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.

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.”

Recent figures have indicated that the level of credit and debit card fraud in the UK is continuing to decrease. This encouraging news serves to highlight the growing efficiency of anti-fraud measures put in place to protect our finances, as well as the increased vigilance among UK cardholders.

According to the UK Cards Association, a total of £365.4 million was lost through credit and debit card fraud in 2010; whilst this is a huge sum of money, it actually represents a 17% drop from the 2009 figures. This has been attributed to the roll-out of chip-and-pin, and improved customer awareness.

It was also found that phone, mail-order and internet fraud dropped by 15% thanks to the Verified by Visa and MasterCard Secure Code anti-fraud systems that now operate on the web.

It’s not all good news though, as phone banking fraud totalled £12.7 million, equating to an unwelcome increase of 5%.

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Concerned UK savers can breathe a sigh of relief with the news that the New Year will bring new rules, with the first £85,000 in any bank or building society receiving automatic protection from the state.

Under the current rules, £50,000 is covered, but after the well documented collapse of Northern Rock, savers have been looking for more protection. This Is Money reports that the new Financial Services Compensation Scheme will push the limit up to £85,000 and that payments should be made within 20 working days, although the FSCS says it is aiming to achieve any necessary compensation payments within the target of 7 working days.
Many savers who used doomed bank Icesave were waiting up to 2 months, so this will come as very welcome news.

However, Kevin Mountford at Moneysupermarket.com has urged caution for savers with more than one pot: “Until 1 January, consumers with over £50,000 in the bank should ensure their money is spread between accounts, taking care to avoid using two products from the same provider - as only £50,000, or £100,000 for joint accounts, is protected within each institution.”

“It’s important savers check which banking group their accounts sit with, as two seemingly distinct providers might fall under the same banking umbrella. For example, First Direct is owned by HSBC, meaning any customer who has money saved with both providers will only be protected up to £50,000.”

The new safety net kicks in on January 1st, 2011.

Image: Moneysavingexpert.com

Santander could be about to tuck into your savings if you owe any money to the Spanish banking giant, or any of its subsidiaries. According to ThisIsMoney, anyone who has savings or current accounts held with Alliance & Leicester, and debts owing to Abbey, will see Santander use that cash to clear the arrears. It will also work in reverse; those saving with Abbey but owing to Alliance & Leicester will see the same fate.

Alliance & Leicester and Santander-owned Abbey bank will formally merge at the end of May, putting Santander in charge of all the accounts held with either bank. Santander can then legally exercise its right to use customers’ cash to clear overdue monies; this is known as ‘set-off’.

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Alliance & Leicester’s Premier Current Account presently offers a £100 cashback incentive, combined with an interest free overdraft for 12 months, free annual European travel insurance and a 0.5% credit interest rate. Fairinvestment.co.uk has announced that Alliance & Leicester will be calling an end to its £100 cashback offer (currently the most generous on the market), with the date firmly set at March 7th of this year.

Helen Bierton, head of current accounts for Alliance & Leicester, offers words of encouragement to potential customers: “Changing your current account is hassle free with our premier switching service so customers do not need to worry about re-directing direct debits or standing orders.”

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The number of people declared insolvent in England and Wales reached a record high in the third quarter of 2009, according to figures from the Insolvency Service.

There were 35,242 personal insolvencies, a increase of 28% on the same period last year, and a 6% rise on the previous quarter.

However, businesses fared better over the period, with 4,716 company liquidations, a 4.7% quarter-on-quarter fall. However, the number of businesses going bust between July and September was still 14.6% higher than the same period a year ago.

The recession has been fuelling the rise in personal insolvencies since 2007. There are a number of reasons for this. Increased unemployment has left more people unable to pay off outstanding debts, and the onset of the credit crunch meant that many banks limited the amount of cheap credit on offer. Therefore many people were unable to borrow their way out of immediate debt problems. The slow property market has also meant that people could not sell their homes and pay off outstanding debt with the equity.

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The Bank of England is expected to expand its radical programme of printing money by a further £50 billion today as it steps up the fight against the deepest economic downturn in decades.

Whilst other countries have begun to emerge from the recession, recent figures revealed a 0.4% slump in the UK economy between July and September, leading experts to predict that Mervyn King, the Bank’s Governor and the rest of the Monetary Policy Committee (MPC) will extend the total size of its quantitative easing plan to £225 billion - the size of the entire Greek economy. This is the sixth quarterly contraction in a row.

“It is a lot of money, but if it does restart the economy and gets it moving again then it’s worth it,” said George Buckley, an economist at Deutsche Bank. “It’s very difficult to say if quantitative easing is working, but it is doing something.”

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Credit unions have reported a rise in the number of people using them to save safely for Christmas.

The Association of British Credit Unions (Abcul) said that it saw a 15% rise in credit union savings in the two years to 2008.

As consumers seek to reduce their personal debt during the recession, there has been an increase in the number of credit unions offering Christmas savings accounts designed to help people manage their money ahead of the most expensive time of year.

According to research from Abcul, 71% of credit unions said they offered a Christmas savings account, with a further 18% planning to offer the account in the future.

Mark Lyonette, chief executive of Abcul, said: “Credit unions, as community-owned and controlled organisations, offer local people a well-trusted financial solution.

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The European Union has approved proposals to split nationalised Northern rock into two businesses, possibly heralding a partial sell-off.

One of the businesses would function as a “good bank”, containing Northern Rock’s sund assets, including most retail deposits and low-risk mortgages. The remaining “bad” bank would hold the remaining mortgages and repay outstanding government loans.

Northern Rock said the EU’s approval was “an important and positive step”.

Whilst the good bank will eventually be sold to a third party, potentially by the time of next year’s general election, the bad bank will have its assets run down until it goes into liquidation. Potential buyers include Virgin, Tesco Bank and National Australia Bank, which owns the Clydesdale and Yorkshire Bank.

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