The Banks do something right for a change

May 27th, 2010

Over the coming months some interesting new restrictions are being placed on customer activities at two of the UK’s major banks in the name of customer service and fraud prevention. As ever, this raises the suspicion that banks are lining their own pockets at the expense of their customers.

However, in a rather startling turn up for the books, it might be the case that they are doing exactly what they say.

From July, customers with Alliance & Leicester will not be able to withdraw amounts of less than £300 from the counter. This follows the steps taken by a number of banks and building societies which have made changes to their counter services in an attempt to cut queues at branches.

From June, Nationwide Building Society customers with cash cards who want to withdraw amounts of less than £100 will have to use a cash machine. The change will not apply to people with debit cards, or those who still use a passbook.

Having experienced the agony of being stuck behind hordes of unnecessary counter customers, many of whom not only have a ridiculously simple transaction but some tedious anecdotes to go with it, I am wholeheartedly behind this idea.

However, I appreciate the concern expressed by customer pressure groups that some people, especially the elderly, will find it difficult to adjust to the changes. This is why I grant my support only with the caveat that the banks must make the rules flexible for less able customers. I am entirely convinced they will be unable to do this.

The second change is that from August, HSBC customers will be required confirm by phone any large or exceptional internet transfers. The bank says that the move is designed to tackle fraud and I believe them.

This is a move that involves a minimum of hassle but adds greatly to internet security, which is a great concern to many, including those who happily and frequently conduct their finances on the net. Who with a serviceable internet connection is unable to also make a simple phone call?

As described above, payments for utility bills or regular direct debits will be unaffected by the move so it is unlikely to make day to day internet banking more complicated, but it might just stop an internet fraudster transferring your life savings to Nigeria.

It is very rare that I write on this blog that I agree with moves made by large banks, but I am happy to make an exception in this case.

Posted in Personal Loans | No Comments »

Have you been mis-sold PPI?

May 21st, 2010

The Financial Ombudsman Service has recently released figures regarding the complaints it has received, with Payment Protection Insurance (PPI) unsurprisingly topping the list.

The annual report shows that a whopping 30% of the new cases brought during 2009-10 were about PPI.

PPI is supposed to enable borrowers to pay off loans such as credit cards or mortgages if they fall ill or lose their job, but as regular readers will know the schemes have been mired in controversy.

The Financial Ombudsman Service was set up to offer free advice and settle complaints between consumers and financial businesses on a very wide range of financial products.

It handled 925,095 enquiries from consumers in the last financial year. It resolved 166,321 disputes and in half of these cases consumers were given compensation.

49,196 complaints were about PPI, which consumer groups have frequently complained about as being mis-sold.

The figures were released in the same week as the Competition Commission announced its intention to ban PPI being sold at the time loans are granted, despite complaints from some prominent banks.

Analysts have welcomed the news that the Ombudsman is giving so much attention to the problem but believe its full scale is still to be realised. Many people who feel they have been mis-sold a financial product give up before getting to the Ombudsman in the face of stalling tactics from financial providers.

In addition to the PPI complaints, 15.5% of new cases were about current accounts, 11% were about credit cards, 4.5% were about mortgages, and 4% were about unsecured loans.

There was a 27% drop in disputes involving pensions, while motor insurance complaints were down 13%.

There is a general feeling among consumer groups that the problems of the financial products market are finally being addressed by the various watchdogs after a period of stagnation where providers were getting away with scandalous business practices.

It just remains to be seen if this work is continued in the future and brings about real change.

Posted in Personal Loans | No Comments »

Tackle the private debt as well as the public

May 12th, 2010

After the excitement of the election and subsequent coalition negotiations, a piece of news which should focus the minds of the new policy-makers regarding the state of the nation they have inherited.

As well as crippling levels of public debt the UK is also facing an enormous private debt problem as has been dramatically highlighted this week as a new record high was recorded of the number of people being declared insolvent.

The figures are eye-wateringly troubling. There were 35,682 personal insolvencies in the first three months of 2010 which is a whopping 17.9% increase compared with the same period last year.

There is some good news in that the figure has levelled off compared with previous quarters, rising by a mere 108 compared with the last three months of 2009. This means that the figure is a record high but not by much. This is scant comfort.

This is the fifth consecutive quarter when the number of people being declared insolvent has reached a new high.

What is good news is that the figures also show the number of businesses going bust fell dramatically. This should, in turn, have a positive impact on the unemployment figures of the next few months.

There are now several ways that individuals can deal with overwhelming debt, whereas bankruptcy used to be the only option.

Smaller debts can be dealt with by Debt Relief Orders and these have continued to grow since their introduction.

Other debts are now often tackled using Individual Voluntary Arrangements (IVA’s), which involve an official contract between the creditor and debtor.

The new schemes for dealing with unmanageable debt have proved very popular with debtors wishing to avoid the continuing stigma of bankruptcy. They also provide much help to those who in previous years would have found precious little support offered to them.

However, there still needs to be more focus on ensuring that people do not find themselves saddled with unmanageable debt in the first place, a change which will entail altering the entire financial outlook of a huge swathe of the population.

Posted in Personal Loans | No Comments »

« Older Entries