StepChange Debt Charity comments on latest Bank of England consumer lending figures

Responding to the latest Bank of England Money and Credit statistical release showing that the annual growth rate of consumer credit slowed in July, to 8.5%, Peter Tutton, Head of Policy at StepChange Debt Charity said: “The slowing rate of credit growth in July perhaps reflects two themes. Consumer confidence has been fragile over the summer months and this may be reflected in less demand for credit, for bigger ticket items in particular – and with continuing economic uncertainty ahead, this lack of confidence may continue. Over the same period lending criteria have tightened, which we hope is a reflection of an increasing market focus on sustainable lending, following the FCA’s work around creditworthiness and affordability.

“This is all against a background of 3.4.million people struggling with serious problem debt and 1.4 million people having to use high cost credit for household expenses.”

Comment on the UK Finance lending update for July

Richard Pike, sales and marketing director at Phoebus Software, says “July is, of course, a traditionally busy month in the property world, and it is encouraging to see even modest growth compared to the same month in 2017. However, with so much speculation regarding the Brexit deal, or no deal, everywhere you turn at the moment it is likely to be reflected in the housing market in the coming months. When house buying is such a huge financial undertaking, the decision to move or buy has to be affected by consumer confidence, which is likely to be dented amongst the constant barrage of ‘deal or no deal’ speculation.

“The market has been propped up recently by the continuous buoyancy in remortgaging but, with few people now left on variable or tracker rates, this too is likely to slow. As we approach the deadline for Brexit even the threat of a no deal is likely to weigh heavy across our economy, how that will manifest itself in the housing market is difficult to predict, but it could bring along a period of stagnancy while people wait to see what happens.”

Money Advice Trust launches revamped CASHflow tool

The Money Advice Trust has today announced the launch of the updated CASHflow resource, an online tool which enables people to self-manage their debts, with the support of an adviser. The recent revamp of the online tool brings the style and format of CASHflow from the old Common Financial Statement (CFS) to the new Standard Financial Statement (SFS).

CASHflow, which was first launched in 2009, is an online tool that helps people in debt to create a household budget, work out how much they can afford to repay towards what they owe and provides access to sample letters,

The updated site takes people through the process of completing a financial statement using step-by-step guides and onscreen prompts. This approach allows the person in debt to complete the process in their own time. A money adviser then checks the details, including the income and expenditure in the budget, before signing off the statement.

Once agreed, the financial statement gets a unique ID number and the CASHflow logo. The statement is then ready to be shared with creditors, who seeing the CASHflow logo, can know that the information presented is a fair representation of the individual’s financial position.

CASHflow provides a unique combination of empowering clients whilst retaining support from an adviser. It also frees up adviser time to help those people needing casework or face-to-face assistance, whilst for creditors, the process provides assurance that the information in the financial statement is accurate and that the person has sought advice about their debts.

Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: “Helping people in debt to deal with their situation themselves is an important part of our approach to debt advice.

“The new CASHflow website, available for the whole debt advice sector, provides people with the tools and confidence they need to start the process of engaging with creditors, safe in the knowledge that they have the support of a trained adviser behind them.

“The benefits are numerous for creditors, advice agencies and clients alike. Creditors know that the financial statements they receive are accurate, advisers’ time is freed up, and importantly, the person is empowered by working through their financial situation themself to start the process of dealing with their debt.”

Daniel Kelly, coordination and engagement manager, Money Advice Service, said: “For a customer looking to work with their creditors directly, understanding and communicating their financial circumstances is a crucial step towards resolving their debt problems.
“That’s why the Money Advice Service (MAS) is delighted that the revamped CASHflow system is incorporating the Single Financial Statement (SFS), meaning customers can communicate with creditors in a format they will instantly recognise and trust.
“This will help us achieve the right outcomes for people struggling with their finances, allowing more customers to benefit from innovations in the SFS such as the savings category.”

CASHflow is facilitated by the Money Advice Trust.

Advice agencies who want to use CASHflow need to have an SFS licence and request a CASHflow account.

Trade bodies line up to debate mortgage market at FSE London

Front Events, organisers of Financial Services Expo (FSE) London, the premier exhibition for the financial services industry in London & the South East, has today (22nd August 2018) announced the full seminar programme for the event.

FSE London will take place once again at Old Billingsgate in the heart of the City of London on Wednesday 12th September, with a selection of major industry players lined up to debate key issues.

One of the key debates will be the ‘Meeting of trade body minds’ in which six representatives from the leading industry trade bodies will discuss the mortgage and housing market, specifically focusing on the FCA’s Mortgages Market Study Interim Report and its potential ramifications for all stakeholders.

Taking part are, Donna Bathgate (Equity Release Council), Jackie Bennett (UK Finance), Paul Broadhead (Building Societies Association), John Barrass (PIMFA), Robert Sinclair (AMI), and Kate Davies (IMLA).

Also included in the seminar programme is a mortgage panel debate featuring a number of high-street lender representatives – Chris Pearson (HSBC), Esther Dijkstra (Lloyds) and Ian Andrew (Nationwide) – plus Peter Brodnicki (Mortgage Advice Bureau) and James Tucker (Twenty7Tec). The panel will cover the outlook for the mortgage market during the rest of 2018 and beyond, the opportunities for advisers, and how technology can support advisory practices in an uncertain market.

The seminar programme has once again been put together by the Association of Mortgage Intermediaries (AMI), and media partner, Financial Reporter.

There are two other sessions taking place with many of the industry’s leading names discussing a wide range of topics and answering questions on those areas. The other sessions are:

· New-build – how advisers can get involved and support clients from Douglas Cochrane of Lloyds.
· Specialist lending panel – what happens next and where. Five experts debate the key issues in the growing number of sectors that now make up specialist lending. Participants include: David Whittaker (Mortgages for Business); Adrian Moloney (One Savings Bank); Louisa Sedgwick (Vida Homeloans); Alan Cleary (Precise) and Rob Jupp (Brightstar).

All sessions are CII-accredited and delegates can earn CPD hours.

FSE London will also be hosting the second National Mortgage Adviser Awards in association with Mortgage Advice Bureau, with the ceremony sponsored by Brightstar. The Awards will once again recognise the top firms throughout the UK across 12 regions and three specialist awards.

The exhibition space for FSE London provides adviser visitors with access to over 60 exhibitors including lenders, distributors, networks, insurance providers, technology companies, and many more.

James Prosser, Managing Director of Front Events, organisers of FSE London, commented: “FSE London is now just a few weeks away and we have assembled a quality line-up of seminars to deliver to attendees when we open for business on the 12th September at Old Billingsgate.

“2018 has been an eventful year and there is plenty to discuss, debate and look forward to during the next few months and beyond. In a year when the FCA’s Mortgages Market Study Interim Report has provided plenty of food for thought for the industry, we are very pleased to be able to have a variety of mortgage market trade body representatives on one panel to discuss this, and many other areas.

“Some of the measures and proposals outlined in the Interim Report, if introduced, could have far-reaching consequences for all mortgage stakeholders, and it’s important to hear what our representative bodies are doing to ensure the market is not subject to poorly-thought out changes, which could illicit real damage.

“It is a real shame, given the debate generated by the Interim Report, that we do not have representatives from the FCA willing to provide an update to FSE, especially as the date for responses has now passed and given the huge depth of feeling the initial publication generated. The invite to attend and speak is still open and we feel the industry would benefit from, and deserve, an opportunity to hear from its regulator.

“Our other sessions are packed full of quality industry players debating the key mortgage market issues of the day, whether that be the opportunities available in new-build or specialist lending, or a look at the first raft of product transfer data and what its growth means for our market, or how technology is changing and reshaping the advice process.

“FSE London not only delivers quality sessions like this but we have over 60 exhibitors, and the second annual National Mortgage Adviser Awards ceremony taking place. This promises to be our biggest and best FSE London yet and we would urge all advisers to join us for what will be a highly informative day.”

Financial Ombudsman Service reminds banks to treat fraud victims fairly

The Financial Ombudsman Service has told banks they should take into account the evolution and sophistication of frauds and scams – and not simply assume that their customers were “grossly negligent”.

In its latest edition of ombudsman news, the ombudsman service details how it regularly hears from banks that consumers who have been scammed have acted with gross negligence – and therefore banks aren’t liable for the money their customer has lost. However, the ombudsman service says there is a very high bar for being grossly negligent – and this is far more than just being careless. This is because of the increasingly sophisticated scams which fraudsters are using that are becoming even more difficult for consumers to spot.

In pretending to be a consumer’s bank or other entity so they can obtain personal details, fraudsters are increasingly abusing technology to their advantage. Earlier this year, the ombudsman service even heard that fraudsters were contacting people and pretending to be the ombudsman – making it look really authentic as the ombudsman service’s number appeared on the Caller ID.

The ombudsman service doesn’t ever cold call people and will never ask consumers for payment. In the same way, banks will never ask consumers for banking passwords or their PIN. If in doubt, hang up the phone.

The ombudsman service also sees situations where people should have done more to protect their money. While each case is looked into individually, things like keeping a PIN with a bank card, or giving security details to someone else, will make it more difficult to get money back.

Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service, said: “Each year we see more than 8,000 cases involving fraud and scams – everything from disputed cash withdrawals and identity theft, through to mobile phone SIM-swaps and fake banking websites. And where criminals are involved, both banks and their customers often tell us in strong terms that they haven’t done anything wrong.

“But it’s not fair to automatically call a customer grossly negligent simply because they’ve fallen for a scam. That’s especially true in light of the sophisticated way criminals exploit banks’ security systems – and convince customers that their money is at risk.

“We often remind banks that they need to support what they’re saying with facts. And if they can’t do that, it’s likely we’ll tell them to cover the money their customer has lost.”

IHS: “Figures should be taken with a pinch of salt”, Moneyhub

Samantha Seaton, CEO of Moneyhub, commented: “A summer of hot weather has helped to boost spending, but the figures should be taken with a pinch of salt. Inflation is once again pushing up the cost of living, and while job prospects and wage growth are increasing, the interest rate rise will already be eating away at the other side. Those with a mortgage or loan will feel under more pressure.

“For financial advisers, it’s a good time to carry out a rigorous health check of their clients’ finances, particularly for those nearing or already in retirement. Mark Carney hinted at further rate rises for the year, so doing so will help to cushion them from any future turbulence. While the much trumpeted pensions dashboard remains elusive, there are a number of tools and platforms that can provide advisers with a complete and holistic view of their clients’ financial situation, spending behaviour and habits. Taking advantage to this type of technological solution means that they’re able to give hyper-personalised and impactful advice.”

All in Property Services recruits Ray Hugill

All in Property Services is pleased to announce the recruitment of Ray Hugill as a consultant to our business effective from August 2018.

Ray’s role will include the strengthening of existing valued client relationships and to help to create new client opportunities across all aspects of the business.

Ray will also assist with ensuring that the ever increasing regulatory demands on our business are affectively managed.

Commenting on this important appointment, John Boardman, Managing Director said: “We are delighted Ray has decided to join our team. He has over 40 years experience in Financial Services, many at management and executive level. He is well respected within the industry and we are all looking forward to working with him”.

Tenants set to take their first steps to home ownership

Housing association tenants will be given access to the finance they need to get a foothold on the property ladder following the launch of a new £200million Government scheme.

The pilot, in the Midlands, comes after an historic voluntary agreement between the National Housing Federation (NHF) and the Government which will eventually give 1.3million tenants the chance to achieve their property-owning dreams.

The scheme, which was launched on Thursday (16th August), gives large discounts of up 50% on price of their home, for individuals and families who’ve been living in the property for more than three years.

Pete Ball, personal finance CEO at the specialist lender Together, said there was a demand from housing association tenants who would be eligible for the new scheme.

He said: “This is a fantastic opportunity for hard-working families – many who have rented their homes from housing associations for years – to be able to own them outright for the first time.

“We can help by providing right to buy mortgages for those who are often underserved by mainstream banks and building societies. For example, borrowers may be self-employed or reaching retirement; they may want to buy a house made of concrete or a flat more than six floors up and could struggle to get a mortgage in such situations.”

He added: “Home ownership plays a vital role in social mobility, and the financial security needed for people to build a future. We’re excited to be helping housing association tenants do this under the voluntary Right to Buy scheme to give them the opportunity to realise their dreams.”

Guidance was issued in May by the NHF to associations taking part in the latest pilot and a House of Commons briefing document about voluntary RTB was published last month.

Nearly 20 housing associations in areas including Birmingham, Nottingham, Leicester and Stafford have already signed up to the voluntary scheme, which follows an earlier pilot of five associations in 2016. The government has said that any properties bought under the scheme will be replaced like-for-like.

Who is eligible?

Tenants may be eligible to buy under the new scheme if they have lived in a property owned by a social or affordable housing association for at least three years. They can also apply with up to three family members, if the property is their main home and they have lived there for 12 months or more.

Those who meet the government’s eligibility criteria will be entitled to a Right to Buy discount. Tenants living in houses will get a 35% discount (50% discount for flats) on the price of the property, if they have been a public sector tenant for three years. After five years the discount increases by 1% for every year up to a maximum of 70% or £80,900, whichever is lower.*

For example, Mr Smith has lived in a two-bedroom flat, valued at £110,000, for 25 years. He will be eligible for a 70% discount – or £77,000 – meaning he will pay just £33,000 for the property.

Mortgage borrowers can use their discount as a deposit, so they can borrow up to 100% of their purchase price, excluding non-refundable mortgage fees.

Paying by card? You’re less likely to remember the amount paid

Accurately remembering how much money you spend depends on whether you pay by card or cash. Research by the University of Cologne and the Alpen-Adria-Universität Klagenfurt has shown that the recall accuracy regarding the amount spent is lower for payments by card than it is for payments by cash.

Researchers Dr. Rufina Gafeeva, Prof. Dr. Erik Hoelzl and Prof. Dr. Holger Roschk carried out a field study to determine recall accuracy in relation to recently made payments. By gathering data in cafeterias at a German university during the summers of 2015 and 2016, they analyzed interviews with 496 students that were conducted immediately after the act of paying.

“We were able to show that individuals who pay by card have a less accurate recall of the amount paid than individuals who settle their bill with cash”, the authors summarize, who say that the results are relevant for the financial wellbeing of everyone. “A precise recollection of past spending has an effect on the willingness to spend money in the future.”

Smart cards are multifunctional and may also include further non-payment functions such as bonus programs or user identification. These functions play a critical role: “Individuals who use the non-payment functions of the multifunctional card are less likely to remember the transaction details accurately.” Moreover, this multifunctionality also applies to other digital devices such as smartphones or smart watches which can integrate the payment function with other non-payment functions.

“To heighten our awareness, we need designs that separate the payment function from other functions, or that visualise the act of spending money, such as immediate payment information or transaction summaries.”

These findings were published in the Journal Marketing Letters.

Experian’s Credit Search Barometer reveals latest trends on consumer spending habits

A third of loan searches carried out through Experian’s comparison services are for debt consolidation loans, new analysis has revealed.

These type of loans can help consumers with outstanding debts from various lenders to roll their monthly payments into one to reduce their costs.

And latest figures from Experian show that 33%* of all loans searched for in the last two years are for debt consolidation loans, as consumers try and take more control over their finances.

On average, shoppers are looking to borrow £11,000 over five years. Typically, these consumers are 37 years old, and have an average Experian Credit Score of 749.

This score is in the “good” band category and indicates that while these consumers have taken on debts through their 30s, they have been able to meet their monthly repayments and sustain a healthy credit history.

Meanwhile analysis of the type of mortgages potential buyers are looking for shows a jump in consumers shopping for fixed-term deals.

A third (33%)** of searches carried out in July were for fixed-term deals, up from 27% in June and 24% in May.

The trend suggests that potential homeowners have been looking to tie themselves in to a fixed deal to protect themselves from an increase in interest rates and mortgage payments, with the Bank of England recently raising interest rates to 0.75% .

Amir Goshtai, Managing Director, Experian Marketplace & Affinity, said: “The latest look at our data reveals that even consumers who are able to service their various debts are looking to take even more control and roll their monthly payments into one to reduce their costs. The rise in those looking at fixed-term mortgages indicates people have been reacting to the speculation of a potential rate rise. If and when there are further rises is yet to be seen, but in the meantime a priority for homeowners should be to take some simple steps to plan ahead.”