Consumers in UK Being Warned Against Loopholes to Clear Debts

Word has it that there are companies in the United Kingdom right now that are advising citizens they have the power to clear debt by way of a variety of loopholes in the UK law. These claims have been found to be misleading by a number of consumer advocate groups who are now encouraging UK debtors to steer clear of these shady operations and opt for a proper IVA instead – something that UK law guarantees as a way for those in debt to be able to clear what they owe legally.

Those hoping for a quick fix are bound to get a rude awaking according to the consumer groups and the Office of Fair Trading. Those in debt are being led to believe that the firms are able to make use of the Consumer Credit Act to get debts to be written off, but then they charge hundreds of pounds in fees. These cases are now ending up in the High Court.

Earlier this year, thousands of claims came in against lenders because borrowers were looking to avoid having to repay their debts. The technique that these firms are promising to use for UK debtors is to press for a ‘true copy’ of the loan agreement between lender and borrower. If that agreement is not produced within 12 days of being requested, then the firms are claiming that particular debt is unenforceable in perpetuity. However, a ruling made recently at the High Court in Manchester by Judge Waksman said that lenders were allowed to produce reconstituted duplicates of the original agreements signed for the loan and that this would give the borrower plenty of information about their loan. This has caused the OFT to set its sights on these firms, looking to stop them from continuing to promise debtors that they can eliminate debts in this way.

The court continues to maintain that while consumers certainly have a right to the information they would like to request, the Act is not intended to allow them a way to write off legitimate debts. Due to issues like these, consumers have often ended up getting fleeced by trying to find the ‘quick and easy’ solution when legitimate routes such as an IVA can provide them with the debt relief they need so much easier.

Many Feel Imbalance in UK Tax Cuts Could Upset Economy

Some in the media are highlighting the fact that those who earn what is considered to be ‘above average’ incomes in the United Kingdom today are going to be offered fewer tax cuts while those who earn less will get them. This is upsetting to many because Deputy Prime Minister Nick Clegg has said that in the UK today, the average income is £23,000 and that is not seen as enough to be considered well off by many today.

This is a troubling development that some blame on Conservative Democrats who are going to be hitting those above £23,000 with higher taxes and offering cuts to those in lower income levels. According to Clegg, those who earn over the average are going to have to handle the tax burden due to a cut in public spending which is set to reduce services for those at lower income levels. An ‘extra contribution’ from those who earn £23,000 is what Clegg has publicly stated he intends to seek and this has upset many families who feel they are not in a position to give extra simply due to earning that much.

Clegg went on to say that those in the UK who are at the very bottom will be affected by what he referred to as the ‘most visible’ cutbacks and that the welfare budget will be slashed. He explained that the cash is what will be cut rather than the services, but this could be a huge hit to those who are already suffering at the bottom and rely on government funds to try to stay afloat and get work once again in an economy where finding a job has become a bit of a trick as businesses continue to lose confidence and cut back on their labor force.

Mr. Clegg cited that then between the years 1997 and 2010 the spending on welfare in ‘real terms’ rose by 49 per cent, but he did not state whether this took into account a rising cost of living or inflation of the pound or a variety of other factors. This causes financial experts to remain skeptical of his claims regarding the actual value of the spending increase and whether or not it was simply keeping up with rising costs during those 13 years.

Hanky panky is common in politics of any nation, but apparently Clegg has come under serious criticism when the British media showed a leaked email wherein he talked about cutting the budgets of England’s universities by £4.2 billion and then, 3 days later, spoke of a so-called fairness premium of £7 billion which would be used to help the poor obtain education. This caused Andy Burnham, Shadow Education Secretary, to cry foul over Clegg’s actions and state that making university more expensive for some while paying for others to go was deeply unfair.

Some teachers have even declared the education cuts to be ’savage’ and that with less chance for education of the proper sort, students are looking at coming out of school with enormous debt or simply not going at all and earning less over the course of their life times.

Today’s British University Students Looking at Years of Debt

Recent word has come that those young people from middle income families could well be priced out of a university education after the Government decided to back a sharp rise in fees associated with student tuition. Some in the press are seeing this as a real blow to middle income families who are simply trying to help their kids get ahead in the UK, but others say that these increases are needed in order to help keep higher education operational during tough economic times. As it is right now, many who achieve university degrees end up having to make use of a debt management plan straight out of the starting gates right after graduation.

This is a harsh reality, but in many ways, not a new one. Students in countries such as Canada, the United States and, of course, the UK, have been paying extremely high fees for higher education for a number of years. The change now is that the recent economic down turn has made things a bit more harsh for those without a bit of a financial buffer. The ministers have accepted proposals that will end the annual cap applied to charges related to higher education and also the amount that repayments can be hiked. This, according to economic experts, means that graduates with an average income will end up repaying the most. Since the cost of a degree each year in course fees alone is set to rise by as much as £12,000 that means students will be leaving the university setting with debts in the neighborhood of £36,000 in addition to the living expenses while they were getting their education.

London has proven to have the highest cost of living and here students that face face the highest annual fees at £12,000 will end up leaving with a debt of around £90,000. Experts have also stated that British parents on an average annual income will be looking at around £50,000 per child to send them to university.

Those graduates are not going to be expected to pay right off the bat because they are allowed to begin repayment once their income reaches £21,000 a year and even at £25,000 the repayment would be around £7 each week. However, those earning a more realistic £60,000 needed for a modern life will need to pay £68 each weak that means they will most likely have the debt for their education throughout the majority of their working years. This, critics of the fees hikes say, is making a university education out of reach for the vast majority of middle income earning families.

The proposed changes were put forth by Lord Brow, a former BP chief who received his appointment from the previous Labour government who wanted to restructure the funding for higher education. While some concessions are being made to support low income family students via grants and a lack of repayments demanded from graduates who earn £21,000 or less, the issue ends up being that middle class grads will end up struggling due to their average income. Over time, the interest on these repayment plans will have them paying significantly more for their educations due to the repayment schedule they will most likely need to opt for. Wealthier students should be able to pay back their loans at a far faster rate.

Lloyds Banking Group Not Complying with Regulations on PPI Complaints

The biggest Government-backed bank in the UK, which consists of Lloyds TSB, Bank of Scotland and Halifax, is causing an uproar and receiving serious backlash from its own trade organisation, as well as the Financial Services Authority (FSA). The backlash comes in response to a recent move made by Lloyds to put all Payment Protection Insurance (PPI) complaints on hold. Already, the British Banker’s Association (BBA) had announced that it will seek a judicial review to put a stop to the FSA being able to force lenders to review PPI sales which experts say are well into the millions at this point. If the BBA’s members had to meet the demands of the FSA they would end up paying possibly up to 3 million victims of mis-sold PPI and the overall expense is estimated to be nearly £2 billion to those victims.

On Friday, the FSA said that banks must process complaints until the entire legal process has been completed. The BBA which represents these banks has even stated that the banks are not allowed to select which complaints they would like to place on hold. In spite of this, www.1ppi.co.uk are dealing with large amounts of PPI claims quickly and successfully.

It turns out that Lloyds Banking Group may not end up being the only dissenter among banks. In fact, Barclays has also publicly stated that it will review its own processes for handling PPI complaints. HSBC has said it will handle the complaints, but wants to liasion with the FSA in order to find a way to handle the complains. Santander will hear PPI complaints, but the Royal Bank of Scotland has not come forth with word on its own policy. This leads some banking industry observes to speculate that they believe more banks may try to dodge compensating for mis-sold PPI if they believe they can get away with it.

The UK media has been abuzz recently with the news that banks and other lenders have been mis-selling the so-called ‘protections’ which are intended to cover credit card and loan payments for those unable to work, known as PPI. This process has been going on for a number of years and in the last half decade alone, more than 1 million complaints have been lodged against firms that have mis-sold PPI. So far, the FSA has gone against 24 companies and been very vocal about warning companies against mis-selling this insurance.

According to a spokesperson for Lloyds, the banking group intends to let those settlements that they have already made with victims stand, but that they will try to wait out the court case by putting PPI complaints on hold. Lloyds has stated that the BBA knew what they intended to do. However, the FSA regulatory body has stated that the banks must do otherwise and continue to follow the rules for paying back victims of mis-sold PPI. The FSA represents UK consumers and expects the banks to follow official guidelines despite any complaints they may have about that process. The regulators may end up taking action against those banks which refuse to comply. According to the FSA, putting the processing of PPI complaints on hold is only allowed to be authorized by the FSA, the courts or an Ombudsman.

Now, many UK consumers are left wondering what they could do to try and get their PPI complaint dealt with by the banks. One route that consumers have is to speak with the independent arbitrator called the Financial Ombudsmen Service that typically needs consumers to wait 8 weeks or get a rejection from the Bank before they will get involved in a case. However, in this current situation, the Ombudsman will treat having one’s PPI put on hold as reason enough to investigate without making consumers wait. Since 81% of those who have complained to the Ombudsmen about a PPI case have ended up winning, it is a sound move for consumers. However, only a mere 5% of those who have their case rejected ever take the next step and contact the arbitrator.

Financial experts state the 81% of those taking their rejected cases to the Ombudsmen as proof that the banks are not only mis-selling PPI, but doing so in systemic fashion. That kind of epidemic means consumers have got to be on their guard and fight for their rights if they don’t wish to be taken advantage of by big banks.

Struggle Over Spending Cuts in UK Public Sector Worries Many

The Energy Secretary Chris Huhne recently told the media in the United Kingdom that there could be some changes to the proposed public sector spending cuts. Huhne expressed an opinion that the government should not try to make guesses about the worldwide economy outside of a Budget. According to Huhne, these public sector cuts many in the UK today are leery over could be reduced. Conditions which improve or deteriorate could change the game plan, and that the reduced spending set to be laid out on October 20th is not necessarily yet set in stone.

The Government, said the cabinet member, would need to be sure that it remained flexible if the global economic situation were to change in the near future. The cuts proposed by the coalition will be eased in over between now and 2014, Chancellor George Osborne was quick to point out. The hope for those in favour of the spending cuts is to get the UK economy back on track to deal with a global financial situation that has seen drastic changes since the credit crisis that started in 2008.

These cuts to the public sector could have a strong affect on major cities in the UK, especially, warn top economic experts. Economists have said that the £83 billion in cuts could strike hard at the lowest reaches of a debt weary society that is struggling to rebound. While the spending review is not yet available for public viewing, it would go through all of the prospective changes in what is funded and how it is funded. This means a recession, if it were to arrive again, would knock many right into needing those services since so many British consumers today are looking at less than stable job conditions and higher prices for goods and services in the private sector.

If the harsh talk over the absolute necessity of the cuts could be softened, many hope that it may buy time for a debt weary society, but without pursuit of the proper avenues like a debt management plan, many consumers could still find themselves in hot water as austerity continues to be the word of the day in current times. The reason that a long term solution could work is because there are still 4 remaining years until the full brunt of the proposed cuts would be felt by most. If these cuts happen, the danger is that a deteriorating economy could put many at risk who would need more services from the public sector and if the economy improves then the cuts would be unnecessary. So the argument, it seems, comes down to politics, according to many analysts.

The dreaded Double Dip recession could really put things on the rocks for many UK residents and the Budget, argues Huhne, must remain flexible with an eye towards potential changes. If it does not, things could get very difficult for a growing number of people already battling economic distress.

Car Registrations Signalling Many in Debt Are Unable to Buy

In the second worst September for new car registrations since 1999, car registrations are down to 335,246 vehicles which is nearly 9 per cent less than at the same time in 2009. The data comes from the Society of Motor Manufacturers and Traders, suggesting that a drop in new car registrations is further proof that the economy itself remains shaky and people are having a difficult time even considering the option of purchasing a new vehicle due to record levels of personal debt across the UK today.

The reason why the month of September is significant is because this nearly always the busiest month out of any given year due to the fact that this is when the number plate changeover takes place. A big part of the significant drop in registrations is said by experts to be tied in with the fact that the scrappage incentives have been ended by the Government and that had been artificially stimulating the economy by making it possible for indebted consumers who would otherwise not have had the money to do so to buy a new vehicle at a reduced price. This means that those who continue to be in debts may not be able to afford a new car for quite a long time. One way that they may be able to speed up the process, however, is to enter into an IVA as soon as possible. This would allow them to get on a faster track towards financial freedom and a new car rather than waiting as they sink further into debt.

The British car market may still be at a higher point, 2 million units sold, by the end of 2010 and this would be positive, since it is a figure that is a touch higher than 2009. Cost cutting government measures in the UK, though, could continue to shake up those consumers with purchasing power and unsettle confidence from businesses at the commercial level. These factors combine to make the austerity measures look as if they may be having the effect of making people pensive across the UK which could hurt business and, in turn, reduce the availability of jobs. The economy coming to a grinding halt is certainly not what experts are hoping to see, but they warn that in combination with the VAT hike in January of 2011, car sales will be deeply affected.

The moment that the scrappage incentive, which paid out £2,000 per vehicle while it was in effect, ended this August, there was a 17.5 per cent drop in comparison with August 2009. This sort of drastic drop in sales of a crucial durable good in the UK economy is not a good sign. Fleets continue to see sales, but it is private buyers who have stopped at a full 19 per cent fewer than partook of buying a new car in September 2009 – a critical piece of the overall average percentage.

Many UK consumers will still try to purchase a new car before the January 4 VAT raise, but consumer financial experts warn against this, pointing to strong possibilities of even faster mounting debt followed by repossession for those who are in over their heads already. The smart step, experts say, it to enter into an IVA now which will allow them to save for the car they want while building back their credit rating thus lowering the overall cost of the car in the long run. Many impatient consumers are likely to ignore the advice and pay the consequences within months, however, financial advocates explained.

UK Retail Seems to Indicate Coming Double Dip Recession

The retail industry in the United Kingdom today is not looking good according to recent reports that have just compiled the data for the month of August 2010. Since research takes some time to be compiled and organized, it often comes out later than what many expect and this month many also did not expect to see sales fall by nearly half a percent, raising the level of worry that a double dip recession may indeed by in progress. Official figures from the Office for National Statistics have shown that spending on high street fell for the first time since since the beginning of 2010, not a good sign since consumers are already growing anxious over austerity measures that will slash deep into public spending.

The dip in buying activity at the consumer level has given yet another bit of evidence which suggests the economy is further cooling since the middle of the year and that means that the “mini peak” enjoyed by the economy during the 2nd quarter of 2010 may already be at an end. That was the first signal of a potential spike after 6 straight quarters of decline that began back in the Spring of 2008 and lasted until Fall of 2009. This mini recovery was looking good and showed unemployment falling, stronger sales at retail, greater economic activity over all and even a rise in manufacturing in the UK. That brief burst in early 2010 was, in fact, the fastest jump in economic activity since 2001, but now it appears as if things have come to a screeching halt.

Some are blaming Government figures such as George Osbourne for the changes, but analysts remain skeptical over this. The Chartered Institute for Purchasing and Supply gave a brief picture of what was happening in the manufacturing, construction and services sectors and in September these were already looking to be set to slow. Industrial trends were looking quite similar and output from factories in the UK may be increasingly, but only mildly so. None of this paints a good picture for consumers already loaded with debt and hoping for job opportunities as a way to pull themselves free of their burdens.

The housing market, too, has begun a serious decline and first time buyers are scarce overall. Home buying is already at half the level it was before the economic crisis that began to be noticed in 2008, but prices are falling which could be a good sign for the UK public at large – if they were able to find jobs and if other items in their daily lives were not so expensive. Since the Government has ended the ‘cash for clunkers’ programme, sales of new cars are also plummeting as consumers decide to opt for used vehicles instead of springing for financing deals which could end up punishing them with greater debt over time.

In London, retail sales have been abysmal say economists, and the August figures are deeply troubling. Since retail is a prime indicator of consumer confidence, the fact that it is already beginning to slide does not bode well for the UK economy and is likely a reflection of fewer jobs, greater debt and a variety of other factors that are proving difficult for average citizens to handle.

Disastrous Job Market Threatens Many in Modern UK

Unemployment claimant count is on the rise recently as more and more workers in the United Kingdom are finding themselves out of jobs. Researchers uncovered new figures that show 2,300 people were claiming unemployment benefits in the month of August 2010. This most recent report is based on statistics released towards the end the month of September and shows that just under 1.5 million are now claiming these benefits. The figure is derived from the Office for National Statistics and is alarming to economists because they speculate that the austerity moves by the Government may be undermining the optimism of businesses. If the changes which took place in June are having this effect on employment figures, it could mean that the economy reverts back into a stronger recession state which would be bad news for UK workers, many of whom are already facing massive debts and needing to consider bankruptcy as a potential future since other options would require a form of employment to repay the debts.

While 286,000 were able to get jobs in the months between March and June 2010, these jobs appear to not have had a strong enough effect on the overall economic health of the UK. It should also be noted that nearly 30% of the work force now hold part time jobs. These positions are often not enough to cover more than the absolute basic essentials. In all, a full 2.47 million people in the UK are out of a job according to the International Labour Organisation, hurting the chances of a national recovery from the recent credit meltdown and near economic collapse, according to analysts. A high balance of trade deficit is another worry since it has set a new record in the UK. Employers in markets such as construction and the services industry are now appearing to be reacting dramatically to the new situation. Even the International Monetary Fund appears worried by the gradually creeping unemployment not just in the UK, but in most of the western world.

Governments are being prodded to spur economic growth, but the current problems are not looking better for those at the ground level in the work a day world. Unions remain concerned that the public spending cuts in the UK could be worsening the present situation by lowering both consumer and business confidence levels. With 1 in 6 young Britons looking for work, the recovery would be jobless and this is not seen as beneficial by most UK social organisations.

The worrying situation over the fragile state of the UK economy has financial advisors recommending that people seek to shore up their spending via any means possible and look to solutions for debt in case the situation worsens.

Weekly Spending Money for UK Youth Down Sharply

In a report that may amuse many except the youngest Britons, a survey shown as part of research conducted by the Halifax unit of Lloyds Banking Group has found that parents are cutting back in a crucial area of the family budget. According to the statistics, British children’s pocket money has hit the lowest levels since 2003 and researchers say this signifies a big shift in family spending. The effects of the global recession have now reached the youngest in the United Kingdom, say the researchers, as parents try to reduce all spending that is not essential in an effort to pay down massive debts with wages that are not keeping up with the cost of living. The added threat of an unstable job market make this an especially tough time for UK families.

In 2009, the average amount children were given per week was at £6.24 but by the same time in 2010, that amount had shrunk to £5.89 which is just a touch above the low that British families doled out to their children in 2003, £5.79 weekly. While wages have risen over the past year, the cost of goods and services plus the VAT and other expenses have led to a higher cost of living. The report covered children between the ages of 8 and 15, including just over 1,200 children altogether who were surveyed during the latter part of August 2010.

While to some this may appear to be a small issue in light of the overall UK economy, psychologists say that it is important to realize that children form crucial concepts about financial matters at an early age. What may seem to be a minuscule issue to adults is often quite overwhelming to a child between 8 and 15 years of age since this is when principles of spending and saving. Children who grow up with what they perceive to be lower funds often struggle as adults due to a perception that they have experienced a childhood where they were unable to enjoy material things due to lack of money in the home.

Inflation Not Looking Good in UK as Many Continue to Struggle

In recent news surrounding the unveiling of figures from the Office for National Statistics, the Government’s numbers are showing that inflation levels did not change for the month of August 2010. The Bank of England Monetary Policy Committee (MPC) and all of those economists and observers concerned with this part of the United Kingdom’s economy, have all spoken out to have their word about the effects of the new levels, but for the most part many remained quiet about the 3.1% rate of inflation we are seeing today.

The MPC is in charge of keeping inflation at a steady 2% which is deemed as the ideal level to keep the British economy stable and this figure is not exactly good for their public image. With the Consumer Prices Index at more than 3%, it is likely that the rate at the Bank of England will need to be raised which is the main way that the MPC attempts to keep control over the levels of inflation in the UK. The logic behind this is that higher costs for those who want to borrow means that demand for products and services falls and thus the pressures of inflation are weakened and eventually decrease.

Right now, most economists in the UK agree that Britain is on the mend in the economic sense and that in it is doing decent in the short term. However, it is long range projections that macro economists are concerned with and right now they are worried that higher taxes as well as cuts in government spending by way of job reductions means that there will be a very sharp drop in the recovery as soon as 2011 roles around – this would translate to slower rises in prices, which is the desired goal for the consumer’s sake.

However, the problem at that point turns into deflation. This may sound good to most consumers, but the problem is that as deflation occurs, the economy tends to get out of control as demand swells and interest rates rise, thus leading to an inevitable crash followed by skyrocketing inflation that has so long sent many into debt. Overspending leading to big problems is common not only in the UK and United States, but also a major symptom of Japanese problems over the past 20 years.

While no one can read the future, many in the UK today find the inflation troubling as it raises their cost of living.