New measures put down to help the Government crack down on rogue traders and consumer debt have been announced by their Consumer White Paper.

The paper: ‘A Better Deal For Consumers’, bans unsolicited credit card cheques in order to promote responsible lending and borrowing and provides longer term framework to enhance and enforce consumer rights in the wider economy.

The Measures

Some of the measures that will be put in place according to the Consumer White Paper include:

1. Reforms in the regulations of credit and store cards so that consumers are in more control of their borrowing which will help people avoid running up huge debt they can’t afford to pay back;

2. It bans unsolicited credit card cheques so that consumers unaware of high interest rate charges don’t get caught out;

3. A review by the Office of Fair Trading into the market for high cost credit, usually above 50% APR – pay day loans and door step lending;

4. The introduction of a new Consumer Advocate responsible for the co-ordination of work to educate consumers and help them get their money back when things go wrong has been appointed;

5. The courts will also get new powers in order to ban persistent rogue traders including a new national specialist team for internet enforcement tackling scams over the internet. They will also get money for a central ‘Fighting Fund’ to tackle large scale rogue traders; and a pilot scheme giving Trading Standards officers powers to help consumers reclaim their money;

6. Also, a Money Advice Trust new self-help tool-kit, and the Insolvency Service introduce a new Debtor’s Guide to help those in debt stay in control of their finance.

What Consumer Minister Kevin Brennan said:

“Consumers have been seriously affected by the past two years of turmoil in the financial markets, as well as by the longer term changes in the way that goods and services are bought and sold. We are taking decisive action now to prepare for the future. 

“We are delivering a new approach to consumer credit with a review of the regulation of credit card and store cards. We are imposing requirements on lenders to explain their products and to check creditworthiness before they lend, and revised OFT guidance to tackle irresponsible lending.

“There will also be tougher action against rogue traders and fraudsters who look for ways to fleece consumers out of their hard-earned cash, and a new emphasis on consumer rights spearheaded by the Consumer Advocate.”

What Do You Think?

Will this help consumers or not? We want to know your thoughts and opinions. Leave your comments here.

Charity Grandparents Plus has found that young grandparents caring for their grandchildren or their own elderly parents are increasingly facing poverty.

A third of grandparents under 55 years old in the UK are struggling financially. Also, there was an increase in ‘gran-carers’ living alone on low incomes.

The report is called the Poor Generation?, and describes an ‘invisible generation’ that is caught between what their children, grandchildren and their parents need. Sam Smethers of the charity says it “challenges the cosy image we have of the retired grandparent.”

Those who have four or five generation families that are single, working class grandmothers are finding themselves particularly trapped in their obligations to look after people, getting caught in the cycle of living on a low income and acting as unpaid carers.

Torn Obligations

Ms Smethers adds: “For many, particularly ‘gran-carers’ who are of working age, on low incomes and who provide most of the childcare, it’s a real struggle.

They get no help with the challenge of combining work and care. As a result we see them taking low-paid, part-time work or dropping out of the labour market altogether.”

The overall trend of today’s society is for women to have children later in life which in turn pushes back the age of people becoming grandparents. But this report highlights the group at the opposite end of the scale.

There are1.5 million grandparents under the age of 50. Most of these are from less affluent families.

The report shows that younger grandparents are usually lone grandmothers and are three times more financially stretched than those with partners.

Rights For Carer Grandparents

It also shows that the number of single grandparents has doubled in the last ten years, and the number of grandparents on low incomes has risen by a third.

Single children of young grandparents will be particularly dependent and half of such children will rely primarily on grandparents to provide childcare.

The charity asks that carer grandparents be able to work flexible hours, and that they can have ‘granny leave’ when a grandchild is born. They also want grandparents to be eligible for childcare benefit if it allows the child’s parent to work.

Ms Smethers says: “Although overall the grandparent generation is getting older, it is younger, working-class grandparents who are most likely to suffer financial hardship.

“We want this reality to be recognised by paying grandparents through the tax credit system for the childcare they provide.”

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From October the Government has announced that minimum wage for over 21s will be raised from its current rate of £5.73 to £5.80 an hour.

For any employees between 18-21, the wage will also be raised by 6 pence to £4.83, and for 16-17 year olds wages should be increased by 4p to £3.57.

This comes a year after statutory hourly rates were increased by 21p an hour even though business leaders have recently asked that minimum wage be kept at its current level to compensate for the economic problems the country is currently facing.

The government believes that almost a million people will benefit from the increase in October, as it also announces that from October, the adult statutory minimum wage will apply to 21 year olds, as opposed to the current system that groups 21 year olds with those that are 18, 19 and 20.

Business Secretary Lord Mandelson says: “The Low Pay Commission (LPC) has carefully examined the latest economic data before making their recommendations on the minimum wage rate, balancing the needs of workers and businesses in the current economic climate.

“The government agrees with this assessment and has accepted the recommendations for these new rates to take effect in October.”

“These are very challenging times for the UK and unprecedented economic circumstances for the minimum wage,” added George Bain – chairman of the LPC.

“We believe that the Low Pay Commission’s recommendations are appropriate for this economic climate. They reflect the need to protect low-paid workers’ jobs as well as their earnings.”

Mixed Feelings

The Director General of the BBC added: “We pressed for a freeze to the minimum wage because of the severity of the downturn and the daily loss of jobs.

“We are pleased that the increase is only a modest one, and it shows that the Low Pay Commission and the government have largely understood the seriousness of the situation. However, a freeze would have been more help to businesses.”

The general secretary of the union Unison however, has opposing views: “We think it should be increased by more than 7p an hour because it is hardly going to help low-paid workers pay the bills.”

John Cridland of the CBI said: “This moderate increase recognises that many businesses are struggling, and helps protect jobs at a time of rising unemployment.

“Over the past decade the minimum wage has risen faster than average earnings and inflation, and a sensible, cautious approach now will help ensure this landmark piece of legislation continues to improve the lives of low paid workers for many years to come.”

The news of the increase also comes shortly after the government announced that from October employers were not allowed to use tips and service charges as a ‘top up’ of their employees’ wages in order to meet the minimum wage requirements.

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In an attempt to control business costs during the recession period, 10% of firms in the UK plan to freeze the pay of their employees.

According to the Incomes Data Service (IDS), firms are also putting off decisions about wages, which it says: ‘may be covering a much darker picture’ when it comes to the final extent of the pay freezes. But it also says that the average rate will increase, just more slowly.

There will be some sectors of business however, that see no change in the inflation of pay. Utility firms and the defence industry are two such examples.

Another thing that is becoming increasingly common within the workplace, is employers reducing the amount of hours their staff work in order to cut costs and still being able to keep many skilled and experienced employees within their firm.

Some employers have even waived bonuses and pay hikes, and told employees that there is no prospect of a pay rise this year.

‘Fairness Agenda’

Editor of the IDS Pay Report, Ken Mulkearn said: “We are also seeing pay pauses, where it comes to the time for an annual pay review and firms are saying they will put off a decision on what to do about pay.

“This means it does not get recorded as a pay freeze even if, in all likelihood that will be the outcome eventually in many cases.”

Though according to Mr Mulkearn, some businesses have decided to operate a ‘fairness agenda’ whereby staff at the higher end of the payment scale’s wages will be frozen, but lower salaries will be increased.

The car manufacturing business has been particularly badly hit in the recession. Some employees are being cut to just a couple of shifts each week and have had overtime banned, which has a serious impact on the amount of money each employee brings home.

‘What Else Can Businesses Do’?

Head of Economics at the TUC, Adam Lent has said that pay freezes are becoming “increasingly widespread… It’s a very tough recession. People are having their pay frozen or even cut and it can affect their finances extremely badly.

“Unions will always opt for a pay freeze and short-time working over redundancies. People understand that it’s better for a large number of people to take that pain, which is quite tough, than to have a small number of people take redundancy which is totally devastating.”

John Cridland of CBI business group said around half of its members would not be looking at pay rises this year. He said: “What else can businesses do? They only have a certain amount of money coming in and a certain amount going out and these have to balance otherwise the business closes down.

“The objective of a business is not to lay people off. If they have to reduce overtime, if they have to cut out bonuses or change shift patterns they will do so.”

What Do You Think?

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Residents of the Sutton Coldfield and Erdington area of the West Midlands are being urged to get in contact with their credit holders after it has been found that thousands have been mis-sold their credit agreements.

It has been estimated that as many as tens of thousands of people may have been over charged for their credit agreements. This could be on all kinds of things, including car finance, loans and credit cards.

What can you do?

West Midlands debt advisor Mark Griffiths said: “If you have any type of insurance, then you can check to see if you have a claim.”

“The Financial Services Authority (FSA) has already fined companies like Alliance and Leicester, Egg and Capital One millions of pounds for failing to take reasonable care when selling credit agreements to people.

“In most cases, this is because Payment Protection Insurance (PPI) was added to the loan, which is not suitable for its purpose, or the borrower didn’t even know they had the insurance.

“As a result, many thousands of people will have a successful claim.

“At a time when money is going to get increasingly tight, it’s important to find out if your lender owes money back to you.”

How to get in touch

For further information you can visit www.moneymadeclear.fsa.gov.uk.

Or, if it’s easier, you can call the FSA on 9845 606 1234

What do you think?

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If NatWest loses its continuing test case over bank charges, it has said it will refund overdraft fees to customers. These findings come as an internal bank document reveals preparations that banks are making if they lose their case.

The document that has been found says that overdraft fees may have to be refunded, the cost of which could run into millions of pounds overall. Though the bank, which has recently been taken over by the Royal Bank of Scotland, has said it was just drawing up a contingency plan to deal with one possible outcome of the test case.

The RBS NatWest is one of eight banks in total awaiting an Appeal Court judgement as to whether or not the Office of Fair Trading (OFT) can decide if their overdraft charges are unfair.

If the bank is to lose its case, the document reveals that customers can expect to be refunded, saying that a team from the bank are “preparing systems and processes to pro-actively refund charges to the group’s customer base.”

The bank document also says that: “all customer accounts that are due a refund will be calculated as accurately as possible…Any monies will be accurately accounted for and reconciled.”

It adds that the bank aims for “avoidance of group reputational damage and/or loss of funds.”

An RSB spokesperson has said that the document found simply reflects the fact it was obliged by the Financial Services Authority (FSA) to deal with its customers complaints “efficiently and swiftly” if it ended up losing its test case.

He said that “this work stream has absolutely no bearing on how we see the outcome of the test case.

“With an organisation of our size and our different brands, complying with these requirements demands careful contingency planning and this document merely confirms that RBS is taking its obligations in this respect seriously as it has done throughout the whole test case process.”

Campaign group Legal Beagle’s spokeswoman Sharon Coleman has said: “we would welcome a pro-active approach if they intend resolving the matter without further appeals.

“Consumers have become increasingly frustrated by the apparent lack of progress in the test case, especially those affected by financial difficulty.”

For the last three years, banks have been besieged by hundreds of thousands of angry customers demanding the return of high charges taken by banks whenever customers go overdrawn without permission.

Last year, eight banks and the OFT agrees to stage a test case in the High Court in an attempt to resolve the legal issues.

In the first round of High Court hearings, at the beginning of this year, the banks lost their case. Mr Justice Andrew Smith said in April that under the 1999 Unfair Terms in Consumer Contracts Regulations (UTCCR), the OFT had the power to decide if banks’ charges were fair.

An appeal to this decision was heard in October of this year, and judgement is expected in the New Year.

HSBC and Lloyds TSB have also revealed that they have a contingency plan in place should they lose that appeal, and there is little doubt that other banks will have measures in place also.

Among the conditions set by the FSA, includes that banks will have to make “preparations for dealing with relevant charges complaints when this direction ends and updating those preparations as the outcome of the test case becomes clear.”

The Royal Bank of Scotland guarantees that it will not repossess properties belonging to owners who have fallen behind on their payments for at least six months.

RBS are currently the fifth biggest mortgage lender in the UK, with a 7% market share. Therefore, their decision could put pressure on HBOS, who are currently the biggest mortgage lender.

The government have recently also bought out a 58% stake in the Royal Bank of Scotland recently after shareholders held a meeting and decided to take the government money, and therefore bought out a tiny percentage of the shares offered to them.

RBS have said that it wants to make sure customers are given an opportunity to seek help and independent advice before starting legal action against them.

Craig Donaldson, the RBS’ managing director of retail banking has said: “we fully understand that one of the biggest worries facing homeowners in financial difficulty is the thought of losing their home, and this is especially true given the current economic climate.”

Citizens Advice and charity Crisis, who represent homeowners struggling to keep up with arrears, have welcomed the news.

Just last week, Ian Pearson, Treasury minister, said that he would hold banks’ “feet to the fire” in order to assure that customers were treated properly.

Shortly after the RBS made this announcement, the Bank of England released figures that showed mortgage approvals had dropped again in October of this year by around 1,000 approvals less than in September.

BBC business editor, Robert Peston has said:” Here’s the positive side of what Royal Bank has done : it gives those who lose their jobs in the looming wave of redundancies a better chance of getting a new source of income in time to prevent the bank seizing the family property.

“But there is a cost, which will fall on estate agents and – possibly – anyone interested in seeing an end to savage deflation of house prices.”

Initial assumptions were that the delay in repossessions was due to the government take over, but it may not be entirely down to that.

Jonathan Charley, from EDS consultants, has said: “At a time when house prices are falling, banks don’t really want to do repossessions because all they end up with is no money coming from the mortgage loan and they end up with a stock of houses, which they probably can’t sell.

“So, for most banks they’d rather avoid having repossessions and actually just get some form of money coming in from people.”

The delay in bank repossessions for people who are struggling to keep up with their mortgage repayments is just one of many new changes being enforced by the bank. Others include an agreement to return to “normal” lending practices and guaranteeing overdraft rates and contracts for its business customers for at least a year.

The Post Office has decided it will continue running its card account which distributes benefits to 4.3 million claimants.

Private firm, PayPoint, had proved to be competition for the running of the Post Office Card Account; however, ministers have now decided to close the bidding process.

PayPoint have said they are “disappointed by this decision”.

The National Federation of Sub Post Masters had warned that if the contract was lost, up to 3,000 post offices could close.

James Purnell, the Work and Pensions Secretary, has told MP’s that he would do “nothing to put the network at risk”.

The system was originally brought in so that giros and payment books for pensioners and benefit claimants could be ended, while allowing them to still use post offices to collect their benefits.

The announcement from Mr Purnell came two weeks earlier than expected, after criticism from MP’s that delays in the decision were “destabilising”.

Mr Purnell also said that the account was “central to the viability of the network” and added that the next contract would initially run from April 2010 to March 2015, but could possibly be extended after that point.

Some lawyers have said they have concerns over the possibility of legal action as a result of the decision, as well as a chance of an EU investigation into how the process to re-award the contract was conducted, even thought Mr Purnell is denying that the matter was mishandled.

In an interview with BBC Radio 4’s PM he said: “The circumstances have changed because of the current financial situation. It means that people are even more reliant on the Post Office than before.
“It’s a social service which people look forward to visiting. It is often at the heart of local communities. We can’t ignore the fact that the world has been changing.”

The chairman of the Treasury Select Committee, John McFall, has said that the government could be “accused of prevaricating” over the contract after they felt obligated to put it out to tender. He added that the ministers had made up their minds about the importance of the Post Office as a social business.

Unions that were involved in representing postal staff are pleased with the decision, but have also noted that the future of the Post Office depended on its ability to offer new services, especially in the areas of savings and insurance.

Andy Fury, from the Communications Workers Union, has called the Post Office “a national treasure” and said that the government should be doing more to transfer it into the “people’s bank”.

Alan Duncan from the Conservative party, on the other hand, called the decision a “humiliating climb-down for the government, who have done everything they possibly can to find a way of awarding it (the contract) to somebody else”.

Opposing party, the Liberal Democrats, said that the decision must come as a big relief to postal workers, but added that ministers had “some explaining” to do in how the process was handled.

Spokeswoman for the party’s work and pensions department, Jenny Willott, said: “The government has wasted time and money and caused immeasurable heartache by dragging this process out for so long.
“This could all have been avoided if, as the Liberal Democrats have long argued, the Post Office Card Account has never been put out to tender in the first place.”

Business secretary, Lord Mendelson told peers that he believes “very strongly” that there was an opportunity for the Post Office’s future here that had been “enlarged by the turbulence elsewhere in the financial services sector.” He added that the government’s closure plan had not been painless but had “placed the entire network on a much firmer footing”.

Business group Deloitte has recorded that this Christmas people plan to fill their stockings a little less than usual as the average consumer plans to spend 7% less than last year.

The warning going out is that, this Christmas could be one of the toughest in decades for retailers, especially when compared to last year, where spending increased by 7%. This is according to Deloitte’s 14th annual Christmas Retail Survey, where 1,000 people across the country were interviewed.

The figures show that overall, 24% of customers in the UK plan to cut back and spend less this year on presents than they did last year. But it also showed that about 57% planned to spend about the same amount as 2007, and 19% expect to have to spend more.

The total average amount people predict they will be spending this year is £655. This is primarily on gifts, socialising and food and drink.

While the overall spending amount is set to fall by 7%, it is shown that the majority of this will be cut-backs in socialising – 12% less than last year.

More people are however, planning on buying some of their gifts at the supermarket, where the prices are competitively cheaper than the high street stores. 56% of people are planning on doing this, this year, compared with 52% last year.

Strategic advisor to the retail practice at Deloitte, Richard Hyman, has said: “I think the main headline is this is worst Christmas for a generation…But as a nation we’ll be spending £36 billion so it’s not a disaster.
“Broadly speaking, we believe sales will be flat this Christmas, with a slight fall possible.”

He added that retailers will be hoping that last week’s interest rate cuts will boost people’s disposable incomes.

Overall, 19% of adults have said that they plan to spend more this year, if you narrow the age gap to 16-24 year olds, 36% said they intend to spend more.

49% of 16-24 year olds said that they plan to have a good Christmas and “worry about the cost later”, a concerning amount.

Deloitte’s head of retail, Tarlok Teji, has said:” This age group has grown up in an affluent society with technology products and designer wear, are comfortable with debt, and have never been in a recession…Their high propensity to spend represents an opportunity for those retailers targeting younger customers.”

Prime Minister Gordon Brown has sparked talk of possible tax cuts by saying they could help support consumer spending. He also commented on the tax cuts that are planned in the US and Germany and said that countries must work together to tackle the global economic problems we are currently facing.

He has said that he is looking into “everything” that could possibly help the economy and would announce the details of the decisions made within days.

Conservative leader David Cameron has said he believes the Tories will announce “tax change to encourage businesses to take on workers”, and the Liberal Democrats have already admitted they would cut taxes for those that are paid less.

Gordon Brown has said that potential tax changes are a matter for the pre-Budget report, which is due out next week. But also said in a speech that “people are looking to governments for action” at the moment, drawing attention to the plans that Germany, the US and China have to help their economy, which mostly include tax cuts.

He said: “With Britain continuing to lead the debate, economic recovery will work better if we all work together…The benefits of any individual country’s fiscal action will be all the greater if this is part of a concerted and fairly distributed international response to maintain global demand.”

When asked about the possibility of tax cuts, Mr Brown replied that petrol duty had been frozen and people were already getting £120 back in their income tax after the government raised tax allowance following the 10p tax row.

“What I’m determined to do is get all countries around the world trying to get their economies moving again, and one way you can do that is by putting more money into the economy by tax cuts or public spending rises but that’s something we have got to look at in the next few weeks.” He told GMTV.

There have been reports that the Conservative party may propose National Insurance payments holiday for new workers in order to encourage employers to take on more staff, in their tax proposals.

Cameron has also warned against permanently damaging public finances, and is criticising the government because it had a large budget deficit before the recession even began. He has suggested that any new proposals should make clear where the money is coming from in the first place to stop the governments’ excessive borrowing.

On the other hand, spokesman for Mr Brown said that increasing borrowing is now the accepted view across the world, and that the government would have to look at all the issues relating to tax and spending.

Nick Clegg, Liberal Democrat leader, has said that they have been pushing for tax cuts for the middle and low income earners for months, adding that “We are the only party saying that tax cuts have got to be big, they have got to be permanent and they have got to be fair.”

He also said that in order to make the system fairer, “loopholes” that benefit only the rich on capital gains and tax relied on pension contributions had to be abolished, in addition to clamping down on tax avoidance and introducing more green taxes.

Ken Clark, the former Chancellor has been recorded as saying that previous efforts to boost the economy had failed and so it’s time for VAT cuts in order to encourage customers back into the shops.