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Match the money whizzkids
from This is money/Daily Mail
MANY children returning to school this week will get their first taste of personal finance education.
More than 2,000 students in over 100 schools and colleges in England and Wales are already studying the equivalent of GCSEs and A-levels in personal finance on a course set up by the Institute of Financial Services (ifs). And this number is set to rise dramatically.
The course first hit schools and colleges last year, covering banking, saving, borrowing, tax and National Insurance, with 60 hours of study in the Foundation paper.

This month the Intermediate Certificate, the second component of the qualification, kicks off.
It's an essential subject for youngsters if they are going to make the most of their money and avoid the HYPERLINK "javascript:self.name='main';PopUp('you_popup','/pages/jargon/index.html?in_jargon_term=mis-selling','350','150')" mis-selling and debt traps suffered by many of their parents' generation.

Research suggests classes on personal finance and budgeting in schools can lead to a couple with two children being on average £32,000 wealthier by the time they reach their 30s and 40s.

The Institute for Public Policy Research carried out its study in the U.S., where children are taught basic finance skills. But personal finance education in the UK remains mainly down to the whim of a school's headteacher.
The ifs exam is available only in schools that choose to take it up, and compulsory education on the subject remains pitiful.
The Qualification and Curriculum Authority (QCA) is introducing units to cover money, saving and spending as part of the Personal, Social and Health Education & Citizenship classes in schools this month.

Meanwhile, under an initiative known as Learning Money Matters, which has been set up by City watchdog the Financial Services Authority and which is due to start in September 2008, basic finance skills will be taught as part of the maths GCSE.
But critics say this is inadequate as it provides only seven-and-a-half hours of study over two years.
Most adults had to pick up financial skills in life as they borrowed, saved and spent. So here's your chance to test yourself with some basic questions from the two exam papers.

Tue, 12 Sep 2006 17:09:10 +0100
U.K. Banks' Unsecured Bad Debts Set to Increase, Says S&P
U.K. banks may see an increase in unsecured bad debts in the ``short term'' as consumers find it harder to repay credit amid rising living costs and after insolvency rules introduced two years ago made defaulting less onerous, said credit analysts at Standard & Poor's Rating Services.
``Unsecured impairments are likely to climb further,'' said the London-based analysts led by Nick Hill in a statement. ``Competition is likely to restrain any attempt to increase margins to compensate for the additional risk.''
Rising energy costs and interest rates and rules making it easier to negotiate so-called individual voluntary arrangement orders among those who default, have driven up unsecured bad debt by 70 percent in the last two years among the U.K.'s biggest banks, said the analysts.
Pretax profit at the U.K. units of seven British banks including HSBC Holdings Plc rose by an average of just 2 percent in the first-half of this year. Overall profits at the five biggest lenders climbed 22 percent, driven by overseas lending and corporate banking, said the analysts.
Lloyds TSB Group Plc, the No. 1 provider of unsecured loans in the U.K., ``has the greatest sensitivity to a further deterioration'' in consumer bad debts, said the analysts. A 50 percent increase in its bad-debt charge could reduce pretax profit by 18 percent. On the same measure, Barclay's profit would drop 11 percent and HSBC's 3 percent, the analysts said.
Debt Growth Slowing
The pace of growth in bad debts is expected to slow as banks have tightened their lending criteria. Still, ``indebtedness in the U.K. is unlikely to decline quickly,'' the analysts said. Prospects for growth in unsecured lending are ``low'' due to pressure on fee income, as the U.K.'s Office of Fair Trading's probes so-called payment-protection insurance, which is sold on loans and credit cards.
U.K. household debt is at a record 1.19 trillion pounds ($2.3 trillion), the bank of England said in May. Individual insolvencies in England and Wales rose in the second quarter to the highest since records began in 1960.
Tue, 12 Sep 2006 17:08:14 +0100
Sun, sand & spending: holidaying Brits hit borrowing high
As summer draws to an end, for many Britons the anticipation of a well-earned break has been replaced with the anxiety of paying for it all. A sixth (15 per cent) of British holiday makers admit to borrowing money to pay for their holidays this summer, according to the latest Personal Credit Index from CreditExpert, the online credit monitoring service from Experian.   

By far the most popular form of finance is a credit card, with 14 per cent of holiday makers choosing to pay for their holiday using this method, while one in 10 (10 per cent) had no idea how they were going to pay for their fortnight in the sun before they set off.   A third (33 per cent) of those who used a credit card to pay for their summer holiday say they don’t expect to repay the borrowed amount at their next statement, reveals the CreditExpert/Ipsos MORI research, which polled c2,000 adults across Great Britain in June and July of this year.   Some 14 per cent estimate it will take them four to six months to pay off their holiday credit card bill, meaning they could still be paying interest on the debt at Christmas. Two per cent expect to still be paying off the cost of this holiday in a year’s time.   

Heat is on as credit confidence drops   Personal credit confidence has seen a three point drop – from 101 in the second quarter of this year, to 98 in the third quarter, according to the CreditExpert Personal Credit Index, which tracks consumers’ current credit confidence and future expectations on a quarterly basis.
The impact of holiday costs may have contributed to this fall, together with rising fuel and energy prices and other seasonal effects.   The number of borrowers who are uncomfortable with their level of borrowing has risen by two percentage points over the third quarter of 2006, to 15 per cent, reflecting this overall drop in credit confidence.

Yet despite this, the vast majority of borrowers (76 per cent) still say they are comfortable with their current level of borrowings.   Among those with multiple credit holdings (defined as three or more credit cards or loans and a mortgage), a third (34 per cent) said they were uncomfortable with their debt in June – compared to just 18 per cent in April, clearly showing the impact of this drop in confidence.   
On borrowed time  More than a quarter (27 per cent) of borrowers say they expect their level of borrowing to decrease over the next six months, compared to 30 per cent in the second quarter of the year – a three percentage point drop in only three months.   

“Getting carried away and overspending a little on holiday is something nearly everyone has experienced, but the latest Personal Credit Index reveals a worrying picture of people failing to budget for their holiday costs or plan their repayments, meaning they could be repaying holiday borrowings well up to and beyond the Christmas period,” says Jim Hodgkins, Managing Director of CreditExpert.co.uk.   
“Being constantly aware of your financial situation can help you plan your future spending better and ensure that high periods of spending, such as holidays, don’t leave you struggling for the rest of the year.

An online credit monitoring service, such as CreditExpert, provides a summary of your financial situation so it can help you get your finances in order before planning any further spending. It will also alert you to any changes in your credit report which could have an impact on your future financial plans.”

Tue, 12 Sep 2006 17:07:15 +0100
Debt court judgments soar
THE number of debt judgments issued by the UK County Courts has soared, jumping by its highest number for 16 years.

County Court Judgments brought by lenders against people who haven't paid their debts hit 165,000 in the three months from the beginning of April to the end of June.
The figure was up by 25,000 on the same period in 2005 – the largest year-on-year increase since the start of the recession in 1990.
According to the Registry Trust, the body behind the figures, lenders were attempting to recover £500m worth of debt by going to the courts. Registry Trust chairman Malcolm Hurlston said: 'The rise in the number and value of consumer CCJs is proof of their [the lenders] concern about the performance of the credit economy. They are increasingly looking to the courts to recover bad debts owed by individuals.'
A HYPERLINK "javascript:self.name='main';PopUp('you_popup','/pages/jargon/index.html?in_jargon_term=CCJ','350','150')" CCJ stays on a person's credit record for six years unless they pay the balance within a month of its being issued. Even if the debt is paid within the six years, the CCJ will remain on file, but will be marked as 'satisfied'.
A CCJ is the first step in a legal process that can end with bailiffs at your door, demanding goods to the value of the debt. It is also the first step for a lender to take out a charging order, which converts an unsecured debt into a secured one, enabling it to make a claim on equity in the borrower's property.
The average amount of a CCJ in the quarter was £2,386, up from £2,155 in the same quarter last year.

Tue, 12 Sep 2006 17:07:12 +0100
Friends join forces to get on property ladder
from media.netpr.pl
Thousands of first-time buyers who cannot afford homes in London are joining forces with friends in "mates" mortgages.
Britain’s biggest bank, HSBC, said it has seen a 50 per cent rise in group loans.
• Stamp duty up 30 per cent in just three months
• £1m won't buy you a nice country home as prices rocket
These allow up to four friends to club together in a single mortgage so that they can buy a property that would otherwise be way beyond their reach.
Research from the bank suggests that up to three quarters of first-time buyers would consider purchasing a property with friends.
Barry Blackshaw, senior manager of lending markets at HSBC, said: "We are addressing customer need.
"First-time buyers are increasingly unable to meet traditional lending criteria as a result of house-price growth.
"As prices are unlikely to fall any time soon, we are expecting this trend to continue."
Demand for the mortgages is likely to be particularly strong in London, where prices have soared in a miniboom in many areas this year.
Nationally, first-time buyers are having to borrow a record average of 3.21 times their incomes, according to figures from the Council of Mortgage Lenders.
Although group loans are still only a small proportion of total lending, the figure of 0.7 per cent last year was more than double the 0.3 per cent seen in 2000.
Other lenders to offer them include Abbey, HBOS and the Britannia Building Society.
Last month, Morgan Stanley launched a shared equity loan through its new lending arm, Advantage, which offers up to seven times borrowers’ incomes in exchange for a share of potential profits when they sell.
But there is also growing concern that solutions such as clubbing together could create problems.
Sue Anderson, of the CML, said: "This kind of offer can create unstable households, which could ultimately be bad news for the owners and for the property market."
Keith Tondeur, of debt advice charity Credit Action, said: "They are building a housing market bubble but if the bubble bursts, millions of borrowers will be in trouble."

Tue, 12 Sep 2006 17:01:24 +0100
The Government is working closely with banks to ensure their customers get clearer information on credit card cheques
from media.netpr.pl
The Government is working closely with banks to ensure their customers get clearer information on credit card cheques.

Following a consultation, the DTI found consumers wanted more information on how credit card cheques work. Lenders have now agreed to include a summary of the costs and fees for using the cheques when they are distributed.

The consultation revealed that although there was a demand for more
transparency about fees and charges, there was no evidence to suggest credit card cheques were causing debt.

Consumer minister Ian McCartney has now called on lenders to introduce these measures as soon as possible. He said:

"These steps are an important move towards increasing the transparency about the marketing and use of credit card cheques.

"The extra information will go a long way in helping consumers and will make it easier for them to find the type of finance they want. I will be looking to the industry to deliver speedily on the changes it has promised.

"If it fails to do so, or if there is evidence that the operation of these cheques is causing harm to consumers, we will look again at the need to regulate."

Members of the payments trade association, APACS, have agreed to print
summary boxes on leaflets and letters sent out with credit card cheques
by the end of the year. A requirement to use them will be written into the banking code in 2007.

The summary boxes will include information on:

* details of interest rates for credit card cheques - including both
promotional and standard rates;

* clearer information on charges for using the cheque, for example fees for
use and charges if the cheque is not honoured;

* legal information explaining that credit card cheques do not benefit from
the same level of consumer protection as credit card payments; and

* a statement explaining how to dispose of unwanted cheques.

Twenty responses were received from credit card companies, trade associations
and debt-advice organisations during the consultation.

The Government will be keeping in close touch with industry bodies to ensure
they deliver their commitment to make information clearer for consumers.

Notes to Editors
1. The Government recently published its annual Over-Indebtedness Report. The
report outlined actions the Government is taking to tackle over-indebtedness,
including:

* the introduction of the Consumer Credit Act 2006 with new laws to improve
responsible lending and borrowing;

* £120m funding for financial inclusion initiatives including £45 million
to fund the launch of more free face-to-face debt advice around the UK and
£6 million to fund outreach initiatives; and

* the launch of Debt Test, an online self-assessment tool to improve financial
capability, particularly among young people.

* The full text of the Government response to the consultation is available
at: http://www.dti.gov.uk/consultations/index.html

2. The Consumer Credit Act updates and augments the 1974 Consumer Credit
Act. It aims to create a fairer, clearer and more competitive consumer credit
market by:

* Improving consumer rights and redress:
by removing the extortionate credit test and replacing it with a test concerned
with unfairness, and by introducing an alternative dispute resolution (ADR)
scheme for consumer credit matters to be run by the Financial Ombudsman
Service (FOS);
* Improving the regulation of consumer credit businesses:
by altering the powers of the Office of Fair Trading (OFT) to enable it to
take targeted action to drive out rogues, and by requiring minimum standards
of information provision to consumers throughout the life of the loan; and
* More appropriate regulation of consumer credit agreements:
by abolishing the £25,000 limit for regulation and making the rules concerning
enforceability consistent and proportionate.

Tue, 12 Sep 2006 17:01:19 +0100
The Government is working closely with banks to ensure their customers get clearer information on credit card cheques
from media.netpr.pl
The Government is working closely with banks to ensure their customers get clearer information on credit card cheques.

Following a consultation, the DTI found consumers wanted more information on how credit card cheques work. Lenders have now agreed to include a summary of the costs and fees for using the cheques when they are distributed.

The consultation revealed that although there was a demand for more
transparency about fees and charges, there was no evidence to suggest credit card cheques were causing debt.

Consumer minister Ian McCartney has now called on lenders to introduce these measures as soon as possible. He said:

"These steps are an important move towards increasing the transparency about the marketing and use of credit card cheques.

"The extra information will go a long way in helping consumers and will make it easier for them to find the type of finance they want. I will be looking to the industry to deliver speedily on the changes it has promised.

"If it fails to do so, or if there is evidence that the operation of these cheques is causing harm to consumers, we will look again at the need to regulate."

Members of the payments trade association, APACS, have agreed to print
summary boxes on leaflets and letters sent out with credit card cheques
by the end of the year. A requirement to use them will be written into the banking code in 2007.

The summary boxes will include information on:

* details of interest rates for credit card cheques - including both
promotional and standard rates;

* clearer information on charges for using the cheque, for example fees for
use and charges if the cheque is not honoured;

* legal information explaining that credit card cheques do not benefit from
the same level of consumer protection as credit card payments; and

* a statement explaining how to dispose of unwanted cheques.

Twenty responses were received from credit card companies, trade associations
and debt-advice organisations during the consultation.

The Government will be keeping in close touch with industry bodies to ensure
they deliver their commitment to make information clearer for consumers.

Notes to Editors
1. The Government recently published its annual Over-Indebtedness Report. The
report outlined actions the Government is taking to tackle over-indebtedness,
including:

* the introduction of the Consumer Credit Act 2006 with new laws to improve
responsible lending and borrowing;

* £120m funding for financial inclusion initiatives including £45 million
to fund the launch of more free face-to-face debt advice around the UK and
£6 million to fund outreach initiatives; and

* the launch of Debt Test, an online self-assessment tool to improve financial
capability, particularly among young people.

* The full text of the Government response to the consultation is available
at: http://www.dti.gov.uk/consultations/index.html

2. The Consumer Credit Act updates and augments the 1974 Consumer Credit
Act. It aims to create a fairer, clearer and more competitive consumer credit
market by:

* Improving consumer rights and redress:
by removing the extortionate credit test and replacing it with a test concerned
with unfairness, and by introducing an alternative dispute resolution (ADR)
scheme for consumer credit matters to be run by the Financial Ombudsman
Service (FOS);
* Improving the regulation of consumer credit businesses:
by altering the powers of the Office of Fair Trading (OFT) to enable it to
take targeted action to drive out rogues, and by requiring minimum standards
of information provision to consumers throughout the life of the loan; and
* More appropriate regulation of consumer credit agreements:
by abolishing the £25,000 limit for regulation and making the rules concerning
enforceability consistent and proportionate.

Tue, 12 Sep 2006 16:56:15 +0100
U.K. Banks Unsecured Bad Debts Set to Increase, Says S&P
from Bloomberg
U.K. banks may see an increase in unsecured bad debts in the ``short term'' as consumers find it harder to repay credit amid rising living costs and after insolvency rules introduced two years ago made defaulting less onerous, said credit analysts at Standard & Poor's Rating Services.
``Unsecured impairments are likely to climb further,'' said the London-based analysts led by Nick Hill in a statement. ``Competition is likely to restrain any attempt to increase margins to compensate for the additional risk.''

Rising energy costs and interest rates and rules making it easier to negotiate so-called individual voluntary arrangement orders among those who default, have driven up unsecured bad debt by 70 percent in the last two years among the U.K.'s biggest banks, said the analysts.
Pretax profit at the U.K. units of seven British banks including HSBC Holdings Plc rose by an average of just 2 percent in the first-half of this year. Overall profits at the five biggest lenders climbed 22 percent, driven by overseas lending and corporate banking, said the analysts.
Lloyds TSB Group Plc, the No. 1 provider of unsecured loans in the U.K., ``has the greatest sensitivity to a further deterioration'' in consumer bad debts, said the analysts. A 50 percent increase in its bad-debt charge could reduce pretax profit by 18 percent. On the same measure, Barclay's profit would drop 11 percent and HSBC's 3 percent, the analysts said.

Debt Growth Slowing
The pace of growth in bad debts is expected to slow as banks have tightened their lending criteria. Still, ``indebtedness in the U.K. is unlikely to decline quickly,'' the analysts said. Prospects for growth in unsecured lending are ``low'' due to pressure on fee income, as the U.K.'s Office of Fair Trading's probes so-called payment-protection insurance, which is sold on loans and credit cards.
U.K. household debt is at a record 1.19 trillion pounds ($2.3 trillion), the bank of England said in May. Individual insolvencies in England and Wales rose in the second quarter to the highest since records began in 1960.
Match the money whizzkids

This is money/Daily Mail 06/08/07
MANY children returning to school this week will get their first taste of personal finance education.
More than 2,000 students in over 100 schools and colleges in England and Wales are already studying the equivalent of GCSEs and A-levels in personal finance on a course set up by the Institute of Financial Services (ifs). And this number is set to rise dramatically.
The course first hit schools and colleges last year, covering banking, saving, borrowing, tax and National Insurance, with 60 hours of study in the Foundation paper.

This month the Intermediate Certificate, the second component of the qualification, kicks off.
It's an essential subject for youngsters if they are going to make the most of their money and avoid the mis-selling and debt traps suffered by many of their parents' generation.

Research suggests classes on personal finance and budgeting in schools can lead to a couple with two children being on average £32,000 wealthier by the time they reach their 30s and 40s.

The Institute for Public Policy Research carried out its study in the U.S., where children are taught basic finance skills. But personal finance education in the UK remains mainly down to the whim of a school's headteacher.

The ifs exam is available only in schools that choose to take it up, and compulsory education on the subject remains pitiful.
The Qualification and Curriculum Authority (QCA) is introducing units to cover money, saving and spending as part of the Personal, Social and Health Education & Citizenship classes in schools this month.

Meanwhile, under an initiative known as Learning Money Matters, which has been set up by City watchdog the Financial Services Authority and which is due to start in September 2008, basic finance skills will be taught as part of the maths GCSE.
But critics say this is inadequate as it provides only seven-and-a-half hours of study over two years.

Most adults had to pick up financial skills in life as they borrowed, saved and spent. So here's your chance to test yourself with some basic questions from the two exam papers.

Thu, 07 Sep 2006 16:00:57 +0100
Sun, sand & spending: holidaying Brits hit borrowing high
from www.easier.com
As summer draws to an end, for many Britons the anticipation of a well-earned break has been replaced with the anxiety of paying for it all. A sixth (15 per cent) of British holiday makers admit to borrowing money to pay for their holidays this summer, according to the latest Personal Credit Index from CreditExpert, the online credit monitoring service from Experian.   

By far the most popular form of finance is a credit card, with 14 per cent of holiday makers choosing to pay for their holiday using this method, while one in 10 (10 per cent) had no idea how they were going to pay for their fortnight in the sun before they set off.   A third (33 per cent) of those who used a credit card to pay for their summer holiday say they don’t expect to repay the borrowed amount at their next statement, reveals the CreditExpert/Ipsos MORI research, which polled c2,000 adults across Great Britain in June and July of this year.   Some 14 per cent estimate it will take them four to six months to pay off their holiday credit card bill, meaning they could still be paying interest on the debt at Christmas. Two per cent expect to still be paying off the cost of this holiday in a year’s time.   

Heat is on as credit confidence drops   Personal credit confidence has seen a three point drop – from 101 in the second quarter of this year, to 98 in the third quarter, according to the CreditExpert Personal Credit Index, which tracks consumers’ current credit confidence and future expectations on a quarterly basis. The impact of holiday costs may have contributed to this fall, together with rising fuel and energy prices and other seasonal effects.   The number of borrowers who are uncomfortable with their level of borrowing has risen by two percentage points over the third quarter of 2006, to 15 per cent, reflecting this overall drop in credit confidence.

Yet despite this, the vast majority of borrowers (76 per cent) still say they are comfortable with their current level of borrowings.   Among those with multiple credit holdings (defined as three or more credit cards or loans and a mortgage), a third (34 per cent) said they were uncomfortable with their debt in June – compared to just 18 per cent in April, clearly showing the impact of this drop in confidence.

  On borrowed time  More than a quarter (27 per cent) of borrowers say they expect their level of borrowing to decrease over the next six months, compared to 30 per cent in the second quarter of the year – a three percentage point drop in only three months.   

“Getting carried away and overspending a little on holiday is something nearly everyone has experienced, but the latest Personal Credit Index reveals a worrying picture of people failing to budget for their holiday costs or plan their repayments, meaning they could be repaying holiday borrowings well up to and beyond the Christmas period,” says Jim Hodgkins, Managing Director of CreditExpert.co.uk.   

“Being constantly aware of your financial situation can help you plan your future spending better and ensure that high periods of spending, such as holidays, don’t leave you struggling for the rest of the year. An online credit monitoring service, such as CreditExpert, provides a summary of your financial situation so it can help you get your finances in order before planning any further spending.

It will also alert you to any changes in your credit report which could have an impact on your future financial plans.”

Thu, 07 Sep 2006 15:56:05 +0100
Debt court judgments soar
from This is Money
THE number of debt judgments issued by the UK County Courts has soared, jumping by its highest number for 16 years.

County Court Judgments brought by lenders against people who haven't paid their debts hit 165,000 in the three months from the beginning of April to the end of June.

The figure was up by 25,000 on the same period in 2005 – the largest year-on-year increase since the start of the recession in 1990.
According to the Registry Trust, the body behind the figures, lenders were attempting to recover £500m worth of debt by going to the courts. Registry Trust chairman Malcolm Hurlston said: 'The rise in the number and value of consumer CCJs is proof of their [the lenders] concern about the performance of the credit economy.

They are increasingly looking to the courts to recover bad debts owed by individuals.'
A CCJ stays on a person's credit record for six years unless they pay the balance within a month of its being issued. Even if the debt is paid within the six years, the CCJ will remain on file, but will be marked as 'satisfied'.
A CCJ is the first step in a legal process that can end with bailiffs at your door, demanding goods to the value of the debt. It is also the first step for a lender to take out a charging order, which converts an unsecured debt into a secured one, enabling it to make a claim on equity in the borrower's property.

The average amount of a CCJ in the quarter was £2,386, up from £2,155 in the same quarter last year.

Thu, 07 Sep 2006 15:54:48 +0100
Friends join forces to get on property ladder
from www.media.netpr.pl
Thousands of first-time buyers who cannot afford homes in London are joining forces with friends in "mates" mortgages.
Britain’s biggest bank, HSBC, said it has seen a 50 per cent rise in group loans.
• Stamp duty up 30 per cent in just three months 
• £1m won't buy you a nice country home as prices rocket
These allow up to four friends to club together in a single mortgage so that they can buy a property that would otherwise be way beyond their reach.
Research from the bank suggests that up to three quarters of first-time buyers would consider purchasing a property with friends.
Barry Blackshaw, senior manager of lending markets at HSBC, said: "We are addressing customer need.
"First-time buyers are increasingly unable to meet traditional lending criteria as a result of house-price growth.
"As prices are unlikely to fall any time soon, we are expecting this trend to continue."
Demand for the mortgages is likely to be particularly strong in London, where prices have soared in a miniboom in many areas this year.
Nationally, first-time buyers are having to borrow a record average of 3.21 times their incomes, according to figures from the Council of Mortgage Lenders.

Although group loans are still only a small proportion of total lending, the figure of 0.7 per cent last year was more than double the 0.3 per cent seen in 2000.

Other lenders to offer them include Abbey, HBOS and the Britannia Building Society.
Last month, Morgan Stanley launched a shared equity loan through its new lending arm, Advantage, which offers up to seven times borrowers’ incomes in exchange for a share of potential profits when they sell.
But there is also growing concern that solutions such as clubbing together could create problems.
Sue Anderson, of the CML, said: "This kind of offer can create unstable households, which could ultimately be bad news for the owners and for the property market."
Keith Tondeur, of debt advice charity Credit Action, said: "They are building a housing market bubble but if the bubble bursts, millions of borrowers will be in trouble."

Thu, 07 Sep 2006 15:52:03 +0100
The Government is working closely with banks to ensure their customers get clearer information on credit card cheques
from www.media.netpr.pl
Following a consultation, the DTI found consumers wanted more information on how credit card cheques work. Lenders have now agreed to include a summary of the costs and fees for using the cheques when they are distributed.

The consultation revealed that although there was a demand for more
transparency about fees and charges, there was no evidence to suggest credit card cheques were causing debt.

Consumer minister Ian McCartney has now called on lenders to introduce these measures as soon as possible. He said:

"These steps are an important move towards increasing the transparency about the marketing and use of credit card cheques.

"The extra information will go a long way in helping consumers and will make it easier for them to find the type of finance they want. I will be looking to the industry to deliver speedily on the changes it has promised.

"If it fails to do so, or if there is evidence that the operation of these cheques is causing harm to consumers, we will look again at the need to regulate."

Members of the payments trade association, APACS, have agreed to print
summary boxes on leaflets and letters sent out with credit card cheques
by the end of the year. A requirement to use them will be written into the banking code in 2007.

The summary boxes will include information on:

* details of interest rates for credit card cheques - including both
promotional and standard rates;

* clearer information on charges for using the cheque, for example fees for
use and charges if the cheque is not honoured;

* legal information explaining that credit card cheques do not benefit from
the same level of consumer protection as credit card payments; and

* a statement explaining how to dispose of unwanted cheques.

Twenty responses were received from credit card companies, trade associations
and debt-advice organisations during the consultation.

The Government will be keeping in close touch with industry bodies to ensure
they deliver their commitment to make information clearer for consumers.

Notes to Editors
1. The Government recently published its annual Over-Indebtedness Report. The
report outlined actions the Government is taking to tackle over-indebtedness,
including:

* the introduction of the Consumer Credit Act 2006 with new laws to improve
responsible lending and borrowing;

* £120m funding for financial inclusion initiatives including £45 million
to fund the launch of more free face-to-face debt advice around the UK and
£6 million to fund outreach initiatives; and

* the launch of Debt Test, an online self-assessment tool to improve financial
capability, particularly among young people.

* The full text of the Government response to the consultation is available
at: http://www.dti.gov.uk/consultations/index.html

2. The Consumer Credit Act updates and augments the 1974 Consumer Credit
Act. It aims to create a fairer, clearer and more competitive consumer credit
market by:

* Improving consumer rights and redress:
by removing the extortionate credit test and replacing it with a test concerned
with unfairness, and by introducing an alternative dispute resolution (ADR)
scheme for consumer credit matters to be run by the Financial Ombudsman
Service (FOS);
* Improving the regulation of consumer credit businesses:
by altering the powers of the Office of Fair Trading (OFT) to enable it to
take targeted action to drive out rogues, and by requiring minimum standards
of information provision to consumers throughout the life of the loan; and
* More appropriate regulation of consumer credit agreements:
by abolishing the £25,000 limit for regulation and making the rules concerning
enforceability consistent and proportionate.

Thu, 07 Sep 2006 15:51:18 +0100
Banking giant to scrap credit card cheques
from www.today.reuters.co.uk
LONDON (Reuters) - A UK banking giant is set to scrap expensive credit card cheques, leading to calls for other lenders to follow suit.

The Royal Bank of Scotland (RBS.L: Quote, Profile, Research), Europe's second largest bank and the world's fifth biggest, will withdraw credit card cheques at the end of September.
It is the first to do so since the Department of Trade and Industry opened a consultation on measures to improve the transparency of credit card cheques in November last year. It is due to announce the findings of its enquiry shortly.
Nick White, head of personal finance at price comparison service uSwitch.com, said the RBS move was "certainly a step in the right direction and one which we hope other providers will follow.
"It's good news to see that one of the largest credit card providers in the country is leading the way by ending this practice for both new and existing customers," he said.

In January, RBS and its NatWest subsidiary stopped sending out the cheques unsolicited.
White said the bank's decision to stop issuing them altogether was "tantamount to an admission that it's only commercially viable for the banks to do so if they can send them out unsolicited -- encouraging customers to use them who otherwise would not."

Credit card cheques have long been regarded as one of the key contributors to a rise in bad debt, which has been increasingly eating into banks' profits.

RBS' bad debt charge in its retail markets unit rose 19 percent to 680 million pounds in the six months to end-June, continuing a trend among banks showing consumers are struggling to pay back unsecured loans.
Credit card companies send out thousands of unsolicited credit card cheques every year.
They allow consumers to draw money from an existing credit card account, and can be useful to buy goods or services from organisations that do not accept credit cards, or pay cash into a bank account.
But the cheques come with a host of hidden charges and higher interest rates than those normally levied on credit card transactions.

Some lenders charge an annual percentage rate of more than 20 percent on purchases made using credit card cheques, according to data from price comparison service Moneysupermarket.com.
Users often find there is no interest-free period, compared to a typical 56 days on credit card spending, and can also be hit with an additional "handling" fee.
The news came a day after APACS, the UK payments association, launched a new credit card cheque summary box. The information box, which will accompany all credit card cheques sent out in the UK by the end of the year, aims to spell out the terms and conditions, such as interest rate and other charges, at a glance.

Wed, 06 Sep 2006 16:06:26 +0100
Interest rate rise hits retail hard
from www.breakingnews.iol.ie
August is normally a buoyant month due to good weather and school holidays, however not this year. SPSL had predicted a 0.6% rise in month on month shopper numbers. In actuality the month was down 1.3% on July 2006 and the RTI was down 3% year on year.  Commenting on the impact of the interest rate rise, Dr. Tim Denison, Director of Knowledge Management at SPSL said;

“This first tightening of policy by MPC for two years means many will be facing increased mortgage payments and heavier overdraft and credit card debt. It comes at a time when the picture for retail was looking brighter and will be a body blow for retailers who’ve been fighting hard to maintain margins against ever rising energy and other costs and just as the minimum wage is set to rise in October.  

“The increasing pattern of its impact on consumer confidence can be clearly seen in the week by week RTI figures for August; the week commencing 30th July got off to a healthy start with shopper numbers up 0.8% on last year, slightly better than our prediction. Then came the bank’s bombshell and the figures for week two commencing 6th August were down 2.3% on last year, week three commencing 13th August were down 4.5% on last year and week 4 commencing 20th August were down 6.2% on last year.  “The good start to August was partially due to the end of sales and last minute bargain hunting at the start of the holidays.

However, the interest rate rise announcement meant that as the month went on and people re-assessed their financial positions and letters started arriving from building societies and banks, the gap widened. Sadly for retailers, there was no sign that the back to school promotions had had any significant impact on customer numbers. Overall the month ended 3% down on August 2005.  “Looking at regional differences year on year, London’s RTI was up 1.8%.

This is not necessarily as good as it seems, because shopper confidence in London was still badly affected last August by the terrorist attacks in July, but nevertheless it shows that London has recovered somewhat. However, the RTI was still 3.3% below August 2004 figures.  “All other regions saw various levels of decline on Aug 2005; the worst decline being in Northern England which was down 7.4% on last year. This is a sign that house price rises previously seen more in the South are now catching up with the rest of the country, although with the new interest rate rises the brakes may yet be applied.  

“Unfortunately for retailers the outlook for September is not good either. SPSL is expecting a 4.2% drop year on year.”

Wed, 06 Sep 2006 16:05:19 +0100
Record insolvencies boost UK debt firm's profits
from www.breakingnews.iol.ie
Debt advice firm Debt Free Direct forecast bumper profits today as record numbers of people became insolvent.  The company said it expected to bank pre-tax profits “at least 10% ahead” of the £9.8m (€7.6m) forecast by City analysts this year.  It pointed to a massive increase in the number of people entering individual voluntary arrangements (IVAs), which allow people to repay a set amount of cash each month in exchange for creditors freezing interest payments on the debt.  Debt Free Direct issued an average of 551 IVAs each month between May and July - up 196% on the same period last year – and a record 607 IVAs in August.  The numbers have soared as more and more people struggle to pay off loans and credit card bills at a time of soaring household energy bills, rising inflation and higher interest rates.  Last month the government said a record 26,021 people in England and Wales became insolvent during the spring and financial services group KPMG predicted the total number of insolvencies this year would top 100,000 – the equivalent of one every minute of the working day.

It has provided a boost for Debt Free Direct, whose shares lifted more than 4% today. Shares in the company have soared by as much as 189% this year.  Altium Securities analyst Martin Cross said it was “another very positive trading update” from the firm.  Mr Cross also forecast the number of monthly IVAs issued by the firm to rise to 900 next year and 1,100 the following year.  Chief executive Andrew Redmond said recent research by PricewaterhouseCoopers showed that lenders got on average 29% more money back through IVAs issued by Debt Free Direct than the rest of the industry.  “This can only contribute positively to our market-leading position,” he said.  The firm added that its recently opened operations in Northern Ireland and Australia were going well.

Wed, 06 Sep 2006 16:04:14 +0100

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