Fresh Start UK

Queens Speech Summary

Tom Jones — Thu, 17 May 2012 15:33:22 +0000

Queens Speech Summary

The Queens Speech set out the government’s proposals including the following relating to the economy:

One focus of the legislative programme will be on economic growth
The first priority will be to reduce the deficit and restore economic stability
Legislation will be introduced to reduce burdens on business by repealing unnecessary legislation and to limit state inspection of businesses
Legislation will be introduced to reform competition law to promote enterprise and fair markets
Legislation will be introduced to establish a Green Investment Bank
Measures will be brought forward to further strengthen regulation of the financial services sector and implement the recommendations of the Independent Commission on Banking
A draft bill will be published to reform the water industry in England and Wales
Measures will be brought forward to modernise the pension system and reform the state pension, creating a fair, simple and sustainable foundation for private saving
Legislation will be introduced to reform public service pensions in line with the recommendations of the independent commission on public service pensions.
Approval will be sought of parliament relating to the agreed financial stability mechanism within the euro area.
Firm plans have been set out by the government to spend 0.7% of gross national income as official development assistance from 2013. This will be the first time the United Kingdom has met this agreed international commitment.

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APDSI becomes a member of MALG

Tom Jones — Wed, 16 May 2012 17:17:00 +0000

APDSI becomes a member of MALG

The Money Advice Liaison Group (MALG) is a non-policy making discussion forum and the Association of Debt Solution Intermediaries (APDSI) has announced its membership of the forum which was formed in 1987. Trade bodies and institutes, credit reference agencies and regulators within the credit and debt sector make up the 56 national organisations who are members. Within the United Kingdom, MALG aims to facilitate, organise and promote better communications, best practices, understanding and professionalism among national organisations concerned with consumer credit and personal debt.
Six local for with similar aims and objectives are supported throughout the UK by MALG. The resolution of differences and the exchange of views between members are also supported.

“We are very pleased to be joining MALG. At this time of significant regulatory change – publication of the OFT’s revised Debt Management Guidance, transfer of the OFT’s consumer credit powers to the new Financial Conduct Authority (FCA),the publication of the House of Commons BIS Committee report – Business, Innovation and Skills Committee – Fourteenth Report – Debt Management and discussions on a Debt Management Protocol – it is important that all sectors with a stake in the debt management sector are represented in any discussions on the future of that sector – regulators, creditors, consumer representatives, debt solution providers from both free and fee-charging sectors and intermediaries.
“Only thus can any changes which come out of these various regulatory strands be balanced and rounded and, most importantly, properly serve the needs of the most vulnerable constituency – consumers in debt, many through no fault of their own.” Commented the Secretary General of APDSI, Alasdair Warwood.
“To be a member of MALG without doubt conveys a certain good practice status to the industry; it is like a badge. Mutual understanding and communication, two of the hallmarks of MALG, should assist both APDSI and the wider industry to understand and work through together the various challenges that each face and those that the industry as a whole come up against.
“Together it should be possible to sort the wheat from the chaff within the brokerage and introducer sector and thus enable this sector to move forward towards good practice. There are a number of myths hanging over the introducer and lead generator sector and APDSI should be able assist the industry in general to better understand this particular sector and together with other MALG members strengthen their fight against abusive practices that do exist in this area” said Chair Anthony Sharp, who co-founded the Forum.

“The introducer sector of the industry. Which APDSI covers, is a difficult and somewhat controversial area of business. I believe APDSI will be able to inform MALG of the workings of this sector, help it to understand the difficulties and gain from MALG a fuller understanding of the general view of the other parts of the industry to this sector. All this should assist APDSI to continue down its path of improving practices with more confidence and support. The networking value of MALG is enormous and this works both ways.” He continued.

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Misunderstanding of Payday Loans

Tom Jones — Wed, 16 May 2012 15:06:24 +0000

Misunderstanding of Payday Loans

93% of customers think payday lenders treat them with dignity and respect said a survey by the Consumer Finance Association (CFA).

According to a survey by the CFA, it doesn’t matter how much interest is charged for a payday loan, provided you are treated with dignity and respect. “One of the largest ever pieces of research into the payday loan industry, conducted by international research agency YouGov, has revealed a massive gulf in attitudes between payday loan customers and politicians” claims the CFA, a trade association which includes several payday lenders among its members, showing that payday loans can be “misunderstood”.

93% of payday loan company customers think payday lenders treat them with dignity and respect, whereas only 5% of policymakers think they do so. 89% of customers think payday lenders explain their charges and fees clearly, whereas only 12% of policymakers think they do, found the survey.

However, when conducting the survey YouGov was careful to question a variety of policy makers, but the 300 payday loan users it questioned were all customers of just one company, The Money Shop – one of the biggest and more reputable high cost loan companies. The results of the survey would probably have been different had the sample been extended to customers other companies, including those having lost their licence following the Office of Fair Trading investigation into customer complaints.

YouGov were provided with the contact details of 3,600 Money Shop customers, from which 300 were randomly selected said a spokesman for the CFA, the Money Shop was chosen because of its size and high profile.

The way the survey was conducted raises issues of how representative of the industry the research is.

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Parliament to vote on Payday Loans

Tom Jones — Wed, 16 May 2012 09:30:42 +0000

Parliament to vote on Payday Loans

Parliament will vote on an attempt to give regulators the power to cap the cost of payday loans and other high-cost forms of borrowing. Stella Creasy, the Walthamstow MP, tabled an amendment to the Financial Services, in a move she says will offer greater protection to consumers even if it is never used. The amendment is to give power to the new financial regulator to set a maximum amount which can be charged for credit by lenders.

The bill covers a range of measures including a reform of how banks are regulated and will see replacement of the Financial Services Authority with the Financial Conduct Authority (FCA). Regulation of consumer credit will also be taken away from the Office of Fair Trading by the FCA.

Consumers will be expected to be protected from being mis-sold poor financial products by the FCA, but Creasy’s amendment seeks to allow it to set a maximum price for loans with a view to curbing costs in the short-term loans market. The cap would be on the total amount that could be charged for borrowing once arrangement fees and interest were added together, not on interest rates alone. “The FCA may make rules or apply a sanction to authorised persons who offer credit on terms the FCA judge to cause consumer detriment. This may include rules that determine a maximum total cost for consumers of a product and determine the maximum duration of a supply of a product or service to an individual consumer” reads the amendment.

As the economic downturn and credit squeeze has forced struggling consumers to look beyond high street lenders for money, payday loan companies have become a common sight on UK high streets. Internet companies, who can allow consumers to borrow cash at rates of up to 4,214% through mobile phones and online, have also taken off.

Some consumers find themselves rolling over their borrowing and accruing large debts even though the industry argues its loans are designed for short-term borrowing. Anyone falling behind with payments quickly sees their debts mounting due to the rates of interest.

Creasy’s amendment would allow the regulator the power to impose a cap.

Currently, if lenders are found to be in breach of their consumer credit licence, they can be sanctioned by the OFT; Creasy argues fines are no deterrent and it can take years for a licence to be removed.

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Expansion of Payday Loan Companies.

Tom Jones — Tue, 15 May 2012 11:22:05 +0000

Expansion of Payday Loan Companies.

The fact that banks are not providing a service that they exist to provide is evidenced by Wonga’s move into the business loans market. Deborah Orr writes that in difficult times banks should support good businesses. Opportunities are brought by every crisis and the credit crisis has provided an opportunity for the “alternative credit industry”. Payday loan companies have never had it so good and are one of the few new businesses opening in the high street. The sector has expanded 5 fold in recent years and is now “worth” £1.7bn. Wonga announced recently that it was moving into small business loans.

In recession, alternative loan businesses have expanded in direct response to the economic crisis. Wonga emphasises that it will provide a service that is supplementary to banking services and its small business loans will be short-term and aimed at companies with cash-flow problems, rather than companies seeking capital investment.

Payday loan companies rely on the high interest rates paid by those who don’t default to supplement those who do.

A campaign has been ongoing for 2 years by the Labour MP for Walthamstow, Stella Creasy, for a cap to be put on the cost of credit. The government agrees that the proposed Financial Conduct Authority (FCA) should be allowed to cap the cost of credit but it doesn’t have explicit power to do so, meaning any attempts to curb interest rates by the FCA would be subject to legal challenge.

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Credit History Records: Payday Lenders

Tom Jones — Mon, 14 May 2012 13:15:16 +0000

Credit History Records: Payday Lenders

Credit reference agency Equifax has issued an alert that some payday lenders are failing to record all their lending transactions. The payday lending industry has been accused of not making enough checks to ensure it is lending responsibly. This means that other lenders may not be seeing all clients’ borrowings when they check the credit files of applicants.

Neil Munroe, the external affairs director at Equifax said “Sharing data about customers’ payment behaviour would enable payday lenders to check they are not lending irresponsibly to people who have multiple loans and who are rolling debt over from one payment period to the next. But, as importantly, when the data is made available to mainstream lenders, it will help to rehabilitate the credit records of higher-risk borrowers who repay their payday loans on time.”

The Office of Fair Trading is investigating the payday loan industry over its lending practices and very high charges. Firms have been accused of targeting the young and trapping customers in a debt-ridden lifestyle, interest on short-term loans can be as high as 4000 per cent. Recently, MPs on the Business, Innovation and Skills Select Committee, said that payday lenders should record all transactions on a shared database so that consumers’ credit histories can be accurately monitored.

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Get-out Clauses relaxed on Virgin Active Gym Membership

Tom Jones — Fri, 11 May 2012 12:04:27 +0000

Get-out Clauses relaxed on Virgin Active Gym Membership

The gym chain was prompted to improve terms for members who lose their jobs following discussions with the Office of Fair Trading (OFT).

Virgin Active has agreed to give members who lose their jobs longer to cancel their contracts. Following a high profile court case against Ashbourne Management Services, a company that draws up agreements and collects payments for gyms, which found its contracts to be unfair, The OFT has been investigating the use of contracts in the health club industry.

The OFT has closed its investigation into Virgin Active as there has not been any evidence found that unfair contract terms were being used. Virgin has agreed to improve terms for members who lose their jobs and reduce the notice period for members on legacy 24-month Esporta contracts from three to one month.

Anyone made redundant has now been given two months from their final working day to give notice to quit their membership, previously it was one. If people lose their job through circumstances other than redundancy; Virgin Active has agreed to allow membership cancellation.

Standard debt collection letters will be changed for customers in arrears, highlighting the benefits of debt advice.

“Virgin Active is delighted that the company has been given a clean bill of health by the OFT with regard to their investigation into the health club sector’s use of contract terms and business practices considered to be unfair by the high court in the Ashbourne Management Services case.

“During the course of its discussions with the OFT, Virgin Active suggested some minor improvements to its terms and conditions and the debt collection letters used by third parties collecting debt on its behalf, which the OFT agreed with.” The company said in a statement.

This was part of a wider investigation into gym contracts across much of the industry, which is ongoing.

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Increase in UK Car Production

Tom Jones — Thu, 19 Apr 2012 12:26:38 +0000

Increase in UK Car Production

According to the Society of Motor Manufacturers and Traders (SMMT), UK car production rose in March to 135,456, an increase of 0.3% on the previous year.

Cars made for export fell by 1.8%; however, the number of cars produced for the UK market rose by 9.3%. Of the cars produced in the UK in March, almost 80% were for overseas markets.

Overall vehicle sales were down 1.5% in March. As demand from overseas fell sharply, commercial vehicle production slumped by 21%.

Paul Everitt, SMMT chief executive, said “Challenging economic conditions in mainland Europe are a concern, but the sector continues to win business in important and faster growing export markets.”

“The prospects for the UK motor industry are extremely good with new investment, commitment and jobs being created by global automotive companies.”

Car production rose 12.3% during the first three months of 2012. Nissan said its new hatchback would be produced at its Sunderland plant earlier this month, boosting the UK car industry. By 2014, the new model could lead to the creation of 225 jobs at the factory and a further 900 in the supply chain.

Jaguar Land Rover unveiled its XF Sportbrake estate car at the Geneva Motor Show in Switzerland and confirmed its latest model would be made in the West Midlands.

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Child Benefit Payments could be docked for Parents of Truants

Tom Jones — Wed, 18 Apr 2012 13:53:02 +0000

Child Benefit Payments could be docked for Parents of Truants

Child benefit payments could be docked for parents who let their children play truant from school.

The current system of penalty notices does not work because around half of them went unpaid, said the Government’s adviser on behaviour.

The maximum fine will go up from £50 to £60, doubling to £120 pounds if not paid within 28 days, under Charlie Taylor’s new plans.

Mr. Taylor said the money should be taken automatically from their child benefit, if people fail to pay.

The plans come in the wake of the summer riots last year

“Recouping the fines through child benefit, along with other changes to the overall system, will strengthen and simplify the system” said Mr.Taylor.

One of the last resorts for schools to deal with absence problems is issuing fines to parents. The fine is doubled if the parent fails to pay within 28 days.

The school or local authority has to withdraw the penalty notice, with the only further option being for local authorities to prosecute parents for the offence, if the fine is not paid after 42 days.

Last year over 32,600 penalty notices for school absence were issued to parents, and, since introduction in 2004, more than 127,000 have been issued.

A recommendation that the Government should toughen up rules around term time holidays is expected from Mr. Taylor. The latest figures show that these remain a major reason for absence and increased from 9.3% in 2009/10 to 9.5% of overall absence, in 2010/11.

A recommendation that the Government should toughen up rules around term time holidays is expected from Mr. Taylor

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Government Plans to Cap Tax Relief

Tom Jones — Wed, 18 Apr 2012 13:50:06 +0000

Government Plans to Cap Tax Relief

Immediately seen as the start of a U-turn and amid an ongoing row about how a cap would affect charitable donations, Downing Street unveiled the move to cap tax relief. Prime Minister David Cameron wanted to encourage charitable giving but refused to say whether he accepted the proposal would hit donations, said Number 10.

Almost one in 10 people earning more than £10m a year pay less than the 20% tax rate, figures released by Treasury showed, in a bid to justify the step.

The proposal to limit income tax reliefs to £50,000 or 25% of income will be the subject of a consultation set to report in the summer, it has now been revealed.

In the coming days and weeks, ministers are due to hold talks about the policy’s implementation with charity groups and philanthropists

“I want to see Britain’s charities succeed but at the same time I think it is important to make sure that the wealthiest people in our country are actually paying a good share in income tax, This was never going to be introduced until next year – [there is] plenty of time to get it right, plenty of time to consult and listen. The key principle is more for charities and philanthropic giving yes – but allowing people to drive down their tax rate to 10% when they are some of the richest in the country, no,” said David Cameron at the Tory local election launch.

How these changes will affect donations, half of which comes from the 7% wealthiest donors, concerns Charities.

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