, and in the complexity of debt cases. This development only affects the charity's debt advice service and its Job Clubs, Fresh Start and Life Skills groups and Money Courses are unaffected.
 
 

Gov.uk reports Nationwide refunds £6m to customers following CMA action

Nationwide has committed to refund £6m to affected current account customers after it broke a legal order from the CMA. The action comes after Nationwide was found to have broken Part 6 of the CMA’s Retail Banking Market Investigation Order 2017, which ensures customers with personal current accounts receive a text alert before banks charge them for unarranged overdrafts. This gives customers time to take action to avoid unexpected charges. Nationwide admitted contravening the Order 20 times, affecting over 320,000 customers. Some of the problems date as far back as February 2018 from when the Order was introduced. The CMA has directed Nationwide to take immediate action and improve its practices and compliance with the Order and any new processes must be audited by an independent body. Nationwide informed the CMA in June 2019 that, between June 2018 and June 2019, it had failed to provide leaflets on switching Personal Current Accounts to around 120,000 customers in breach of that Order. Although the Order was revoked before the CMA was notified of the breach, Nationwide has committed to provide affected customers with those leaflets.
 
 

Credit Strategy reports Monzo launches ‘get paid early’ feature 

Challenger bank Monzo has confirmed its two million customers across the UK will be able to take advantage of a feature allowing them to get paid a day early. Using the feature, customers will be able to get their hands on their salary or student loan free of charge, provided it is done via the Bank Automated Clearing System (BACS). All banks have access to this information and could do the same thing, Monzo said. The feature is rolling out from August 20, 2019, and is opt-in. Monzo’s also intends to launch mortgages, loans, products for businesses and ways to help consumers rebuild their credit scores.
 
To view Monzo’s new feather click here
 
 

Experian’s Boost to come to UK after US launch report Credit Strategy

Experian is to launch its consumer-consented data product Boost in the UK, Credit Strategy has learned. Boost, which has been on the US market since the end of 2018, allows customers who have either a poor credit score or a thin credit file, to add their own data to their file and improve their score. If consumers have been making utility and telecom bill payments on time, the product allows them to factor those payments into their credit files. In the US, consumers can grant Experian permission to connect to their online bank accounts to identify utility and telecommunications payments. After a consumer verifies the data and confirms they want it added to their credit file, an updated score is delivered in real time.
 
To read the full article click here
 
 

Which? Reports NatWest trials ‘voice banking’ with Google Assistant

Some 500 customers can say 'OK, Google' to start banking, selected NatWest customers will be able to bank with their voices, using Google Assistant on their smartphones or Google Home speakers, as part of a new trial.  The technology is being tested with 500 NatWest customers. They will be able to ask for details about their accounts, including their balance and recent transactions, and get verbal responses from their Google Assistant, along with text answers if they’re using a smartphone. At the moment, customers can ask eight questions and access 15 ‘banking tips’. If the initial three-month trial is successful, more features may be added. NatWest is the first, and so far only, high street bank to trial voice banking publicly. The bank suggests that voice banking might ‘follow the same path as mobile banking – moving from a niche way for people to manage their finances into a mainstream method to bank.
 
To read the full article click here
 
 

Financial Conduct Authority (FCA) launches Guidance for firms on the fair treatment of vulnerable customers

The FCA are currently consulting on Guidance to give firms involved in the supply of retail products or services clarity on how they should treat vulnerable customers fairly. Their Financial Lives survey found that 50% of adults show characteristics of potential vulnerability and thus may be more susceptible to experiencing harm. This is a significant concern and protecting vulnerable consumers is a key priority. They want to see firms embedding the fair treatment of vulnerable customers into their culture. Their research and engagement has shown that firms are making good progress. Despite this, there is room for improvement.
 
To view the consultation click here
 
 

FCA launched our Credit Information Market Study and published our Terms of Reference.

Credit information plays a critical role in many markets. It can impact consumers’ access to a range of financial services (including mortgages, loans and credit cards) and in some cases the price they pay for them. This is significant as, according to the FCA Financial Lives Survey, nearly 4 in 5 adults hold at least one credit or loan product. Furthermore, those vulnerable customers for whom a lender’s decision is more finely balanced are most likely to be affected if the credit information market is not working well. In exploring these themes, the market study will assess how the sector is working now and how it may develop in the future. They will report on the preliminary conclusions in Spring 2020.