As the UK continues to do its best to resist further financial gloominess, savers are being hit by the butchering of interest rates. Several banks and building societies are slashing saver rates, leaving very little in the way of attractive savings accounts.

Halifax has dropped one of its best fixed rate accounts, whilst dropping the eye-catching rates on many others. Saga has dropped its three-year fixed 4% account, as have The High Street bank and Monmouthshire Building Society.

The Close Brothers matching account is now the only one of its kind still available, according to This Is Money. However, this account would need £10,000 banked immediately to start it up.

Two-year fixed ISAs are also taking a hit, as the best-buy from BM Savings fell from 4.05% to 3.6%. Santander’s 4% is the best two-year fixed available, but with news announced that Moody’s credit agency has downgraded the rating of all Spanish-owned banks, including Santander UK, confidence has taken a tumble. Stock markets and savers alike are not responding well to the news.

As five-year fixed rate accounts receive similar treatment, savers will be scratching their heads wondering where they can get a truly rewarding return on their cash.

David Black, an expert an Defaqto, believes that savers can still find good deals, saying: “‘With the wholesale money market still a pale shadow of what it used to be there is a lot of competition among banks and building societies to attract savings and this can play in favour of savers.”

Read the rest of this entry »

Experian has revealed that mortgage application fraud increased for the fifth year running, with 34 in every 10,000 applications proving to be fraudulent.

The credit reference agency also said that 93% of these false applications were a result of misrepresented information, with people attempting to conceal their poor credit history or financial state.

A precarious and unpredictable economy has a direct negative effect on mortgage availability, as lenders approach the market tentatively. A proven credit history is essential, and many borrowers are looking to hide the truth in order to have their applications accepted.

General financial services application fraud rose by 4% in 2011, with both insurance and current account fraud increasing. Insurance fraud rose by 23%, whilst 36 in every 10,000 current account applications were found to be fraudulent.

Nick Mothershaw, a director of identity & fraud at Experian, said: “It is vital that financial service firms accurately validate and verify the identities of the people they interact with and use every technique at their disposal which includes validating income claims and checking for signs of an adverse credit history.”

There was some positive news, as credit card fraud continued to fall; 12 in every 10,000 applications were fraudulent in 2011, compare to 19 in 2010. This figure stood at 45 back in 2006.

A significant rise in claims for burglaries and personal theft is taking its toll on the price of home insurance, as gold prices increase sixfold.

The Telegraph reports that these claims have amounted £415m, and jewellery appears to be the main target. Churchill saw a 22% rise in claims for gold, diamonds and similar personal items, which left jewellery accounting for a third of all home theft claims.

The cost of meeting burglary claims is increasing, with a 10% rise on last year alone, according to data from the Association of British Insurers. There were 276,000 claims for domestic burglaries, and personal theft outside of the home are rising too.

The cost to cover rising claims inevitably goes back into the premium costs, but nonetheless home insurance is still the sound way to ensure your have your belongings protected for thieves. You can also improve your premiums, and your peace of mind, by installing a competent security system.

If you do have jewellery, bear in mind that the rise in cost is sparking theft for such items, and make sure your home insurance policy will cover the whole, accumulative value.

Paul Richardson, home insurance specialist at NFU Mutual, said: “If the contents of some jewellery boxes needed to be replaced, owners may be devastated to find their current insurance policy would only pay out a fraction of the cost of replacements. Sentimental items such as engagement rings and heirlooms are typically underinsured as many current owners have never had them valued.”

Data revealing the extent of credit and debit card fraud in the UK has brought welcome news, as figures are down to their lowest point in over a decade.

A 41% decline in fraudsters impersonating other people to gain and use credit cards has played a huge part in the drop, along with a 24% fall in fraud from faked cards.

Card fraud peaked in 2008, with losses amounting to £610m, and the UK Cards Association says that we have experienced the third yearly decrease in a row. Losses have totalled £341m in the last year, which is the lowest recorded since 2010, when the figure was £317m.

Melanie Johnson, chairman of the UK Cards Association, said: “This is the third year card fraud losses have fallen – clear proof that our endeavours to fight fraud are packing a punch.”

“Customers have also played their part in driving down losses by taking heed of advice about looking after their personal and financial details.”

Significant improvements in anti-fraud measures have had the desired effect, with chip-and-pin technology taking much of the credit.

Prime Minister David Cameron is planning to confront representatives of various car insurance providers, in an attempt to address the rocketing premiums faced by UK motorists.

Bloomberg reports that the PM will discuss the abundance of lawsuits, which has led many to adopt the term ‘compensation culture’. The nation’s plethora of weak claims for injury is having a direct effect on car insurance premiums, with companies claiming that the rise in compensation payouts has to be funded by price increases.

This has been considered more than a little dubious; many have highlighted the fact that car insurance companies receive payments directly from law firms, in exchange for the details of motorists who have been in an accident.

Bloomberg’s report states that the average cost of car insurance rose by 17% last year, to £410, whilst the average young male motorist pays out close to £3,000. The average young female driver pays out just over £1,500 and the Association of British Insurers has said that record claims for whiplash are adding almost £100 to each premium.

David Cameron is expected to pledge a reduction in whiplash claims, through requests for greater medical evidence, and lawyers’ fees for personal injury claims are expected to be forcibly decreased.

Drivers often fare better when they compare car insurance, and shop around for other key motoring services such as breakdown cover.

Image: The Guardian

High street lenders have been increasing the number of loans and deals available to first time home buyers, but this could still fail to stimulate the market, amid fears that credit scores will need to be near perfect.

According to This Is Money, 332 deals are currently available to buyers with a 10% deposit, whereas two years ago the figure was 114, and last year it was still only 199. The average two-year fixed-rate is lower, at 5.51%, when it was 6.10% last year and 6.48% two years ago.

These figures, according to Moneyfacts, represent a saving of £89 per month on a £150,000 loan, when compared with the same borrowed amount two years ago.

HSBC has said it will lend a massive £3 billion in order to find 27,000 first-time buyers, whilst Halifax and Nationwide are also offering deals intended to spark and stimulate interest through appealing investment opportunities.

However, these deals are entirely dependent on the credit checking process, and many buyers find themselves falling at this hurdle. It can stem from simply avoiding the electoral roll, or never managing a credit card, and whilst many will feel this shouldn’t work against them as a potential buyer, they are stumbling blocks for gaining credit.

Having a proven financial history will help a lender to recognise you as a responsible borrower, capable of managing finances and paying back the owed instalments and interest payments on time and in full.

As a first time buyer you may also want to check home insurance deals, as comprehensive buildings and contents cover is popular among home owners.

A recent survey has revealed that UK motorists are struggling to such an extent that many drivers are choosing to dodge maintenance on their vehicles in order to keep costs manageable.

The findings, produced by Carrentals.co.uk, indicated that nearly a third of motorists plan to push back repairs and non-essential maintenance purely to save money. Having breakdown cover in place is a wise fail-safe, but call-outs can affect the following year’s premium in some cases.

The survey also found that 60% of drivers don’t find the time to regularly check their tyres, whilst 80% don’t check the brakes.

Following some basic car maintenance tips will help to keep your car in check without spending too much money. There are also some good winter driving tips to follow as we approach the cold season.

Gareth Robinson, managing director at Carrentals.co.uk, said: “While for many having a car is vital for their daily life, they are increasingly looking for ways to cut back the costs associated with driving, be that safe changes such as buying a more economical vehicle, or the more dangerous cuts in maintenance.”

“Safety has to be paramount, so we would ask anyone needing to save money to think carefully about where and how they cut their expenses.”

Banking group Barclays has extended deals with Aviva and Legal & General in order to provide its customers with more comprehensive options for general and life insurance products.

The current general insurance from Aviva, offered through Barclays, will be accompanied by new life assurance and personal accident products, available on a non-advised basis. Products can be added online, over the phone or in the branch.

Legal & General will expand upon its current mortgage protection distribution deal with Barclays by adding family and mortgage life assurance and critical illness cover, available on an advised basis.

Paul McNamara, Barclays’ managing director of insurance and investments, said: “We look forward to building on our already successful relationships with Aviva and Legal & General to provide our customers with a comprehensive range of competitive and easily accessible insurance, which they can tailor to their needs.”

“This agreement brings market leading capabilities to support Barclays aim (sic) of better meeting our customers’ needs across our channels, whether online, over the phone or through our extensive branch network.”

The Financial Services Authority is planning to make changes to the rules regarding packaged current accounts, amid growing concerns that banking representatives are not highlighting benefit eligibility criteria to customers.

According to the Guardian, the proposed changes would see compulsory eligibility checks carried out by banks and building societies.

Packaged savings accounts are designed to offer a multitude of benefits, all paid for with one monthly charge to the bank. Inclusive services are usually mobile phone insurance, ID theft protection, travel insurance and breakdown cover, although this varies depending on the type of packaged account, as some are more comprehensive than others and the differing charges for each account reflects this. Monthly fees are usually between £8 and £25.

As people in the UK look to find ways to save money, more and more are choosing these multi-benefit accounts as they are cheaper than requesting each benefit individually from relevant providers.

Many people are paying for these accounts and then finding problems when it comes to making use of the benefits; for example, someone over 70 might find out that their inclusive travel insurance was invalid from the start due to their age. A banking representative can plead ignorance, and whether there was malicious intent or not would not matter, as the customer has already willingly agreed to the account.

Sheila Nicoll, FSA director of policy, said: “For some people packaged accounts represent good value and convenience. But in other cases customers may find that the insurance cover they have paid for is useless.”

Read the rest of this entry »

New research has shown that the North of England is seeing the worst of rising car insurance costs, although the increases appear to be slowing down.

The information, provided by the Confused.com/Towers Watson Car Insurance Price Index, showed that from June to September 2011, Oldham was found to have an average premium of £1,437, representing a rise of 27.9% from last year.

Bradford was found to experience similar figures, with an increase 27.5%, whilst Liverpool saw premiums go up by just under 27%.

The North is not alone, however, as motorists all around the UK continue to struggle with rising costs for vehicle cover. Scotland saw the lowest rises, but no single area in the UK benefited from a recorded decrease.

A key issue regarding the current car insurance costs is the marked difference from the rate of inflation; the UK as a whole has seen an average rise of car insurance premiums of 12.3%, whilst the Consumer Price Index is sitting at 4.5%, and this means that the rise in premiums is almost three times as high as UK inflation.

Motorists can at least take a positive from the research, as it showed a quarterly decrease of 1.6% between June and September. This represents the first quarterly decrease for over three years.

You can save money on your car insurance premium by shopping around online and comparing car insurance quotes.

Read the rest of this entry »