Payday loans were certainly a hot topic recently, when it was revealed...
Debt and money news – September 2016
This month saw the introduction of a new plastic £5 note, changes to TV licensing laws and a payday lender ordered to refund £34m back to thousands of its customers.
Grab yourself a brew, sit back and find out the latest news from the world of debt!
Payday lender to redress £34m to 97,000 customers
The Financial Conduct Authority (FCA) has announced that the payday lender CFO Lending has been ordered to pay £34m to 97,000 of its customers as part of a redress scheme. CFO lending traded under various names including Flexible First, Payday First, Money Resolve, Paycfo, Payday Advance and Payday Credit.
The FCA investigation found a number of poor practices at the firm had caused detriment to many of their customers. These included threatening or misleading letters, incorrect reporting of details to credit reference agencies, and not properly assessing the affordability of some of its loans.
After talks with the FCA, the lender agreed to refund or write-off some of its customers’ debts. Affected customers will receive either a cash refund, have their outstanding debt balance reduced, or have any remaining debt balance written off.
CFO Lending will contact customers over the next six months to explain how the refund will be dealt with.
Controversial tax credit firm has their contract ended
Last week it emerged that Concentrix, the company outsourced by HMRC to deal with tax credit fraud, won’t have their contract renewed next year.
The firm faced mounting criticism after it wrongly stopped some people’s tax credits and sent out around 1m “spam” letters to people. This prompted many people to contact their local MPs to complain, and caused a social media backlash.
The contract, which began in 2014 and was due to be renewed next year, now won’t be extended, and the Treasury also revealed that the firm failed to meet standards outlined its contract in 120 of 1,625 instances.
A HMRC spokesperson said:
“We want to reassure customers who have had their tax credits stopped that we will prioritise their cases and make sure that they are processed as quickly as possible.
“That’s why we have decided not to extend our contract with Concentrix and HMRC is redeploying 150 staff so that customers can get through to advisers and resolve any issues about their claim.”
The new fiver is here!
This month the newly designed £5 note was released. The notes are the first of their kind in the UK, as they’re made of a type of plastic polymer that’s said to be cleaner, tougher and better for the environment. The new notes are even expected to survive if you accidentally wash them.
The plastic notes now feature new security features including a transparent window which makes the note harder to counterfeit. Old paper £5 notes will be gradually be withdrawn from circulation, but they can still be spent until May 2017. After that date, you’ll need to exchange paper £5 notes at the Bank of England.
2016: Our highest ever demand for debt advice
Demand for debt advice is the highest it’s ever been, according to data from our 2016 Statistics Mid-Yearbook.
Our report looked at data from people who contacted the charity in the first half of this year, to examine the issues that people in problem debt are experiencing. We saw a number of different trends that help paint a picture of debt in the UK.
More of our clients are turning to friends and family for loans, which now total over £200m in the first half of the year. We also found an 11% increase in the number of people getting help from us, compared to the same period last year.
Our Chief Executive Mike O’Connor was also interviewed about these latest stats on BBC Radio 4’s Money Box programme.
New TV licence rules come into effect
As of 1 September people watching BBC programmes on iPlayer need a TV licence. This is a change in the old rules that meant that a licence was only needed to watch live TV, which made catch-up content exempt from the annual fee.
If you already have a TV licence the new rules won’t affect you. However if you watch BBC shows on iPlayer and you don’t have a licence, it’s now a criminal offence to watch them without one and you could even get a court fine.
Bank to refund thousands of incorrectly charged customers
Thousands of NatWest and Royal Bank of Scotland (RBS) customers are to receive refunds after the bank found it had incorrectly applied charges to student accounts.
Both banks offered student accounts with interest-free overdrafts. However the bank found that some people who used their overdrafts and were allowed to increase their limit, were charged interest.
This interest went against the terms of the student accounts, so RBS will now get in touch with anyone affected, and issue a refund. Those affected should hear about this by 1 November.
Star of ‘Rip Off Britain’ falls victim to fraud and loses £120,000
Star of BBC’s Rip Off Britain show Gloria Hunniford was left shocked after falling victim to bank fraudsters.
A woman and two others, posing as the presenter and her son and granddaughter, visited a branch of Santander last year and gained access to the presenters account. Over the next few days they emptied £120,000 from her savings.
Thankfully Santander have now refunded the stolen money, but police are still searching for two of the fraudsters, after catching one man who is due to be sentenced next month.
How do we tackle the UK savings crisis?
In March the Government announced a new Help to Save scheme, aimed at helping lower-income families. The scheme lets eligible people save a maximum of £50 a month into a special type of account. If someone with an account saves each month, the Government rewards them by topping up what they have by an extra 50%. It’ll be introduced in 2018.
However our latest report on ‘Boosting lower-income saving’ has found that although Help to Save is a great start, the scheme needs improvements to be able to help as many families as possible.
These improvements include the option to access savings more regularly; particularly as regular income-shocks often mean access to your savings is important. We also think that people should also be able to ‘top-up’ their monthly payments above £50, allowing for the ups and downs in many people’s income.
The final details of Help to Save are yet to be decided, but hopefully our recommendations will help towards how the scheme works, as we want to see a reduction in the level of debt problems that could be helped by having ‘rainy day’ savings available to help people when they need it the most.
That’s it for this month. Don’t forget to sign up to our newsletter to make sure you receive our round-up of the latest debt news straight to your inbox!