|
|
 In 2011, MDC, or Money, Debt and Credit, the financial service company, helped thousands clients in the UK with their personal finances. Their latest Infographic illustrates the average amount of debt that people have in the UK, based on the data from MDC’s bespoke service of Financial Management Plans. This revealed that the typical amount of debt for their clients is between £6001-9000.
This information has been categorised using national, regional and London postcodes. If you are struggling financially, the first thing you need to decide is if a Financial Management Plan is right for you. If you are having difficulty paying bills, or have had a major change in your household income, or unable to keep up with financial commitments, then the best way forward maybe a Financial Management Plan .
Your first step is to calculate how much a month you can afford to pay towards your debts, after you met your essential commitments. A payment plan is then devised for you that is fair to both you and your creditors. These payments are then negotiated on your behalf so your original monthly repayments are restructured to accommodate the changes.
We also try to get interest and charges frozen on all your debts so that more of what you pay goes towards reducing the debt (in many cases we are successful, but there’s no guarantee this will be accepted every time).
Then it’s simply a case of maintaining one monthly payment to us, which we distribute to all your creditors, either until your circumstances improve or your debts are cleared. A Financial Management Plan is an informal arrangement between you and your creditors and has the flexibility to be adapted to suit your needs if your circumstances change.
Although a Financial Management Plan could be the perfect solution to get your finances back on track you should also consider the following points before deciding to go ahead:
•They are not legally binding so creditors are still free to take legal proceedings against you at any time.
•Reducing the amount you pay means you will be repaying your debts over a longer period of time and may increase the total amount to be repaid
•Your ability to obtain credit will be affected in the short term, and possibly in the medium to long term.
•You are still liable for paying your debts in full.
 New figures released this week show that the level of fraud in the UK increased by nine percent over the course of 2011, with identity fraud showing the highest increase. Throughout the year a total of 236,500 cases were reported, which is the highest number yet according to the UK Fraud Prevention Service, CIFAS.
Almost half of the cases concerned identity fraud, which is a ten percent increase when compared to the amount of identity fraud instances reported in 2010. Over the last five years facility takeover fraud, which concerns a fraudster accessing a credit card or bank account from a victim, has increased by more than 300%.
According to CIFAS this means that data fraud makes up about 58% of all cases reported, and even more concerning, the amount of victims that have suffered both types of fraud have increased by 10% when compared to 2010 figures.
CIFAS communication manager Richard Hurley stated that all organisations need to be aware of the threat and review how they will prevent themselves from becoming a victim of fraud in the future. He added that organisations can protect themselves either by increasing the id requirements they put in place when dealing with PINS or applications or by taking a closer look at their security procedures.
Also on the rise in 2011 were accounts of misuse facility fraud, which occurs when an account number is obtained legally but then later used for fraudulent purposes. On the up side, the amount of false insurance claims filed in 2011 dropped by almost 23%, down to just 396 cases compared to the previous 537 cases.
Financial solutions company Think Money recommends looking back at your finances from this time last year to help you create a clearer picture of your current financial situation.
The comments came in response to protection insurance company Bright Grey’s advice to improve your financial ‘safety net’ in 2012. Are you saving at the moment? Could you be saving more? Think Money believes looking back at your finances from one year ago is an excellent way to identify whether your financial situation has improved – or worsened.
If your finances are in a worse shape than a year ago, you need to identify why before you can begin addressing the problem. Money problems ‘don’t usually come out of the blue’ – it’s likely there are some underlying issues with money that need to be addressed.
Looking back to twelve months ago, you may be able to identify the financial habits you had back then that helped you do well financially, as well as any ‘toxic’ habits that need banishing.
Think Money offered this additional advice to anyone with debts: “If you were managing your debts successfully a year ago, but feel you’ve lost control now, what were you doing differently then? Did you have fewer debts of smaller amounts, a higher disposable income, or were you simply more financially organised? If you’re facing debt problems, it’s important to get professional advice as early as possible, so you can find an approach to budgeting and debt management that works for you.”
Reviewing your spending regularly is an important part of debt management, as it could be that you’re overspending in areas where you could cut back, or it could help you identify other areas for improvement.
Article Courtesy of Think Money
 It is estimated that people who are not earning large salaries won’t see the amount of disposable income they have increase to the levels seen before the recession for another eight years. This figure has recently been released by the think tank, the Resolution Foundation.
The study was titled ‘Squeezed Britain’ and it applies to households that bring in about £20,000 each year. In addition to the problem with disposable income it is also estimated that these people will have to wait over 20 years until they have enough money to purchase their first house.
It is estimated that nearly six million households in the country fall into the group that the study applies to. It is expected for people in this income category that their incomes are going to decline over the next few years until they level out around 2017. It is expected that after this period incomes will grow strongly but even with very strong growth it will take another three years for salaries to be at the pre-recession level.
If these growth figures are not met then it is possible that the wait will be even longer and that by 2020 income levels will still be nearly 10 percent lower than they were in 2007.
The study also highlighted the problem of getting on the property ladder and compared the amount of time people had to save in order to afford a deposit on the first time. In 1991 it was estimated people had to wait four years, by 2001 this figure had doubled to 8 years and last year it was estimated that people are having to wait is 22 years before they can afford the deposit money. This is because of the rising price of homes while incomes have remained relatively flat in comparison.
 With a number of policies and financial products being offered to us on a regular basis, it can sometimes be difficult to know what is needed and what is not. Life insurance, whilst not a legal requirement is still a highly important product and here are ten reasons why:
1. It protects more than just you – the main purpose of life insurance is to offer your family and friends a financial payment to help cope with funeral costs and other expenses. This means that the policy benefits others, making it your last gift to loves one.
2. It can ease the grieving process – following on from the above, life insurance policies can help people to grieve by removing any financial worries they may have. Without these concerns they can focus on the process of grieving, making the situation easier to cope with.
3. It will keep your finances in order – having a life insurance policy means that your finances will be kept firmly in check. This means that things like your mortgage payments may be covered in the event of your death.
4. It’s one less thing for you to worry about – following on from the above, having a policy which can cover you future financial arrangements means that you don’t have to worry about what will happen when you are no longer around.
5. It protects your children’s future – for those with children or dependents, life insurance policies can ensure that they are financially protected, giving them the best chance at a positive future.
6. It could make you life more comfortable – none of us like to think about a time when we will no longer be here but these policies can make your life more comfortable by giving you the knowledge that financial situations will be taken care of when that time comes.
7. It will help your spouse – whilst children and dependents will be protected with these policies it is important to remember the same benefit will be offered to your spouse as well. Any individual who has lost their partner will know there is a lot to organise immediately after a death and this can be hard to do when grieving. This payment could therefore remove one burden from your grieving partner, helping to protect them financially.
8. It can help pay debts – unfortunately, debts from credit cards and other such products are not cleared following your death and that means your family will be left to foot the bill. A life insurance payment could therefore be used to pay this off, meaning your family are not left out of pocket.
9. It is affordable – life insurance policies are actually fairly reasonable in price and that means that all individuals should invest in them. Of course, no-one can put a value on your life but investing in life insurance will mean that you will have peace of mind over what the future will bring.
10. It can improve your quality of life – some policies will offer early payouts to individuals who are suffering from a terminal illness, such as cancer. This means that you could benefit from an improved quality of life when you most need it, allowing you to make the most of your final moments.
 The British banking industry has taken a few hard knocks in recent years, with many consumers unwilling to trust those institutions that have made it through the crisis. One such institution that nearly did not survive is the building society Northern Rock, which was recently bought by the Virgin supremo Sir Richard Branson. Branson now intends to use his foothold in the financial services industry, and the appeal of his Virgin brand name, to create a new kind of bank.
Of course, this isn’t Sir Richard or Virgin’s first venture into the murky world of finance. Virgin already offers a popular and successful managed fund as well as personal finance products such as credit cards. However, there are only 200,000 of those Virgin credit cards in circulation; a mere drop in the ocean when it comes to the UK-wide banking industry.
Even though Branson is undoubtedly an excellent businessman, with more successes than failures behind him, that does not mean that the Virgin brand cannot fail. More established names than Virgin have attempted to branch out into new markets in the past only to find that they are unable to penetrate whatever industry they have set their sights on.
Virgin has already recorded a number of misses in the personal finance sector; hardly inspiring confidence in Branson’s efforts to take on the major banks. The Virgin Index Tracker fund was launched with a huge fanfare, charging just 1% in an industry where fees of 5% were considered good value for money.
Unfortunately, those who rushed to take advantage of the deal have seen little to cheer about besides the low charges, with the Index Tracker remaining stubbornly at 160% while the FTSE All Share Index has risen to 220%. Market experts, as well as those with a vested interest in Northern Rock, the shareholders and investors, are concerned that banking is just the latest in a long line of new obsessions for Sir Richard and that his heart is not really in the venture.
The business only cost him £747 million, compared to the £1.4 billion that the UK taxpayers had to shell out to save Northern Rock, which means that Branson can afford to play around with his new toy without being too concerned about making losses or profits.
The old Northern Rock branches have already been given a Virgin-style makeover, complete with the ubiquitous flashy red colour scheme. Experts are predicting that the “new” bank will enjoy some success, at least in the short-term, with Branson expected to draw on all his skills as a marketer in promoting the new products and accounts.
Cash incentives for opening new accounts have already proven popular at other financial institutions, such as the Co-Operative and Santander, and this is likely to be one of the tools that Virgin employs to win customers from the High Street banks.
The worry is that Branson is not planning to stay around for the long-haul; a previous foray into the financial services sector ended with a sale to Royal Bank of Scotland. This means that customers who think they are signing up for something different when they open a Virgin account could end up with just the same old bank after all.
 PPI claims are big news these days and it can seem like anybody and everybody is entitled to compensation for PPI mis-selling.
However, this is not always the case and the only way to find out if you are entitled to PPI compensation is by speaking to a financial solicitor.
A claim for PPI compensation can usually be made if you have taken out a loan, credit card or mortgage in the last 10 years and were unknowingly or wrongly sold Payment Protection Insurance.
The insurance can be hugely beneficial to many borrowers if they lose their job or are unable to keep up repayments for a number of reasons, but unfortunately, in many cases it is added on without the borrower’s knowledge. In other situations, people have been told that they can benefit from PPI but in fact the policy does not apply to their circumstances.
Where do I start?
In situations where PPI has been unknowingly added to borrowings, or an adviser has mis-led the borrower and incorrectly advised they take out the insurance, it can be possible to claim.
In order to do so, paperwork and evidence of the situation must be provided. This includes the finance agreement and details of your repayments. These are vital in determining whether PPI was mis-sold and how much money you lost, or could have lost if the debt is outstanding, as a result.
All financial claims should be handled by a solicitor with experience in the field. Only they can ensure your claim is dealt with professionally and that you get the best possible outcome.
How much compensation could I get?
The level of PPI compensation awarded will depend on the situation and take into account how much you have paid out for the policy. You may also get interest, but tax is payable on that part.
Average settlements are around £2,500 and your solicitor will give you an idea of how much your claim is worth when the process begins.
Why should I make a PPI claim?
“If you have been paying out for insurance that you did not want or need, or maybe even did not know about, you are entitled to get that money back,” explains Matthew Briggs, CEO of www.claims.com.
“Making a claim is not about getting something for nothing but is to do with upholding your rights to financial justice and compensation and helping ensure the wider problem does not continue.”
 More people in the UK are seeking help from organisations which provide free debt advice, according to a new survey carried out by the Money Advice Trust.
Unsurprisingly, given the current financial situation, the number of people contacting debt helplines or seeking assistance online has increased from 1.4 million in 2010 to over 1.5 million in the last 12 months. Figures from Nottingham University researchers, who conducted the investigation on behalf of the Money Advice Trust, suggest that more than 10 million Brits are now in debt and struggling to deal with their finances.
Experts are predicting that the situation is only likely to deteriorate over 2012 and debt advice companies can expect a dramatic increase in the number of people seeking advice over the next few weeks as families come to terms with the cost of the festive period.
The chief executive of the Money Advice Trust, Joanna Elson, is concerned that rising prices in shops, coupled with falling wages and more job losses, will mean that UK residents are going to find it harder and harder to pay for their essentials without resorting to credit cards and pay-day loans. Elson added that many of the participants in the research had resorted to selling family treasures to deal with their debt problems, when in fact practical advice and support is only a phone call away.
UK insurance giant Prudential have revealed that those retiring in 2012 can expect to live on an annual income of £15,500, which is £1000 less, or 6% lower, than those who started their retirement in 2011. These figures come courtesy of Prudential’s Unique Class of 2012 research, which provides a financial insight into the financial expectations of Brits who are planning to retire within the next 12 months.
The results of this annual survey, which Prudential first carried out in 2008, show that the expected annual incomes for the retired have dropped by over 16% in the last 5 years. The retirees in the Class of 2008 could look forward to a total annual income, which included state, private and company pensions, of around £18,6000. That is £3100 a year more than those retiring this year will have.
In a sign of the on-going financial challenges facing those due to retire in 2012, one in five will get by on an expected annual income of less than £10,000. Meanwhile, around the country there is a regional disparity of more than £5,000 in expected retirement income. Londoners have the highest average expected incomes of £17,900, while those in Yorkshire and Humberside have the lowest at £12,800.
Fewer than two in five (37 per cent) of the Class of 2012 say that they have saved enough to secure a comfortable retirement.
Men are more optimistic about their retirement than women, with 45 per cent of men confident they will be financially comfortable compared with 31 per cent of women. However, nearly one in five (18 per cent) of those planning to retire in 2012 have no idea of the level of income they will need in order to live comfortably.
Vince Smith-Hughes, Prudential’s retirement income expert, said: “The current economic climate has created the perfect storm for people in the run up to retirement. The impact of the credit crunch, banking crisis, recession, and concerns over the Eurozone, has been reflected in the fact that expected retirement income levels have hit a five-year-low.”
“It is concerning that expected retirement incomes are going down, while pensioner expenditure is going up. However, there are some practical steps that workers and imminent retirees can take to ensure a more comfortable retirement. For those who are still working, it has never been a more important time to save into a pension. The longer that savings are invested in a retirement pot, the greater the opportunity they will have to grow.”
“However, even those due to retire this year could make their retirement funds generate better incomes. Consulting a professional financial adviser can help savers to make more informed pension saving and retirement income decisions.”
The communications agency BergHind Joseph has warned that the financial services sector have to overcome the overwhelming problem of mistrust that exists if they are to prosper at all in 2012. The research the agency held at the end of 2011 showed that trust was the single most important issue that the the financial sector was facing, and the lack of it was having a serious impact on business.
The agency recommends that there are three key steps that companies need to take in order for consumers to have restored confidence in financial services and brands.
1. Develop brand values which truly reflect the business – which the agency describes as ‘talk the walk’ – which refers to having having a sound business model that is reflected in its brand values
2. Differentiate from similar businesses
3. Maximise the personal touch – become a people-friendly business
Ian Brownhill, Knowledge Director of BergHind Joseph says, “Trust took a massive hit following the credit crunch and ensuing recession, but issues such as high pay, mis-selling, conflicts of interest and short-termism have a much longer history. We have asked if lack of trust in financial services companies is so widespread and deep-seated, is there anything individual brands can do about it? The continuing financial crisis has dragged what was seen as a boring sector into the spotlight and now most people can be counted on to have an opinion about banks and insurance companies – sometimes even hedge funds and private equity firms. What’s more increasingly, their views are negative.”
Examples of where business is being harmed include the low uptake of private pensions in the UK. Mis-selling scandals, lack of transparency over charges, the collapse of company pension schemes and the failure of the once market-leading pension provider Equitable Life have all contributed to the lack of trust. This is also impacting on long-term savings products because consumers have low confidence in future performance and the future solvency of the company they have entrusted their savings. But even short-term products such as bank accounts are also seen as risky.
But BergHind Joseph has identified three steps to restore trust in individual financial sector brands:
1. Don’t walk the talk – talk the walk
Transparency is a necessity. Easy access to the internet and social media mean that currents of information flow more freely than ever before, bypassing the former corporate gatekeepers – the internal heads of brand, marketing and communication. Customers can broadcast their experiences in online forums. Employees can blog to the outside world. Financial services brands need to ‘talk the walk’. Invented brand values and superficial image-building will fool no-one. Customers and stakeholders want proof, including product performance in line with promises, high standards of service, and exemplary behaviour at the corporate level. And more authentic brand values will win the trust of employees as well as customers, helping to eliminate the cynicism that can kill internal brand allegiance.
2. Show them you’re really different
The financial services industry will remain contaminated by the financial crisis for the foreseeable future. Consumers will apply a ‘mistrust discount’ to all financial services branding, marketing and communication claims. It will be up to organisations to prove – through their attitudes, behaviour and performance – that they are not ‘just like all the rest’. As far as individual financial services brands are concerned, it’s all about differentiation – now more than ever.
3. Get up close and personal
People overweight personal experience in comparison with external sources of information. Financial services brands need to build trust by making use of this psychological trait. To the greatest extent possible, they must seek personal contact with customers and provide them with the expected and promised level of service. And whenever that vital contact is mediated – for example by the telephone – the experience must be as human, attentive and helpful as it can be.
Brands must also discriminate – in the positive sense – between customer groups, making allowances for national, cultural and personal preferences. There is no such thing as ‘the’ customer, and all distinct customer groups need special attention.
|
|
