Weekly Money: the stories we noticed 26 to 30 October

The personal finance stories you may have missed this week: insolvencies up; Dollar fined £15.4m; state pension probe; bailiff crackdown

George Osborne was forced into an embarssing climb down after the House of Lords voted out his Tax Credit cuts (Getty Images)

30 October

The number of people becoming insolvent has climbed for the first time in a year, climbing 2.8 per cent to 19,683 between July and September, Is this bad news? Not necessarily. The increase can partly be blamed on more people are choosing to enter into individual voluntary arrangements (IVAs). There were 10,197 IVAs in the third quarter of 2015, a 9.3 per cent increase in three months.

“That suggests more people are facing up to their financial issues and taking steps to deal with mounting debt repayments,” said James Jones of Experian. He says the sooner people take the first step on the road to recovery, the sooner they can rebuild their finances and credit rating. But key to that is being prepared to discuss financial problems with creditors.

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Well-off savers are taking big risks with their pension pots, warns wealth manager Brewin Dolphin. Its research suggests that people with £100,000-plus retirement savings are using the pension freedoms introduced in April to take money out of their pot to spend on a holiday, invest in property, put in a savings account or withdraw as cash.

“They do not sound sensible investment decisions for those seeking a comfortable retirement,” said Stephen Ford of Brewin Dolphin.

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The Royal Bank of Scotland is the worst bank for branch closures. The bank - including NatWest - shut 385 branches between 2014 and 2015, more than a third of the total closures, and 165 were the “last bank in town”, leaving communities without a bank at all, says Move Your Money.

29 October

MPs have launched an investigation into the new state pension, due next April. They’re concerned that many of those affected by the changes don’t know what they will mean for their pensions, especially people who are close to retirement and may have done most or all of their retirement planning and saving under the existing system.

While many people are expected to be better off, the Works and Pensions Committee warns that people with less than 10 years of National Insurance contributions, for example, will no longer receive any state pension, and people will no longer be able to count on a percentage of their spouse’s pension after their death.

“In addition there is a group of women born between 1951 and 1953 who feel particularly aggrieved by the way they are affected by the transition to the new state pension,” pointed out Frank Field, committee chair.

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A new Bill hopes to stamp out bad behaviour by bailiffs. In particular Yvonne Fovargue, the MP who presented the bill, hopes it will cut back on bailiffs’ bullying tactics and lead to them only being used as a last resort by councils.

“Bailiffs are continuing to use intimidation and bogus excuses to gain entry to people’s homes and to seize goods which they have no right to,” she said. “My Bill will ensure that bailiffs have to abide by a legally binding code to ensure that they act in a reasonable and fair manner.”

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The Tory 3.5 per cent hike in insurance premium tax from Sunday will cost young drivers £40, reckons Comparethemarket. Young drivers already pay 160 per cent more for car cover.

28 October

Lloyd Banking Group’s bill for the PPI mis-selling scandal has reached £13.9bn after the bank – which also owns Halifax and Bank of Scotland – was forced to put aside another £500m to cover the cost of customers’ compensation. The amount means that Lloyds has now set aside more than twice any other bank.

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Energy suppliers now have to include their collective switch deals in their communications with customers, Ofgem ruled yesterday. It means consumers should see all offers and not be barred from those offered to only a select few.

Darren Braham, of First Utility, which has been campaigning for the change, said: “The move will stop suppliers being able to offer a low price to new customers while hiding them from existing customers and is a clear victory for transparency and openness in the energy market.”

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The rise in insurance premium tax (IPT) from 6 per cent to 9.5 per cent on 1 November – announced by the Tories in the summer Budget – will add £18.80 on to the average comprehensive car insurance policy, reckons the AA.

But young drivers – who are the least likely to be able to afford the tax hike – will be hit the most and some drivers could be encouraged to drive without insurance, it warns. With most insurers expected to pass on the tax grab to customers, the average premium for those aged 17-22 will climb from £1,278 to £1,319.35, the AA says.

“Car premiums have risen nearly 10 per cent in the past six months and the IPT rise will only pile on the misery,” said Janet Connor, the managing director of AA Insurance.

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Here’s a warning for mortgage borrowers: don’t presume that the one with the lowest interest rate will be the best deal. In fact, borrowers would be better off choosing a deal with no arrangement fee over a lower-rate alternative, warns Moneyfacts.

For instance, choosing the lowest no-fee, two-year fixed-rate mortgage at 60 per cent loan-to-value (currently HSBC’s 1.89 per cent deal) would leave borrowers around £1,500 better off in the first year than if they chose the lowest overall rate (Post Office Money’s 1.15 per cent deal), which comes with a hefty £1,995 fee.

“Low-rate deals look great on paper but are often accompanied by high fees up to £2,794,” said Charlotte Nelson, of Moneyfacts.

27 October

Dollar Financial yesterday became the latest payday lender to face financial penalties for failing customers. The high-cost credit company - which owns the high street chain the Money Shop - has been forced to refund more than £15.4m to 147,000 people.

After an investigation into the firm, the City Watchdog ruled that Between April 2014 and April 2015 - after tough new lending rules came in - Dollar customers “may have suffered detriment as a result of the firm’s affordability checks, debt collection practices and systems errors”.

Many were lent more than they could afford to repay which is a clear violation of the Financial Conduct Authority’s requirements for high-cost short-term lenders. The company – which also owns online loan firms Payday UK, Payday Express and Ladder Loans – has had to change its lending criteria to meet the regulator’s rules.

Jonathan Davidson, director of supervision at the regulator said: “The FCA expects all credit providers to carry out proper checks to ensure that borrowers don’t take on more than they can afford to pay back.”

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The tax gap between the amount HM Revenue & Customs expects to collect and what it actually gets in climbed 10 per cent last year. The news will mean the tax authorities are likely to increase efforts to chase those who may be using schemes to reduce their tax bills, said lawyers Pinsent Masons.

The self-assessment tax gap reached £4.6bn in 2013/14, up 5 per cent from 2012/13, while the PAYE tax gap climbed 15 per cent to £3.9bn. Fiona Fernie of Pinsent Masons, said: “The sharp rise in the tax gap means we are likely to see HMRC continue their focus on investigations into individual taxpayers.”

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Energy bills for tens of thousands could climb by an average £147.95 when 12 dual fuel tariffs expire this Saturday if they don’t switch to a better deal. Customers of Npower, Sainsbury’s Energy, Scottish Power, First Utility, Extra Energy and Co-operative Energy have tariffs ending, with some Extra Energy customers facing a rise almost 20 per cent.

Tom Lewis, of Gocompare, said: “By being rolled onto their suppliers’ standard variable tariffs, which don’t represent value for money, customers are effectively welcoming a price rise that they should really be fighting.”

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More of us than ever are flashing the plastic online. The number of card transactions on the internet increased by 20 per cent in the past year with consumers spending £11.5bn online in August alone, according to the UK Cards Association.

There were 130 million card payments online in August - almost 50 a second - up from 108 million in the same period last year. Meanwhile the average value of an online card transaction has dropped by £8.44 in the past year, to £85.27.

26 October

Shares in communications giant TalkTalk slumped more than a tenth today as fears continued to circulate that it will face a massive compensation bill following its cyber-attack last week.

Some 4 million customer accounts were compromised in the security breach on 21 October. However Company insiders attempted to play down fears of a large compensation bill pointing out that fewer customers than first anticipated will have been affected by the breach.

The company said at the weekend that crooks would not be able to access cash from affected customers' accounts. It said that complete credit card details were not stored in its system and account passwords were not accessed.

“We now expect the amount of financial information that may have been accessed to be materially lower than initially believed and would on its own not enable a criminal to take money from your account,” it said.

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The simplest way to save money? Switch energy tariffs. If you’ve never switched gas and electricity, savings of up to £300 a year could be had. That could be particularly crucial for older folk, many who struggle to pay bills and keep the heating off to save money, often with disastrous consequences.

Big Energy Saving Week is a campaign to help people cut their fuel bills and get all the financial support they are entitled to. It’s urging householders to help elderly people who need support to winter-proof their energy bills.

“We’re urging sons, daughters, friends, neighbours and even older people themselves to help each other, or someone they know, to check and make sure they are on the best deal online or over the phone,” said Philip Sellwood, chief executive of the Energy Saving Trust. “It could make a real difference this winter.”

For advice about switching visit BeAnEnergyShopper.com. For tips on how to save money on your energy bill call the Energy Saving Advice service on 0300 123 1234.

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Insurance Premium Tax is climbing from 6 per cent to 9.5 cent next Sunday 1 November. The 58 per cent price hike - introduced by the Tories in the summer Budget - will add nearly £13 to the average motor policy, more than a tenner to home and pet cover, and more than £40 to the cost of private medical insurance.

James Dalton, of the Association of British Insurers, said: “Whether you are a homeowner, driver, own a pet or buy medical insurance, millions of people across the country face being hit in the pocket by this rise. However if you take out a policy by Saturday 31 October, you’ll avoid the extra tax charge.

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Nuisance calls to mobile phones are climbing, reckons Which? In a month, one in ten mobile users received more than 20 unwanted calls. Yet only 3 per cent of active UK mobile phone subscriptions are registered with the Telephone Preference Service. A new text service (text OPTOUT to 80057) allows people to register mobiles for free.