July 2012

New guide to mental health and debt sparks criticism from debt collection industry

A new “Guide to mental health and debt” from moneysavingexpert.com has been criticised by the Credit Services Association as being “out of touch with the modern debt collection industry”.

Payday loans - a tale of two campaigns

Two announcements this week on short-term, high interest loans.

On the one hand, the Business Minister, Norman lamb, welcomed “the progress made by payday lenders as they published newly revised Codes of Practice to increase transparency and better help vulnerable borrowers”, while cautioning that “they need to maintain their focus on protecting consumers and tackling bad practice”.

New powers to speed up suspension of credit licences to protect consumers

The Government has announced that the Office of Fair Trading is to be given new powers to suspend the consumer credit licences of rogue credit, loans and debt collection agencies.

Currently the OFT can suspend or revoke a consumer credit licence when there is an urgent need to protect the interest of consumers.  However businesses can continue to trade if they decide to appeal against the decision, which can take up to two years. 

UK families among the worst off in Europe on housing costs

One in six people in the UK is spending more than 40 per cent of their income on housing costs, according to housing charity Shelter. 

Its findings are based on figures from the European Union, which define housing costs as mortgage or rent payments, structural insurance, mandatory service and charges, regular maintenance and repairs, taxes and utilities (water, lighting and heating).

Cautious welcome for Funding for Lending scheme

There has been a cautious welcome for the new Funding for Lending scheme, under which the Bank of England will make low-cost funds available to banks and building societies for more – and cheaper – mortgages and business loans.

The aim of the multi-billion pound scheme is to address the rising cost of borrowing and the difficulty people have faced in obtaining both mortgages and loans. 

Savings fall dramatically for the over-75s, says new report

The savings of people over the age of 75 have plummeted by almost half over the past two years, according to a new report. 

Aviva’s latest Real Retirement report suggests that older pensioners are being forced to use their savings to meet rising living costs, with average savings pots dropping from £22,500 (Q2 2010) to £12,998 (Q2 2012).  In addition, almost a quarter of this age group has a credit card debt they do not repay in full on a monthly basis.

Payday loans put mortgage applications at risk of refusal

People who have taken out short-term, high interest loans may be risking rejection by mortgage lenders, it has emerged.

Lender GE Money has confirmed that it will not approve applications from borrowers who have had one payday loan in the last three months or more than two in the last year.

And companies that provide credit checking services are coming under increasing pressure to highlight payday loans on customer credit checks.

New “best practice” standards to be developed for debt advice by Money Advice Trust

The Money Advice Service has commissioned Money Advice Trust to develop ‘best-practice’ standards for debt advice across the UK.

Recent Money Advice Service research has shown that a range of different quality measures is currently used for debt advice. Now MAS plans to develop and put in place a best practice framework for the services that it funds.  The long term aim is to extend the use of the framework throughout the debt advice sector.   

Upward trend continues for household debt figures

More figures on household finances suggest that families who had been gradually reducing their debts are being forced to borrow for everyday household expenses. 

Debt charity Credit Action’s July statistics show that, up to the end of May 2012, a downward trend in average household debt (excluding mortgages) has reversed.

In addition, average household debt figures (including mortgages), which remained reasonably steady last year, increased sharply in January and have continued to grow this year.

More evidence that most Britons are living on the financial edge

There is more evidence that households are struggling to get by, with younger families suffering the most.  Almost a third of 18-34 year olds were more likely to have sold items online to make ends meet, and were twice as likely to take out a payday loan as other age groups according to a new survey.

The findings, which also suggested that 13 per cent of young people surveyed had skipped meals to save cash, come from the Centre for the Modern Family, a think-tank set up by life and pensions provider Scottish Widows.