Know your rights: August’s debt news

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It’s August and the kids are off school, the adults are enjoying the sunshine and everyone’s feeling more relaxed. It’s usually a notoriously slow news month, but things haven’t quietened down in the world of debt.

We’ve got an unexpectedly bumper debt news article for you, from payday lenders offering compensation and another potential PPI-related scandal, to Npower writing off some of its customers’ debts. And here I was thinking August would be a quiet one!

Potential new PPI claims worth £33billion

You’ve probably heard of payment protection insurance (PPI) mis-selling, as it’s something we’ve talked about quite a few times on the blog. Well, it now seems that something even bigger is on the horizon which could see banks having to pay out up to £33billion.

In this case, when banks sold PPI policies they might also have charged commission without letting their customers know. It became clear this was happening when college lecturer Susan Plevin took her case to court. Over 10 years ago, Susan took out a £34,000 loan repayable over 10 years, and was advised by her bank to take out PPI alongside it. The PPI policy was for 5 years, and was taken out with the bank’s preferred insurance provider.

The total cost of the PPI was £5,780, and Susan was told at the time that part of this was commission. However, it turned out that over 70% (more than £4,000) of this was commission. The court ruled that her creditor should’ve told her how much commission she’d be paying and who it’d be going to. Not giving her this information was breaking the law.

If this ruling is applied across the industry, people who’ve claimed a PPI refund in the past but have been rejected could find that they have a valid claim and are owed compensation. If this is the case then Britain’s financial organisations will face a huge pay-out.

The Financial Conduct Authority (FCA), the body which regulates the banks, is currently deciding what to do next and they’re expected to come to a decision next month. We’ll keep you posted as to how the story develops…

Npower writes off some customers’ debts

Gas hob

Npower agree to wipe some customer’s debt

Customers who made a complaint to the ombudsman about Npower and found their complaint wasn’t resolved within 28 days will get free energy until it is dealt with, according to This is Money.

Npower has also agreed to write off any outstanding debt on the accounts of customers who were affected by this issue up until 21 July this year. Anyone affected by the issue after this date will continue to receive free energy but debt will only be cleared on a case-by-case basis.

Ofgem, the body which regulates energy firms like Npower, believes around 1,000 households could be affected. Ofgem will write to anyone affected to let them know how the company plans to support them.

Payday lender to refund £20m to customers

Payday loans company Ariste Holding Limited, which trades as Cash Genie, has agreed to pay out over £20 million to more than 92,000 of its customers. The announcement comes a year after Cash Genie voluntarily told the FCA, the body which regulates them, that they had treated customers unfairly.

An independent review of Cash Genie’s past practices showed failings dating back to September 2009. The review found that Cash Genie failed its customers on a number of issues, including charging customers unfair fees and interest that weren’t part of their contracts, and rolling over or refinancing loans without their customers’ consent.

If you’re a Cash Genie customer, you don’t need to do anything for now; they aim to contact everyone affected by 18 September.

If you’ve heard that you’ll be getting a refund from Cash Genie and are worried about the impact it could have on your debt solution or your credit file, take a look at our article for guidance.

£6,800 a year to send your child to a free secondary school

When you wave your little darling off on their first day of secondary school, you’ll probably be wondering where all that time has gone. But you might also be wondering where all that money has gone, given the news that sending a kid to school in Year 7 costs parents a whopping £6,800 per year on average.

The reason the first year at ‘big school’ can be so expensive is due to the cost of buying uniforms, PE kits, stationery and laptops. Extras such as gifts for school friends, costumes for plays, and school trips all add to the cost.

There’s no need to break the bank on school stuff though. Take a look at our handy hints to help you save money on your child’s back-to-school costs.

Firm that helped stop nuisance calls is fined…for nuisance calls

A firm which provided a service to stop nuisance calls has been fined £50,000 by the Information Commissioner….for making nuisance calls itself.

Point One Marketing, which trades as ‘Stop the Calls’ and are based in Bournemouth, have been accused of operating in a ‘bullying and aggressive way’.

Some people said that the employees of the company had shouted at them when they asked not to be called again. In another incident, a woman with dementia was persuaded to give the company her credit card details.

Find out how to stop nuisance calls on our website.

Is the latest ATM scam at a cashpoint near you?

Woman's purse with change

Watch out for the ‘Lebanese Loop’ ATM scam

People in Leeds are being told to be aware of an ATM scam known as the ‘Lebanese Loop’ following a rise in incidents at the city’s cashpoints.

In the scam, the card slot is blocked using metal or plastic strips, the machine then retains the card and the fraudster can collect them when the customer has left. You can’t usually see the ‘Lebanese Loop’ device, but you might be able to feel something that feels different above the card slot or the ATM.

ATM users are being urged to take extra care when using cashpoints, making sure they shield the keypad when entering their pin and being aware of anyone acting suspiciously nearby.

If your card is swallowed for no apparent reason, you should stay by the machine, ring your bank to cancel your card, and notify the police.

41% of indebted Britons lie about their bank balance

According to a survey from MoneySuperMarket, 41% of people in debt lie about their debt or keep it a secret because of shame or guilt. The survey found that 23% of people in debt are most likely to keep it a secret from their families, while 18% would keep it from their friends, and 15% would keep it from their partners.

The main reason for this is because of feelings of guilt or shame (41%), followed by stress (21%).

Kevin Mountford from MoneySuperMarket said: “The best way to cope is to tackle debts head on, not bury your head in the sand, and be honest to those closest to you, as they are the people who can often provide help and support.”

If debt is causing you stress or making you feel ashamed, you can find free resources to help you to improve your situation on our Debt in Mind page.

No-one in Scotland jailed for non-payment of TV licence fines

In the last five years, nobody in Scotland has gone to prison for failing to pay fines for TV licence arrears, according to The Herald. The situation in England looks very different, with 39 people being jailed for the crime in 2014 alone, on average for around 20 days.

The huge difference in numbers of people spending time in prison over TV licence fines could be down to the fact that in Scotland people who fail to pay a fine of less than £500 can’t be jailed.

It’s important to remember that although watching TV without a licence is a crime in Britain, that alone can’t land you in prison. Jail is only a risk if you’re taken to court, fined for not having a TV licence, and then don’t pay the fine.

Britain remains the only place in the world where watching your TV without a valid licence criminal offence. but politicians are considering changing this. If this were to happen, BBC bosses might not be so happy. According to the The Herald, some are worried that if there isn’t the threat of going to jail, some people won’t pay up.

Find out what could happen if you fall behind on paying your TV licence, and how we can help.

Are you missing out on flight delay compensation?

man on beach with suitcase

Could you be owed compensation for a late flight?

According to the Telegraph, more than 500,000 people could be due a pay out for airline delays and cancellations in the past year.

If you arrived more than three hours late to your destination, you could claim £281 for short-haul flights, or as much as £420 for long-haul flights. However, if the delay was down to something out of the airline’s control, like bad weather or other issues that could affect safety of the flight, it’s unlikely you’ll be able to claim.

Research from consumer action group Which? shows that short-haul passengers with Vueling, Monarch and Thomas Cook were most likely to have experienced delays of over three hours. Pakistan International Airlines, Air India and American Airlines were the long-haul airlines with the most delays of over three hours. The worst British airport for delays was London Gatwick, which saw 2,134 flights delayed for over three hours between May 2014 to May 2015.

Richard Lloyd from Which? told the Telegraph: “Flight delays are a disappointing and stressful reality for people travelling abroad this summer. The last thing you need is a long wait at the airport…We’re urging people to hold their airline to account and claim the compensation they are rightly owed if they have a lengthy delay.”

According to EU rules, you could claim for delays as far back as six years ago. If you think you could be owed money by an airline, take a look at MoneySavingExpert.com’s guide to claiming flight delay compensation.

Well that’s one way to avoid the tube strikes…

When Sam Cookney, who works in London, started to get frustrated with the cost of living in the capital, he looked at the figures and came up with an unusual alternative. Rather than spending £700 per month for a shared flat in London, he now pays £570 for a two-bedroomed flat with a roof terrace in central Barcelona and commutes to the UK for work.

He currently makes the 930 mile round-trip from Barcelona to his office in Farringdon around four times a month. The rest of the time he either works from home or in a rented workspace.

“Getting to the airport at 5am is so easy, straight through security, hang around for half an hour, have some breakfast and I’m on the plane and straight in my office”, Sam told the Guardian. “It’s probably the best decision I’ve ever made. The quality of life is just so much better in every respect…it’s just not really comparable to my previous London lifestyle.”

We’ll be back next month with more debt news! To get the latest debt news and money-saving tips straight to your inbox, sign up for our monthly newsletter.

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Laura Davies joined the MoneyAware team in May 2014 from a background in public relations. Outside of work, Laura enjoys travelling, reading, drinking tea and spending too much time on Buzzfeed.

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