Missold PPI Complaints Still Over 1,000 a Day

Despite a drop in the number of complaints relating to missold payment protection insurance (PPI) through the latter half of 2013, the Financial Ombudsman Service continues to receive more than 1,000 complaints every day.

According to chief ombudsman Tony Boorman: “The extraordinary volumes of financial complaints we saw in 2013 now look as if they are starting to level off at last… But we’re still a long way from being able to say that PPI is sorted once and for all.”

Lloyds TSB has lately been the organisation that the most complaints have been levelled against, according to the ombudsman. Runners-up included HSBC, Barclays and the Bank of Scotland. Lloyds, however, claimed that when the number of complaints was considered against the number of customers it had, they were proportionally lower than those of most other institutions.

For the past couple of years, the Financial Ombudsman Service has more than doubled its staff, and those making claims for missold PPI have faced significant delays. While the numbers remain high, the fact that they are levelling off means that those making PPI claims should hopefully see timescales for adjudication improve noticeably. In spite of the levelling off in claim numbers, with still more than 1,000 to deal with every day the ombudsman has claimed that there are no plans to lay off any staff. Furthermore, the service has said that most of its staff are on three year contracts, suggesting that their jobs will remain secure at least until the end of this period.

When it comes to the adjudications, there are massive differences between banks. Barclays was the subject of just over 36,500 complaints, and in 77% of these the ombudsman found in favour of the customer. By contrast, less than 6,436 complaints were aimed at Nationwide, and only 10% of those were upheld.

Furthermore, the number of cases being upheld overall is falling. Around 75% of complaints were upheld in the first half of 2013, but only 56% in the second half of the year. Around half of complaints are being made through a claims management company. In the wake of the scandal when the large scale of PPI misspelling was revealed, these companies were set up to guide the masses of customers through the process of lodging a complaint and making a claim for the money to be repaid.

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Common Investment Options

With low interest rates set to continue, many people are instead looking to invest their savings. Most bank accounts are delivering interest below the rate of inflation, so investment is not just a way to get more money from savings but to avoid depreciation.

There are a number of different options for investment, and each comes with its own advantages and risks. Some of the most common options for investment are:

Stocks and Shares

Stocks and shares are a popular option for investment. Stocks up to a certain value can be further boosted by placing them into a stocks and shares ISA, resulting in tax-free returns. However, the key risk is that stock values can go up as well as down. The degree of risk depends in part on where you invest. Some stocks are relatively consistent performers, others a prone to greater variation providing greater potential for profit but also greater risk.

Stocks and shares can potentially be a very profitable investment option, but it can be a high-maintenance one. This is especially true if you want to truly maximise returns and minimise risks, which will involve keeping a close eye on your portfolio and moving your investments around to catch value increases and avoid price drops. Ultimately, the stock market can be an excellent investment if it is right for you, but should not be entered into on a whim.

Property

Property is also a popular choice for investment, particularly buy-to-let. Your original investment remains tied up in the property as equity, recoverable if you ever decide to sell, and you earn income in the form of rent. If the value of the property increases, you also get an effective increase in your assets as your investment becomes more valuable.

A good property in a good area with strong demand can be a very safe investment option. Much of the time, it will also be a low-maintenance source of income. However, there will be periods of higher-maintenance. Whenever a tenant leaves, you will need to find a new occupant. When work needs to be done on the property or there are problems, this will also require maintenance. There can also be unexpected difficulties and costs, for example if problems with the property arise that call for costly work or you have problem tenants. There is also a danger that the value of the property may decrease, depreciating the value of your original investment.

 

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Cheap Ways to Market a Small Business

When you are at the head of a small business, especially if you are just starting out, it can be hard to know how to properly market your services. This is often doubly true if you are self-employed, running the business on your own and with all costs coming out of your own pocket. Of course, not every marketing tactic works for every type of business, but there are a few ways to market a business with little or no financial outlay.

Direct Contact

If you are providing services to other businesses (known as “business to business” or “B2B”), the one of the most effective ways to market your services is to identify potential clients and then contact them directly. Email, post, and telephone are all good ways to do this. Identifying potential clients is often easiest to do online. However, even in this digital age the phone book can be a useful tool, as it will often include businesses that don’t have a website or don’t appear high-up in search results.

Often this tactic will cost you nothing but time. However, unless you are confident with business writing, you may want to pay a one-off fee to have a letter or email written professionally. This can drastically improve your chances of success.


Google Adwords Vouchers

Google Adwords is the most popular and useful Pay Per Click (PPC) advertising tool, and can be invaluable if your business has a website. When people search for relevant phrases on Google, adverts through Adwords are shown alongside search results. You only pay for the advert if somebody clicks on the advert and visits your site.

The problem with Adwords is that it can get expensive. However, there are a number of vouchers available, especially for people opening new accounts. These often come as a free gift with other business services, or are sold for less than their face value. This provides an easy, affordable way to try out Adwords and see if it will be a profitable tactic to stick with. Bear in mind that you have to be confident in your website for Adwords to work well, though. No matter how many visitors your website gets, it won’t do much good if they aren’t impressed with what they see.

Networking

Never underestimate the power of business networking when it comes to business. If you provide services to other businesses, attend local business networking events. If you provide them to the public, see if you can attend other relevant events. For example, a florist might attend wedding fairs to meet people who may be looking for wedding flowers.

Networking doesn’t have to be confined to strictly business settings, either. Your family and friends are also valuable networking contacts. Make sure they know what you do. If they later realise they know somebody who could use your products or services, they might introduce that person to you as a new customer.

 

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How to Cut a Small Business IT Budget

Whether you’re self-employed or the head of a small or medium enterprise, there’s a good chance you use a computer. In order to work effectively and keep your business running smoothly, you need to have access to reliable hardware, invest in all the necessary software, and keep both up-to-date. This can be expensive, especially if you are just starting out or have come up against the need to update several things at once. However, there are easy ways to lower the cost of your business’ IT needs.

Buy for the Future

This tactic may involve spending more initially, but it can often mean significant savings down the line. When you buy a new computer or update your software, think about your business’ future needs as well as your immediate ones. For example, choose a computer with a reputation for reliability and with higher spec than you need. It may cost you more right now, but a few years down the line it will still meet your needs where a cheaper computer might have already needed replacing. As always, there is debate among experts, but Toshiba and Asus are widely considered two of the most reliable brands.

Buy Last Year’s Versions

There are times when it makes sense to do almost the opposite of the suggestions above. Usually, this applies to software. For many software packages, an updated version is released every year. However, sometimes the differences between versions can be small, or simply not applicable to your business. This means that you can often save a lot of money by buying last year’s version. It may last just as long as the latest version, but if it does have a shorter lifespan the fact you can use the same tactic again will often still make for a saving.

Use Free Software

Many people dismiss free software, thinking it must not be as good as paid alternatives. However, this is frequently not the case. Many free software packages are made by dedicated and talented professionals as a personal project. A lot are also “open source,” meaning that thousands of professional and amateur programmers contribute to its creation. One of the notable examples is Libreoffice, a free alternative to Microsoft Office. It is fully cross-compatible with Microsoft’s popular office suite, and Libreoffice and  its ancestor OpenOffice.org have been adopted by local councils, government institutions and large companies around the world to cut costs while maintaining productivity. Free software packages are available for many purposes, and often are entirely suited to business use and offer all the functionality of their non-free counterparts. However, be aware that some software is only free for personal use and requires a paid licence for business use.

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Financial Tips When Going Self-Employed

The economy is finally recovering, yet at the same time many people still struggle to find a new job or feel that their current role is at risk. This has led many people to consider making their own career by being self-employed. But financially speaking, working for yourself is very different from regular employment. It’s important to make sure you consider everything carefully before making the leap.

Tax and Bookkeeping

If you intend to keep your own books, make sure you learn how to do so properly. Above all, take the time to learn which costs are tax deductible. Many business expenses can be deducted from your total taxable income, meaning that less tax is paid altogether. Knowing which expenses this applies to will help you make sure you don’t pay more than you need to. If you conduct your business from a home office, you may even be able to treat a portion of your household bills as a deductible business expense.

Business Banking

For most people who go self-employed, a business bank account is really not necessary. In fact, opening one could be a costly mistake. There is no law against running a business from your personal bank account, and the advantages of a business account really only apply to larger enterprises. The disadvantages, on the other hand, are that you get charged for every transaction and may have to pay an ongoing monthly fee as well. These costs can really mount up, especially for those who are just starting out as self-employed. If you wish to keep your personal and business finances separate, just open another personal account.

Be Prepared for Varying Income

In the early stages of a self-employed business, income will often vary from one month to the next. Before you have built up a regular client base, you may find that several one-off customers all come along at once, only for work to seemingly dry up a few weeks later. It is important to be prepared for this with your financial activity. If your business seems to suddenly take off, don’t rush to spend more freely even on investments like extra equipment. Keep running your business carefully in case you soon need the money to see you through a tougher period. Growing your business can wait until you are sure that level of work has become regular.

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3 Mistakes That Can Lose You Money When Moving Careers

1. Not Keeping an Eye on Your Tax Situation

Personal finances can be seriously affected by changing careers. You’d obviously keep in mind the change in salary, but it’s also important also to consider how the change will affect your tax situation. To help you do this, you could ask yourself the relevant questions. Such as; if your income increases, will you lose tax deductions and credits you’re currently eligible for? Or on the flipside, if you expect to earn less, will you qualify for tax deductions and credits that you don’t currently?

You may also want to consider the impact of self-employment tax if you plan to be self-employed. And lastly, will you have fewer or more business-related write-offs as a result of your career change? If you do not consider this in the beginning, like many in today’s job market, it may come about as a nasty surprise later during tax time. And you don’t want that, so make sure you know the situation.

2. Not Assessing Your New Disposable Income

No matter how much you want to move on to your dream job from an unfulfilling career, rushing it will not help you. Career change at the wrong time can prove disastrous for your finances. When you’ve thoroughly researched how you’ll be affected, create a budget accordingly and implement it. You have to get a good idea of how your lifestyle will be affected by the coming career change. If your next job will have you getting a pay cut, it’s easy enough to tell yourself you need to cut back on unnecessary spending. But it’s an entirely different thing to actually do it.

For example, try to target small expenses such as coffee and croissants, and possibly replace them with other alternatives. Pretty soon, the small expenses that used to add up will cease to snowball into a financial problem for you. Of course, this may need some getting used to, but it will definitely be worth the effort in the end. Try your best to live within the financial means you expect to have before departing from your current career track so you can see what it’s really like. For example, instead of renewing that ridiculously priced gym membership (which you don’t attend), why not try to take the more practical option, like regular walks in the local park?

 

3. Forgetting the Extra Charges

When it comes to the career shift, there are often quite a few expenses involved, and these can be easy to overlook. It is advised to thoroughly examine what costs you expect to incur in the process of seeking a job, as well as what new costs you can expect once you make the switch. For example, you may need to hire a career coach or a job expert, you may need a new work wardrobe, you may need licensing for your new profession, or you may even need to purchase some new equipment etc. If you ensure that you consider these useful pointers, you are most likely prepared for any eventuality concerning your finances.

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Increase in bank profits can have negative consequences

Following a long period of changes made to the banking system, there has been a 12% rise in internet banking fraud in comparison to the previous year. A recent report from KPMG stated “Furthermore, the motivation for cyber assaults is shifting, from financial crime to political and ideological attacks, with the number of state-sponsored hacking and ‘hacktivist’ revenge incidents growing”. KPMG also cautioned that the increase in hacking may be the cause for a major blow for financial institutions rather than economic difficulty. ‘Hacktivists’ are a growing threat for banks as a growing number of them target financial groups in revenge attacks.

Although there has been an increase in profits, with total bank profits reaching £16.5 billion, it was stated in a recent report which looked at major banks including Barclays, HSBC, RBS and the Lloyds group that: “modest lending growth and falling impairments all show that the banking sector is starting to get back on track after the financial crisis”.

The increase in profits were largely due to an increase in lending such as mortgages which rose by 0.8% as well as customers paying into their accounts, which rose by 6%, showing signs of improvement in consumer confidence and the UK economy as a whole.

EMA head of financial services for KPMG, Bill Michael said: “The fear is that we will end up with a UK banking sector with very narrow choice, where individuals will not be able to get the products they need. We have to get the balance right between prudence and growth.”

KPMG said that the banking sector is making changes after its recent crisis. For instance £2.3 billion was put by to cater for PPI claims and £700 million for hedging products that were affected by interest rates. Bill Michael also stated that “While it is great that the most recent bank results are in the black, there remains real uncertainty on the shape of their business models in the future,”

KPMG states that the changes in regulations are still slow and is restricting economic progression.

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Amounts Owed to Payday Lenders Increasing by £400 in 1 Year

Newly published figures have revealed that the typical amount people owe to payday loan companies has increased by around £400 in the previous year alone. The figures were published by researcher and debt charity StepChange who also show that the average debt in the cities of Birmingham, Liverpool, London, Cardiff and Leicester has increased from £397 and £563 to reach a new high of £1,859 in London.

Delroy Cornialdi who is StepChange’s external affairs director said that the figures published were a “frightening” reflection on the vulnerability which some communities have towards such high level cost borrowing which can often lead to grave financial hardship. The statistics have been released prior to the Office of Fair Trading is to reveal its plans on whether it will refer the increasingly concerning payday sector to the Competition Commission. A report published in March by the watchdog made the proposal to refer the sector to the Commission which has the power to shake up the market by banning or placing restrictions on products which they disapprove of.

The OFT’s official website stated that they have received a number of responses to their suggestion to refer the payday loan industry to the Commission. It was also said that there will be a meeting held which consists of payday lenders certain Government ministers as well as charities in order to deal with the well-known issues within the loan industry. Jo Swinson who is the Consumer Minister will be the host of this meeting which will examine various plans and proposals for stricter rules to regulate the £2 billion sector.

Previous investigations conducted by the OFT have revealed mass scale irresponsibility in making loans with certain lenders providing encouragement to their borrowers to roll over their loans which further worsens their financial constraint and provides for yet more debt. The newly established Financial Conduct Authority (FCA) will be taking on the responsibility to keep an eye on payday lending companies. One of the biggest criticisms of the payday lending sector is the far above the ground interest rates which it applies to its loans in addition to their marketing strategy which mainly is aimed at vulnerable consumers.

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Property Sellers to Get Greater Freedom in Private Property Sales

With imminent changes to the law, the Department of Business, Innovation & Skills (BISS) announced recently that property sale websites could be expanded and given greater freedom to operate, allowing people to sell their own homes as opposed to going via an estate agent.

BISS states that the rules for property sales as set out in legislation such as the Estate Agents Act (1979) and the Property Misdescriptions Act (1991) were enacted before the internet age. As such, the Acts are unintentionally stopping the development and expansion of private, internet based property sales. The result of the changes will give private property sale website greater freedom. The big question is will those changes actually benefit those selling property when considering the expense of an estate agent with the hassle and complications of going it alone.

Although getting the “For Sale” sign (provided by most such websites) is much cheaper, the onus is very much on the property seller. The seller would have to take the photographs, arrange and conduct viewings, organise Energy Performance Certificates (EPC’s) and similar, and deal with all the paperwork and details. Additionally, the seller would have to negotiate on prices. However, the cost of a website posting your house sale details is a mere £300 to £600, with the larger and more expensive sites also advertising your property on big, respected sites such as Zoopla and Rightmove. The potential savings of thousands of pounds are a great incentive for many sellers.

Estate agents are pointing out that selling a property is quite easy. The hard part is all of the paperwork, checking any potential buyer, dealing with a chain of buyers, the conveyancing, and the lawyers. All those aspects are part of the service which estate agents provide in their fees, and which they have a lot of professional knowledge and expertise about. Above all, many estate agents cite price negotiation; the ability to get the best market value for a property is a part of their job, but is not a skill or knowledge possessed by everyone. Crucially, estate agents are members of the Property Ombudsman scheme, which guarantees compensation should anything in the laborious process go wrong. In response to the changes, some predict that estate agents might introduce fixed fees as opposed to commissions (on average 1.5% of the sale). This would be advantageous to those with larger properties who traditionally face higher commission fees- and shows that the estate agents are taking great notice of these changes.

Private sale websites offer a totally different service than estate agents; Peter Bolton King, of the Royal Institution of Chartered Surveyors (RICS), stated that “there is a huge difference between paying a few hundred pounds just to put the property on to the internet, compared with all of the services that should be provided, and the security that should be offered, by the good traditional local estate agent.” As the law stands currently, the definition of an estate agent, and the rules surrounding them (i.e. the obligation to visit the property itself) prevents private sale websites from operating effectively- or, as the government claims, at their full potential. Once the rules are changed later this year, it is hoped that the private sale sector will expand with greater freedom- therefore boosting the property market.

Despite the benefits, private sellers also face potential dangers, and unnecessary complications. One such danger is that a seller might have no success with a private sale website, and might have to resort to an estate agent after all. Issues such as that, however, are matters for a responsible, informed and advised property seller to consider prior to starting the sale process.

RICS estimates that such private sales make up only 5% of house sales. By comparison, in the US, an estimated 10% of sales are conducted by private sales websites. Deregulation, RICS predicts, could see that percentage rise greatly. Even if the private sales websites do not prove to be popular amongst sellers, the forthcoming deregulation could still change the housing market bringing introducing competition and greater flexibility.

Competition and consumer choice are beneficial for free and open markets. In the area of property sales, such freedom and competition could come at a detriment to many sellers due to their lack of knowledge of the mechanics of a property sale if they go it alone. That risk, however, is for the seller to consider amidst this new freedom in selling property themselves.

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Latest figures show recovery and growth for UK economy

After severe economic pressures in last year’s double dip recession, it seems that Britain’s economy is showing the starting signs of recovery. According to recent surveys, business is picking up, hiring is rising, and consumer spending is also on the rise.

From this and other indicators, the CBI predicts that the economy will grow by 1% in 2013, and a further 2% in 2014- in contrast to the IMF’s predictions, which suggest that the British economy will contract from 1% to 0.7%.

Recent surveys show that business activity is increasing. In April, the Lloyds TSB’s PMI (purchasing manager’s index) was at 52.2, up from 51.6 in March. Collated from data from 1,200 companies in the manufacturing and services sectors, this shows further movement from the 50 mark that separates growth from contraction.

Seven of England’s nine regions registered growth, with Yorkshire & Humber leading with a PMI of 55.7. The West Midlands and the North East showed a reduction in business activity, however; analysts put this down to a weak performance in the manufacturing sector, and less consumer spending.  This is supported by data on business confidence from consultants BDO. Their output index (which predicts short term turnover expectations) rose from 93 to 94.1; the 95 mark indicates growth. The booming services sector drove such figures- however, morale in the manufacturing sector declined, with the index falling to 90.8 from 92.4.

Furthermore, Barclaycard figures over the same time shows that consumers are returning to the high street, perhaps encouraged by the warmer weather.  Spending was up last month by 3.6% compared with April last year, with cinema, and theatre tickets leading with a 21% increase in sales. People are eating out more, with restaurants enjoying an 11% rise in spending, or finally getting round to those household tasks as DIY stores saw spending increase by 8.5%. Reflecting the increasingly digital world around us, and new national habits, online spending rose by 11.7%, as opposed to an increase of just 1.7% on the high street itself.

It was good news for jobseekers too, with the hiring set to increase over the next quarter.  The CIPD (Charteredd Institute of Personnel and Development) stated that more employers are seeking to increase staff numbers as compared to those who are seeking to cut staffing levels, with a balance of +9, an increase from +5 in the previous quarter.

Despite such positive and encouraging figures, leading analysts and business figures urge caution, and point out caveats, relevant facts not registered by the data, or areas of economic weakness (such as manufacturing) that need to be improved upon to get economic growth going.

Whilst urging caution, and stressing that a lot more work needs to be done, analysts are extremely happy with the result of the surveys, and are confident that this shows that Britain is slowly returning from an economic abyss.  In a statement reflecting the views of many analysts, John Cridland, director general of the CBI, said that “the UK economy is moving from flat to growth… although [the data] suggests rising business confidence, the economic climate remains tough… consumers remain under pressure, as inflation continues to outstrip wage growth.”

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