What we Know About the PPI Deadline

The deadline for making PPI claims has provided no small amount of confusion for many potential PPI claimants – not least because it is not a certain thing. The deadline has been under discussion for some time, but so far no firm date has emerged and many of the suggested dates are little more than rumours. Even so, there is enough useful and reliable information around to be helpful. Here is everything important that there is to know – so far at least – about the PPI deadline:

Will There Be a Deadline?

Some organisations and consumer rights activists have questioned whether there even should be a deadline for making PPI claims. The banks have cheated millions of consumers out of billions of pounds and it can be hard to even find out you’ve been cheated. In some people’s books, this means that introducing a cut-off point just gives dishonest a get-out-of-jail-free card for any refunds that have not yet been made and lets them keep the remainder of their ill-gotten gains.

Nonetheless, unless there’s a quite sudden and significant about-face from the Financial conduct Authority (FCA), there most certainly is going to be a deadline for making PPI claims. The only question really left on the table is when that deadline will be.

When is the Deadline Likely to Be?

A few possible dates have either been mentioned by the FCA or flown around as rumours at one time or another. In late 2015, a deadline of Spring next year was being talked about. Much more recently, it was suggested by the FCA that the deadline could be set for the middle of the following year – perhaps sometime in June 2019.

This is the latest concrete suggestion of a timeframe in which the PPI deadline could fall. However, at the time this suggestion was made it was expected that we would have an announcement by now. Since then, the FCA has declared that it will take another couple of months to announce a firm date for the deadline. Some have suggested that the deadline itself will be pushed back proportionally, suggesting a mid-late 2019 date. This is essentially speculation, but is not completely unfounded.

When Will We Know?

While there is no firm date for the announcement any more than there is for the deadline itself, things are a bit clearer in this regard. The short answer is that we can confidently say that, barring further announcements to the contrary from the FCA, we will finally know the Payment Protection Insurance deadline soon.

Originally the FCA was planning to reach a decision and announce it to the world by the end of last year. However, due to the very large volume of contributions and responses the regulator received, it pushed back this announcement a little in order to allow time to properly assess them. The announcement is now expected within the first quarter of this year. We don’t know exactly when we can expect a decision, but it should be before April.

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UK Credit Ratings Downgraded

The UK has seen a downgrade in its credit ratings in the wake of the Brexit vote. Ratings agencies took the decision to downgrade the UK’s ranking as a borrower following the public’s vote in favour of leaving the EU and the resultant economic turmoil.

One of the main credit rating agencies, S&P, previously gave the UK a AAA credit rating, the highest offered by the agency. It has now downgraded the credit rating assigned to the country to AA, two levels below the previous rating. Previously, S&P had been the only credit rating agency to maintain a top-level rating for the UK. The agency said that the UK public’s decision to exit the European Union was likely to “weaken the predictability, stability, and effectiveness of policymaking in the UK” and this was reflected by the downgrade in the country’s credit rating.

Another major credit agency, Fitch, reduced the UK’s former AA+ credit rating to a lower AA. As a key reason for the decision to downgrade, Fitch cited the expectation that the short term would see an “abrupt slowdown” in the UK’s growth.

The downgrading of credit ratings for the UK by S&P and Fitch follows a previous move by Moody’s, another ratings agency. On Friday, following the revelation that the UK had chosen to leave the EU, Moody’s downgraded the credit outlook of the UK from “stable” to “negative.” In explanation for this move, Moody’s talked of a “prolonged period of uncertainty” that was likely to follow the vote in favour of a Brexit, and said that the result of the referendum was likely to have “negative implications for the country’s medium-term growth outlook.” The negative impact on economic growth would, Moody’s predicted, outweigh any financial benefits gained from not paying into the EU.

These cuts to the country’s credit rating mean that the UK is now perceived as having a higher risk profile when borrowing. This can make it more costly for the government to borrow money. In international financial markets, as with credit for individuals and businesses, a poorer credit ratings tend to be reflected by higher interest rates.

Just shortly before S&P and Fitch announced the downgrades in the credit ratings issued to the UK, Chancellor George Osborne sought to issue reassurance about the future of the British economy. He insisted that though there would be a need to “adjust” to a new situation, the UK economy would approach its future “from a position of strength.”

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Insurance Tax Rising: The Impact on Consumers

InsuranceIn his July budget, George Osborne announced that the tax paid on insurance products (Insurance Premium Tax or IPT) is to rise by more than half. This will take effect in November of this year. But how significant is this change going to be at the consumer level?

The change will certainly be a noticeable one. Both vehicle and home insurance premiums will increase as a result of the higher level of tax. However, fortunately the impact on consumers is not likely to be bank-breaking. Currently, tax only adds 6% to the pre-tax value of a premium, so it only represents a fairly small portion of the total that people pay. Only this modest tax portion is experiencing an increase, rising to 9.5% of the premium’s pre-tax cost. The increase to the amount that consumers pay will therefore be noticeable, but not massive.

As IPT, like the vast majority of taxes, is charged as a percentage of the total, those who already pay higher premiums will be worst-hit. The larger the pre-tax premium, the greater the value that will be added to it by tax. The single worst-hit group is likely to be young, newly-qualified drivers who can find that their first insurance premium comes to well over £1,000. The average newly-qualified, 17-year-old driver pays £1,869 for their first year of cover, according to the Confused.com/Towers Watson Car Insurance Price Index, and the tax increase would add an extra £60 to this figure.

The average comprehensive car insurance premium across the board, according to the same index, is £600. A premium of this value will increase by £20 after the higher rate of IPT takes effect.

The reason for the increase in IPT, Osborne claimed while delivering his budget, is to bring the amount levied on insurance premiums closer to the levels charged in the world’s other major economies. Britain’s current, outgoing IPT rate of 6% is, he claimed, “well below tax rates in many other countries.”

Many types of insurance are subject to IPT. The most common products on which this tax is charged are vehicle insurance policies and home insurance, including contents insurance. Other kinds of insurance, such as many kinds of health insurance and all standard life insurance products, are exempt from this tax and should therefore be unaffected by the changes.

Still other types of insurance are subject to different rates of tax instead of IPT. Travel insurance, for example, is subject to a different tax charged at 20% of the policy’s pre-tax value. This should also theoretically be unaffected by the changes, as only IPT is being increased.

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“Deceptive” PayPal to Pay Over £16 Million Compensation

Prominent online payment system PayPal has agreed to pay compensation to customers worth a total of US$25 million (£16.1 million). The payment processing giant has received these penalties in the US for deception of customers.

PayPal, which has long been owned by eBay but recently became a separate company, agreed to make the compensation payments in order to settle the legal dispute at hand, but has not admitted to being at fault. The agreement must receive the approval of a judge before it is made legally binding.

According to a US government watchdog, the company is guilty of a number of offences including failing to properly handle disputes over bills. Most prominently, PayPal has been condemned for adding new members to a credit scheme, which is functionally similar to a credit card, without informing them that they were being signed up to this service.

The scheme in question is called PayPal Credit. It is a method of deferred payment, allowing people to pay for things within their available credit limit rather than with actual money and then repay over the following months, with interest charged monthly. In other words, it works very much like a credit card. However, it is exclusively available as a funding source for PayPal payments and therefore has no need of a physical card.

The accusation is that the company made signing up for PayPal Credit as well as for the standard payment processing service the default option for newly-joining members, and failed to make it clear that they were doing so.

As a result, according to US Consumer Financial Protection Bureau director Richard Cordray, “Tens of thousands of consumers who were attempting to enrol in a regular PayPal account or make an online purchase were signed up for the credit product without realising it.” Cordray went on to claim that many customers only found out that they had been signed up for Paypal Credit after being charged fees for late repayment or even receiving calls from debt collectors.

While the issue surrounding PayPal Credit has perhaps been the most prominent part of this case, it is certainly not the only accusation levelled at the company. Other wrongful practices of which PayPal has been accused include failing to properly post payments, mishandling customer disputes both with merchants and with the payment processing company itself, and failing to make good on advertised promises to provide credit towards purchases.

A statement from the company said that “PayPal Credit takes consumer protection very seriously,” and that “Our focus is on ease of use, clarity and providing high-quality products that are useful to consumers and are in compliance with applicable laws.”

UK customers, the company insists, have not been affected by the problems taking place in the US.


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Mortgage Lending Slow in Early 2015

According to trade body the Council of Mortgage Lenders (CML), mortgage lending has been slow through the first quarter of the year. The CML described the sector as suffering from a “sluggish start” to 2015, but says that things have picked up over the last few weeks.

Gross figures for mortgage lending in Q1 2015 were down 12% compared to the previous quarter. Lending in the first quarter of this year was also down compared to the same three months in 2014, showing a 3% decrease year-on-year. Overall, the first three months of the year saw a total of £44.9 billion lent to home buyers, according to the CML’s figures.

This could be partly down to the introduction of stricter affordability checks, to which would-be borrowers are subject before qualifying for a mortgage. These rules have now been in force for a year and more recently have also been applied to buy-to-let mortgage. They require mortgage lenders to make a close, highly-detailed study of the income and outgoings of potential borrowers before granting credit, and according to the National Association of Estate Agents (NAEA), this is slowing down the process of buying a home significantly.

Mark Hayward, NAEA managing director, said: “A drop in the number of buyers is the direct result of a slow-down in acceptance of mortgages, with it now taking an average of 50 days to receive a mortgage offer.” The new rules also, Hayward said, increases the risk of sales failing to go through.

However, the CML’s figures show that things have been picking up after the “sluggish start” at the beginning of the year – even within the space of the first quarter. Lending was significantly higher in March than in February, and indeed March was a fairly strong month for the mortgage lending sector. With a total of £16.5 billion lent in the form of home loans across the month, March saw fully 21% more lending for mortgages than February. While the quarter as a whole may have seen lending fall compared to the same period last year, March this year saw an increase of 7% compared to March 2014.

According to the CML’s chief economist Bob Pannell, “the underlying lending picture is stabilising.”

“Sentiment and activity,” he continued, “are showing early signs of improvement, and should be further supported by the effects of stamp duty reform. We expect to see lending strengthen over the next few months.”

Over the past few weeks, mortgage lenders have been reducing their rates, and the resulting cheaper mortgages may have helped stimulate the recent upturn in activity.


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Bank of England Decides to Keep Interest Rates in Place

The Bank of England has voted to keep interest rates at their current low levels for the time being. Only two members voted in favour of increasing the rate to 0.75%, with seven voting in favour of keeping rates at just 0.5%.

Continuing low levels of inflation were a key factor in the bank’s decision to keep rates where they are. There was, according to the bank’s minutes, a “material spread of views” on what the outlook was for inflation in the near future, and what the risks associated with interest rates were. However, even if through different reasoning, it emerged that the majority of members agreed that rates should be kept steady for the time being.

According to the minutes: “For most members, the outlook for inflation in the medium term justified maintaining the current stance of monetary policy.”

It seems that the two members who vote in favour of an increase were Martin Weale and Ian McCafferty. For many, this will not be a surprise. Weale and McCafferty have been consistently voting in favour of interest rate rises since August, and in the run-up to the meeting there was some speculation about whether they would continue this trend or not.

It was judged by the meeting that interest rates remaining lower than had been hoped for was “partly the consequence of a margin of spare capacity bearing down on domestic costs and prices.” This, according to the minutes of the meeting, created a definite possibility that expectations for inflation in the medium term would be lowered. The period for which inflation would stay low – specifically under the 2% level – could therefore be lengthened. 2% is the level of inflation which the bank currently hopes to try and maintain, and it was felt that continuing to keep interest rates down could help the situation.

October saw the annual rate of inflation rise to 1.3%, up from the previous month’s figure of 1.2% but still well below the hoped-for 2% level. Just last week, the Bank of England issued a warning that the next six months could see the rate of inflation fall as far as the 1% level.

The current interest rate of 0.5% has been in place since March 2009. The Bank has repeatedly decided against immediate increases in a hope that the low rate will facilitate recovery in the UK’s economy.

The Bank’s nine members voted unanimously on other issues, such as the decision to leave quantitative easing unchanged.

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A Beginner’s Guide to Cash ISAs

Cash ISAs (Individual Savings Accounts) are savings accounts available to every UK citizen and Crown dependency aged 18 years or over which are exempt from income tax on the interest accrued. The 2013/14 tax free allowance is set by the UK Government for Cash ISAs is £5,760. This is the amount that you can deposit in an ISA over a single tax year. This allowance is reviewed by the Government annually.

Although there are other types of ISA available, such as the Stocks and Shares ISA, for the purposes of this guide we’re going to focus on the most common type of ISA; the Cash ISA.

Understanding how the Yearly Tax Free Allowance Works

Once you have met the yearly tax free allowance for any given year you may not add additional funds, even if you have previously withdrawn these funds. Once the money’s in, it’s best that it stays in. This means if you have £5,760 sat in an ISA and you withdraw £2,000 in September 2013, you will only be earning tax free interest on the remaining £3,760 until April 2014, at which point you can invest any amount that does not exceed the newly announced tax free allowance for 2014/15.

Some ISAs also come with penalties for early withdrawal and so it’s important to realise that ISAs are for long term savings and shouldn’t really be treated as easy access bank accounts (although many accounts offer more flexible withdrawal options). ISAs with penalty free withdrawals tend to offer lower interest rates than those that don’t though.

Many ISAs pay out bonuses after a year or more but these bonuses can often be one offs and so it’s important to keep shopping around to find the best ISA to put your money. You can take out one Cash ISA with one provider per tax year but you can hold funds in multiple ISAs at any one time.

Finding the Right Type of ISA for You

There are many types of ISA providers out there and finding the best ISA account will inevitably take a good deal of research and consideration. It’s important to first of all work out what kind of ISA will suit you. Do you want easy access to your money without incurring fees? Do you want to invest most or all of your yearly allowance in one go or do you wish to pay it in incrementally over the year?

There are two main types of Cash ISA that between them satisfy most types of saver. These are Fixed Rate and Regular Savings.

Fixed Rate Cash ISAs

A Fixed Rate Cash ISA offers a fixed rate of interest over a fixed period (usually a year). Depending on the terms and conditions of the account any withdrawal made during this period may cause the interest rate to drop to a lower rate and be backdated to the point at which the ISA was taken out.

Whilst some fixed rate ISAs will allow a minimal number of withdrawals (often one per year) it’s important to understand that the more access you have to your money the lower the interest rate will tend to be. With this in mind a fixed rate ISA should only be an option if you don’t think you’ll require urgent access to your savings in the immediate future.

Regular Savings Cash ISAs

Regular Savings ISAs allow savers to invest their yearly tax free allowance over the tax year in increments. As such these accounts are subject to lower overall interest rates due as the interest are dropped every month.

Let’s take an example: If you were to invest £480 in April (1/12th of your tax free allowance for 2013/14) then you would receive the full rate of interest for that month. When you came to invest another £480 in May however, you would only receive 11/12ths of the interest rate as there are now only 11 months remaining in the tax year. By March 2014 you’d only be earning 1/12th of the interest rate.

Like Fixed Rate ISAs, Regular Savings ISAs may incur a penalty if money is withdrawn over the year or they may have a withdrawal limit or a set notice period. Again, consider whether you require easy access to your money and most importantly of all, do your research.

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Is Everything We Hear About Payday Loans Industry True?

As the payday loan industry continues to grow in the UK, so have the number of unsavoury stories regarding its practices of providing the needy with fast loans. With MPs labelling lenders as professional loan sharks and calling for their regulation, recent surveys and reports have indicated that the picture painted by MPs is, in fact, way off the mark.

A survey by uSwitch in August this year claimed that 49 per cent of payday loan customers described their experience with their lenders as ‘positive’. Another 30 per cent claimed that they would consider using the service again. These figures provide a more complex picture than the MPs would rather have you believe, it seems.

Fulfilling a demand that the banks won’t

The problem seems to arise from the fact that the banks are too reluctant to lend to customers who do not have exemplary credit histories. The uSwitch survey tells us that 25% of British payday borrowers resorted to quick loans because their banks refused them. As a result, there has been a sharp rise in the number of those in need of quick cash injections to help deal with seemingly ever-rising living costs.

Living costs have risen 25 per cent over the last five years. Because of this, there are many who need to bridge the gap between the paying of bills and associated other costs between paydays. Payday loans help alleviate this problem: banks, on the other hand, haven’t offered any help at all in this area.

Irresponsible lending and borrowing

Another sad truth is that not all lenders are responsible in the way they conduct business. If you’re thinking of getting out a payday loan, you should make efforts to find out as much as you can about the lender before you commit.

There are plenty of irresponsible lenders that operate the market: these are the types that approve loans that they know very well the customer will not be able to pay back on time, getting them into deeper debt.

Finding a responsible lender

It’s on you to make sure that the lender you’ve chosen has a good reputation. Good lenders will always carefully consider all cases on an individual basis and will only approve the loan if they are confident of your ability to repay the loan on time without sliding into further debt.

This way, you’ll be able to spend the money and repay it on time without getting yourself mired in more debt. By being accessible and responsive to their clients, a good payday lender will help you avoid the pitfalls so you can borrow and return the money without trouble.

Nothing is ever black-and-white  and payday loans are no exception. With the right amount of research and attention, you’ll be able to put to bed any worries you may have had and safely take advantage of a service that very few institutions currently provide.

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… and the latest on the PPI claims scandal is?

Well, news broke a couple of weeks ago that Lloyds were rejecting genuine PPI claims in the hope that the claimants would not take the case to the FOS and more worryingly, telling their staff to ignore the possible cases of fraud by their peers. Shocking? Well no not really! Those working in the PPI claims industry have been complaining about this for a while now… it’s just that it’s now become public!

Told to Ignore Fraud

Having taken on staff to handle mis sold PPI claims, provided by a third party – in this case Deloitte, it seems that there have been various misdemeanours occurring within the call centre, and they have been uncovered by an undercover journalist working for The Times. This is not what Lloyds needs at this moment.

The journalist concerned posed as a worker within the call centre and reported that staff in training there had told him they were instructed to overlook possible cases of fraud. Furthermore, they were also told that most first-time callers would not follow up claims, in an apparent attempt to deter them from encouraging claims. The contract with Deloitte has since been terminated after Lloyds Banking Group was forced to apologise, although Deloitte insists the reason was not linked to the story in The Times, but to Lloyds choosing other providers.

FOS Receives Record Complaints

Also in the news is the latest statement from the Financial Ombudsman Service (FOS) which has been receiving a record number of complaints involving financial products of late. Indeed, the FOS is so stretched that is dealing with 7000 complaints every day, and is set to take on upwards of 1000 staff in order to deal with the backlog. It dealt with over half a million complaints regarding mis-sold PPI in the last year, a vast increase on the previous 12 months. The reasons for the increase are many, but the High Court’s instruction that banks must repay all mis sold fees will have had an effect.

Complaints Continue to Flood in

The rise in numbers of people claiming, coupled with the banks threatening to impose a deadline (now unlikely to happen) has meant many more people have been coming forward to make a claim much to the delight of PPI Claims Companies like PPI Claims Adviceline.

Claiming may be easier than ever but with the lenders seemingly still attempting to stall on claims it may make sense to use an expert to handle your case, especially if you are unsure of the procedure.

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How to Choose the Right Credit Card

Credit cards are found everywhere nowadays and it has never been easier to fill in an application and have one delivered to your door within a few days.

Even individuals with a poor credit profile can often get small amounts of credit thanks to companies that cater specifically for people looking to improve their credit score.

If you’ve decided to get a credit card then it is important to make sure that you’re getting the best possible deal for you, so here are some tips to help you choose the right credit card:

  • How will you Use the Card?
    The card you choose will ultimately depend on how you plan to use it. If you want a credit card to pay for balance transfers, for example, it would be wise to opt for a card which has a low interest rate specifically on balance transfers. Are you going to pay your balance in full each month or do you plan on carrying it over from month to month? This will determine if you opt for a charge card or perhaps a card with a low interest rate.
  • Use Comparison Sites
    Comparison websites such as Credit.com, IndexCreditCards.com, and CardRatings.com provide an excellent resource for comparing the various features of different credit cards. This makes life so much easier because all of the information will be in one place in an easily-digestible format, enabling you to make a fair and objective comparison.
  • What is the Grace Period?
    The grace period simply refers to the amount of time you have to pay your balance in full each month before additional charges and interest are applied. Many cards typically offer a one month or 28-day grace period; however, some offer a longer period so this is something to look out for if you think you may need more time to pay your balance in full.
  • What is the APR?
    The annual percentage rate or APR is the amount of interest applied to balances carried over past the grace period mentioned above.
    Credit cards often have a different APR for balance transfers and purchases so make sure you’re aware of the different rates for each to ensure you’re getting the best rate for your purposes.
  • What is the Credit Limit?
    If this is your first credit card, you will probably be given a lower credit limit but this can really depend on your credit history.
    The spending limits imposed will vary from card to card – as will the fees imposed for going over your limit – so make sure you’re getting a limit that is appropriate to your level of spending, and check that the over-limit fees are not excessive.
    The best way to avoid spending beyond your credit limit is to always keep your balance fairly low and set a percentage amount that you will never allow it to exceed. Many card providers also send alerts when you are within a certain range of your limit so this is definitely worth taking advantage of.


Guest contributor:  Oliver Harding has written many articles for thebestdiscountcodes. He covers money saving tips in addition to providing great money management advice.

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