Ombudsman releases latest complaints data on individual financial businesses

The Financial Ombudsman Service today releases its latest set of six-monthly complaints data relating to individual financial businesses – including banks, insurance companies and investment firms.

The data published today on the ombudsman’s website covers consumer complaints handled by the ombudsman service between 1 January and 30 June 2011. The data includes both the number of complaints received about individual businesses and the percentage of complaints the ombudsman service upheld in favour of consumers.

During this six-month period, the ombudsman service received a total of 149,925 new complaints – an increase of 54% on the 97,237 cases received in the second half of 2010. Of the data published, 98,632 cases related to Payment Protection Insurance (PPI). 93% of the total number of cases involved 157 financial businesses (out of more than 100,000 businesses covered by the ombudsman).

The number of new complaints about each of these individual businesses ranged from 30 to 19,569. Five financial businesses each had more than 10,000 complaints referred to the ombudsman service, which together accounted for 72,026 cases – just under half of all the new complaints the ombudsman received during this six-month period.

The data published today shows that in the first half of 2011 the ombudsman service upheld an average of 47% of complaints in favour of consumers, compared to 53% in the second half of 2010. The decrease in the uphold rate reflects the impact of the legal challenge brought on behalf of some high street banks against the ombudsman service and the FSA earlier in the year. Across the 157 individual businesses included in the complaints data, the uphold rates varied substantially between 2% and 98% upheld in favour of consumers.

Natalie Ceeney, chief executive and chief ombudsman, said:

These latest figures show a significant increase in the number of new PPI complaints referred to the ombudsman during the first half of 2011. This period coincided with the time when most of the high street banks and some other financial businesses had put PPI complaints on hold, because of their legal challenge against the ombudsman service and FSA.

As a result, complaints in this period about PPI were harder fought, and harder to resolve – particularly if we found in favour of a consumer. This data therefore gives only a partial view on the cases which we were working to resolve over this period.

Look at the complaints data now available on individual financial businesses.

The Rise of the Older-preneur

New research from Clydesdale and Yorkshire Bank has unveiled that rather than relax or look for a new job, over 1 million* ‘older-preneurs’ have used retirement or redundancy as an opportunity to set up their own business.

The Clydesdale and Yorkshire Banks’ Small Business Report found that more than one in four (27 per cent) of Britain’s 4.7 million* small businesses, were set up after retirement (7 per cent) or redundancy (20 per cent).

And it is the ‘older-preneur’, people aged 55 and over, that are the largest group starting up businesses when not in employment. The poll found that nearly a quarter (23 per cent) of ‘older-preneurs’ set up their business after being made redundant. A further 12 per cent have set up in business after taking retirement. The survey also revealed that almost one in ten (9 per cent) small business owners have started their business with redundancy or retirement money.

Trevor Baylis OBE, inventor and entrepreneur, said: ‘It’s never too late to start your own business. I started life as a stuntman and it wasn’t until I saw a programme about the spread of HIV in Africa that I had the idea for the wind-up radio – I was over 54 at the time. I didn’t set up Trevor Baylis Brands, my company to help inventors until 2004, when I was in my 60s. If somebody’s got an idea for a business or an invention, I’d really encourage them to seek the correct help, advice and support and push ahead with it, the economy relies on entrepreneurial spirit and most of all, it could be very rewarding.”

The Clydesdale and Yorkshire Bank research indicates that, in spite of the economic climate, more than 611,000* (13 per cent) small businesses have been set up in the last two years. The Banks’ survey also found that:

Almost one in five (19 per cent) ‘older-preneurs’ say they have transformed a lifelong passion or hobby in to a business
Arts, craft and catering is a popular for ‘older-preneurs’, with 10 per cent starting a business in this sector
Gary Lumby, director of small business banking at Clydesdale and Yorkshire Banks, said: “Many people realise that there is more to life than working for somebody else, and it’s even better if you can turn something you love and enjoy in to a business venture.

“As a society, we are living longer and understand that age and experience bring much more. It should be no surprise to see people wanting to put their experience to good use rather just seeing retirement as a time to switch off.

“And while redundancy is a difficult time for many, for others it provides opportunities; acting as a spur to starting a business they would not otherwise have done. It’s our role as a Bank to help and support people old and young to realise their business goals.”

Steer clear of potential loan scams warns OFT

The Office of Fair Trading (OFT) is warning people to steer clear of scam loan companies who take upfront fees but fail to provide credit or offer clearly unsuitable credit alternatives.

The OFT is alerting consumers after seeing a 50 per cent year-on-year rise in complaints about loan scams, particularly credit applications which involve the consumer ‘wiring’ or sending upfront fees through money transfer companies. Complaints to OFT-managed advice service Consumer Direct increased from 2,059 between 1 July 2009 and 30 June 2010 to 3,167 during the same period in 2010-11.

The OFT advises people to be vigilant when dealing with or taking calls from loan companies that want upfront fees and who are not interested in consumers’ credit history.

The OFT’s ‘dos and don’ts’ to help consumers spot scam loan companies are:

Dos:

Do be very careful when dealing with loan companies that charge upfront fees
Do be cautious if a loan company cold-calls you
Do some research about the business offering the loan – look for proper phone numbers and physical addresses and ask for information in writing
Do check that the company has a credit licence on the Consumer Credit Register at www.oft.gov.uk/ConsumerCreditRegister

Don’ts:

Don’t believe adverts which indicate a loan is ‘guaranteed’
Don’t give out your card details ‘for security reasons’ as the company may then debit your bank account without you knowing
Don’t wire money to loan companies using money transfer services when applying for loans
Don’t go ahead with a loan if a company approves it and then demands a fee before you get the money.

David Fisher, OFT Director of the Consumer Credit Group said:

‘We have seen an increase in complaints about companies who are not interested in the applicant’s credit history, that ask for payment of fees upfront and then disappear with the money.

‘We advise people to check out the company carefully before agreeing to anything, including asking for a landline number, a physical address and doing a search about the company online, as well as checking that they have a valid credit licence.’

‘If consumers think they have been approached or tricked by an advance-fee loan scam, they should report it to Consumer Direct.’

In response to a super-complaint from Citizens Advice, in June the OFT published new draft guidance that gives people better protection when dealing with credit brokers.

For advice on loan scams or any other consumer issues call Consumer Direct on 08454 040506 or visit www.direct.gov.uk/consumer. Free, confidential debt advice services are available for those facing financial difficulties through their local Citizens Advice Bureau by visiting www.citizensadvice.co.uk.

The average person’s attitude to wills

There are three certainties in life: -

1. You will be born.
2. You will die.
3. Before you die you will read approximately 75,279 newspaper and magazine articles stressing the importance of making a will.

 
And….. if you have any sense of responsibility towards your family you will cut out these articles and keep them in a file as a reminder that you really must get round to making a will before, well, see 2 above.

The file will be marked: ‘Things To Do: Fairly Urgent’. Unfortunately, if you’re the kind of person who keeps such a file, the chances are you will also have another one marked ‘Things To Do: Not Very Urgent’.  And this is a problem. For this is the file packed with all the fun stuff; the To Dos you don’t mind doing such as the competition entry forms, the money-off vouchers for tubs of margarine and those surveys that come with new kettles. You know the ones: ‘Register your guarantee within the next two weeks and we’ll enter your name in our prize draw to win another kettle.’ If there was a competition to win a will, then you would have sorted it out years ago. But there isn’t. For a start, what would the questions be?
 

If you die without a will you are:

- Intestine
- Intestate
- In a state

 
Come to think of it, ITV’s daytime schedule has probably featured something very similar. But in general, competitions with death at the core aren’t popular. But you must make a will. All those articles say so.

So if you haven’t taken the plunge yet, imagine: -

• you’re happily married
• you love your children
• you’ve paid off your credit cards – even have some savings
• you finally got that espresso machine you craved
• your house is worth a few quid.

Then one morning you don’t wake up. Sad, but it happens. Who gets your money?
 
If you have a will, your legacy is written down in a legally binding document and, unless you’re the protagonist in the latest John Grisham novel, it’s pretty much incontestable. If you don’t have a will, the Chancellor bags a windfall at your family’s expense and your money does not necessarily go to who you wish.

If you have a will, your family will live, happy and secure, long after your departure.

If you don’t have a will, they’ll hate you even more than that time you refused to switch channels to East Enders on the night Pauline went to the launderette for a tearful moan and a service wash – all in the same episode!

Got it?

You need to make a will. But how?

Traditionally there were two options:

1. DIY.
2. Pay a solicitor.

The first option is the cheaper. You pick up a special pack from somewhere like WH Smith, fill in some forms and… Bob’s your uncle. Unfortunately, because you’re not a lawyer there’s always a lingering danger that on Judgment Day Bob’s not only your uncle but also the accidental beneficiary of your entire estate.

Option two is perhaps the safer of the two. You take yourself through the frosted glass door of your neighbourhood solicitor, who will draw up the paperwork, polish it off with a few ‘heretofors’ and charge you a handsome fee.
 
Option three – sorry did I mention the third option? There is another way and it’s ideal for those of us who can never seem to get round to sorting out life’s essentials. Here’s how it works. You sit at home, watch telly or carry out basic domestic chore. Then at a time convenient to you such as Tuesday evening, a trained legal expert from The WILLpartnership who is a member of The Institute of Professional Willwriters pops round to discuss your requirements.

She/he then sorts out what you need Will and Power of Attorney-wise; completes the simple paperwork and The WILLpartnership (who have been around since 1992 so know exactly what they are doing) drafts your legal documents.

You still have to pay – but only a very reasonable fixed fee.  And even if you’re even half-good at decorating, the chances are that your home is more a convivial place to meet than a solicitors’ office and it’s a lot more convenient.

Finally you can clear out the contents the file marked ‘Things To Do: Fairly Urgent’…….
 
And that’s all there is to it – nearly. Now you are free to sit around and wait for (um, please see number 2 at the top of this piece again), but not before you’ve entered all those competitions. You can never have enough kettles.

WITHOUT A WILL THE LAW DECIDES WHO GETS WHAT WHEN YOU DIE. WITH A WILL, YOU DECIDE.

Both David and Maureen Parker had been married before. Maureen’s son George, 11, now lived with them and they also had a daughter Amy, 8. David and Maureen had never bothered making a Will believing, if either of them died, everything would pass automatically to the other.

They were wrong. And it was only after David’s tragic death in a car accident that Maureen discovered just how wrong.

Their home was in joint names so passed automatically to Maureen. But while David’s savings, pension scheme, life assurance and personal accident assurance should have left his wife and children comfortably off, because he died without making a Will,the law intervened.

It took solicitors months to sort out David’s assets at the end of which Maureen was horrified to discover she was set to receive less than half the money as a lump sum and just a small income.

She was also forced to hand over £10,000 to David’s ex-wife Linda who made a claim on the estate. The rest had to be put in trust for Amy until her 18th birthday when she inherited the whole amount. Although David had brought George up, as a stepson,the boy was entitled to nothing.

Maureen was left with a legal bill of more than £9,000 as well as having to pay over £37,000 in Inheritance Tax.

It was only during conversations at this difficult time, Maureen realised how much was at risk if she didn’t make her own Will immediately.

Maureen says now: ‘I was told if I died without making a Will appointing guardians for George and Amy, the courts would decide who would raise the children. It could take weeks or months and they could even be taken into care. George could have been forced to go and live with his Dad. I’d left him because of his excessive drinking and wasn’t happy with the thought of him bringing up my son. I’ve made a Will now detailing exactly who will look after George and Amy if anything happens to me. It’s given me peace of mind – I can now sleep easily’

Britons too embarrassed to talk about parents finances

Research published by National Savings and Investments (NS&I) last year found that over a third (36%) of the population whose parents are still alive do not know if their parents have a will, or how their parents plan to distribute their estate.  More than two-fifths of the population (46%)  admit they do not know where any of their parents’ important financial documents are kept

One often unanticipated problem highlighted by NS&I’s research is that many British people admit they would not know where to find the relevant paper work needed in the event of a parent’s incapacity or death. More than two-fifths of the population (46%) admit they do not know where any of their parents’ important documents are kept, and less than a third of people (27%) know where their parents’ wills are kept, making a stressful time even more so during a time of loss. NS&I’s Savings Survey reveals that only 7% of British people have spoken to their parents about inheritance.

Additionally:

• Only a third (33%) know where their parents’ bank account details are kept
• Fewer than a quarter (24%) know where information about their parents’ savings funds are kept
• Only one in five people (21%) know where their parents’ deeds to the house are kept
• Less than a third (31%) know where their parents’ birth certificates are kept

NS&I’s research highlights that almost a third of people (31%) admit they have ‘no idea’ about their parents’ financial plans. A quarter (25%) of British people say they will rely on an inheritance to help in the future. Lack of communication about money management means over a third (36%) of the population do not know if their parents have a will, or how they plan to distribute their estate.

When asked why Britons aren’t speaking with their family about this, 12% say it is simply not a priority for them, and 6% prefer to push these conversations back to a later date, assuming there will be enough time in the future. Interestingly, nearly one in ten people (9%) say their parents don’t like discussing the subject with them, and 11% say they don’t want to think about their parents passing away. 6% say they find it an embarrassing subject to talk about.

NS&I spokesperson Tim Mack says, “Later life financial planning is an important issue which affects everyone. It might be a sensitive subject, but every member of a family should try and encourage the others to sit down together and talk about this openly. This is a chance for parents to have honest conversations with their children about the importance of planning ahead, and provides an opportunity for parents to share advice from their own experiences on this matter”.

NS&I is encouraging people to bridge this gap of communication as soon as possible, and there are many benefits in doing so. 13% of the population say talking to loved ones provides a positive opportunity to discuss using the money for events, such as holidays, before the individual passes away, while 14% feel it can be a welcome chance for family members to input to the will. Half (49%) of people whose parents have passed away said it was especially important to have these conversations early because it allowed time for financial matters to be discussed in a calm fashion, instead of being held in times of stress.

The BBC programme, Can’t Take It With You encouraged people to look at later life financial planning such as writing wills. The presenter Sir Gerry Robinson, adds, “With people leading such busy lives, it is sometimes a rare occasion for all family members to be in one room at the same time; this can make it very tempting to push these family discussions back to a ‘more appropriate’ time. In reality, there will never be a ‘good time’ to bring tricky subject matters like inheritance into conversation, and the longer these discussions are avoided, the more likely it is that unforeseen problems may arise with future financial matters”.

Currently, less than a quarter (21%) of the population recognises the importance of speaking with family members about inheritance and family financial planning. NS&I is encouraging more people to take the time to sit down together and open up discussions about the family’s future finances.

However IPW Chairman Paul Sharpe said “Discussing your financial circumstances and the content of your will, even with your children, is not always a good idea and these are subjects that many people, understandably, want to keep private. What is far more important is that people do actually make a Will, keep it safely, tell nobody what is in the Will, but tell everybody where the Will is being kept.”

If you’re in business, you need a Will!

Take Ken Baker. He’d been a self-employed window-cleaner for 20 years. He’d built up a thriving business with a handful of staff, dozens of regular customers and an annual turnover of £74,000. When Ken died suddenly, his widow Kath was offered £50,000 for the business as a going concern. Because Ken hadn’t made a Will, Kath had no authority over the business so was unable to accept the offer and could only stand by while Ken’s staff took over his round. She eventually sold her husband’s van, buckets and ladders for just £4,500.

Or Janice Jones, she was an equal partner in a recruitment agency which she and Sally had started some 12 years ago. Janice and Sally hadn’t bothered with Will(s), arranging life assurance, Lasting Power of Attorney(s) or a partnership agreement thinking that they were just too busy running their business today let alone worrying about tomorrow. Janice was tragically diagnosed with a terminal illness and during the period of Janice’s decline the business was severely hampered in its day to day running as Janice had not appointed anybody in time to conduct her affairs (Lasting Power of Attorney). This caused the business to lose several major clients and the profits to decrease markedly.

After Janice’s death her husband Peter had to give up his job to look after their three small children and thought that what was left of Janice’s share of the business would provide him with an income but he was mistaken. Firstly the remaining profits dropped due to losing Janice completely and secondly somebody had to be taken on to do Janice’s job and this took another large chunk of the profit. The new situation meant that there was not a liveable income for either Peter, who did not actually work in the business or Sally who did. After some months Sally was unable to carry on, a buyer could not be found and so the business ceased trading.

How different it could have been if there had been A Business Will and Lasting Power of Attorneys in place dealing with the succession of the businesses. Without them, your family could suffer financially when you die.

Inter-family lending soars in wake of credit crunch

• Scottish families lead the way in terms of generosity and interest rates
• Female family members are the best bet for cheaper finance
• Retirees reach out as lending criteria gets tougher

According to research, released today, by Aviva into the ‘secret statistics’ of lending between family members, there has been a significant rise in this trend in recent years, with two thirds of consumers (63%) stating that there has been an increase in family approaching relatives for money as a direct result of the credit crunch.

Although two thirds (61%) see it as a positive idea that families are able to turn to each other for financial aide as a first port of call, only 15% of families in the UK are currently lending money to each other on a more regular basis. Although somewhat contradictory in sentiment, this may allude to the fact that finances remain a taboo subject, and although the trend of inter-family lending is increasing, encouragingly, consumers may be seeking professional advice first from organisations such as the Citizens Advice Bureau.

Retirees reach out…
In its recent Real Retirement Report, Aviva found that people who were in debt to family members and friends owed them substantially more than other sources of borrowing such as overdrafts or store cards. In fact, of retirees with this type of debt, those aged between 55 and 64 owe on average £2,100 to family and friends, with this figure increasing to £6,790 for those aged 65 to 74, although the majority of lending between family and friends is likely to be of smaller amounts.

When it comes to family, the recent findings suggest a staggering third of UK consumers would be willing to take out borrowing in their own names, for family members who are unable to obtain credit, possibly due to a lack of available credit lines, a problem often seen in retirement.

The Scottish Clan win in the generosity stakes
It seems that the Scottish are now the most generous when it comes to helping out other family members financially. The findings show that out of the whole of the UK, Scottish families lend the most to each other, with an average amount of £3,200, above the UK average of £2,300.

Not only this, but the findings show that despite 80% of those in England and Wales expecting their money back, with one in ten charging interest higher than bank rates, only 30% of Scots expect to see sight of this money again and if they do, they would charge little or no interest at all.

Brother or sister… Mum or dad…
Although two thirds believe that lending money to each other in the family in the wake of the credit crunch is a good thing, it does seem that it depends who you approach as to what deal you will get!

The findings from Aviva suggest that you would be much wiser approaching a female relative for the highest chances of getting a loan and at the cheapest interest rate, if any interest charge at all. In fact, the results quite clearly show that just 13% of women would charge their family interest on loans at bank rates or higher, compared to 40% of men. However, the findings do show that men lend on average a third more (£2,643) than women (£2,076).

Clive Bolton, ‘at retirement’ director at Aviva, commented; “The credit crunch has had an impact on all members of society; particularly it seems for those in retirement whose available credit lines may be limited. The implications of this seem to reflect a change in family dynamics from the late twentieth century when greater independence was achieved through the wider availability of credit, back to a time when the preservation of wealth and financial reliance was largely focused upon the family.

“However, it is crucial that consumers in financial difficulty seek the right professional advice, in addition to that of their families, to ensure they are aware of all options available to them when making important decisions about their long term financial security.”

A Lasting Power of attorney ‘is as important as a will’

Karen Oliver decided last year to ensure that her 63-year-old father’s finances could be handled smoothly if he ever became ill and unable to cope, they agreed to set up a Lasting Power of Attorney (LPA) on his behalf.

It was a move that brought both Karen, a 32-year-old clerical assistant, and George great peace of mind.  It now means that if George, who lives alone, is not able to look after himself, either Karen or sister Becky, 25, as ‘attorneys’ can smoothly take control of his financial affairs without any delay.

George’s daughters, who both live near him, will be able to do everything from paying his bills through to making limited gifts on his behalf.  Indeed, they have already used the LPA to sort out a problem with a standing order that had not been paid by George’s bank.  In helping set up the LPA for her father, Karen has become a convert and has taken out an LPA for herself and her husband Brian, a 38-year-old carpenter, with Becky and friend Linda as attorneys.  She has also encouraged sister Becky to set one up.

‘Until a year ago, I hadn’t really given much thought to LPA’s,’ says Judith, who lives in Cambridge.  ’But once I began to see the benefits of them, I realised that they were almost as important as having a Will.   Although dad remains fighting fit, he now knows that if anything untoward happens to him, his financial matters will be looked after by family and those people he trusts implicitly.’

‘I also have the comfort that if anything happens to me, my finances will be looked after by those I love.  I feel reassured.’

An LPA acts as insurance if someone is not able to look after their own financial affairs, usually because of mental illness or mental incapacity caused, for example, by Alzheimer’s disease.  Failure to put one in place can result in personal assets being frozen while the Office of the Public Guardian (OPG) decides who should look after a person’s money matters. This process is time-consuming and expensive.

Paul Martin Senior Partner of The Will Partnership, says:  ‘We usually discuss the benefits of an LPA when we sit down with clients who are looking to set up a will.  Most people have never heard of them, but once we’ve explained the benefits-they see the sense of putting one in place.  For those who have family and personal assets, an LPA should be a consideration.’

An LPA is different from an ordinary power of attorney, which is designed for those who need someone else to look after their financial affairs for a short time, maybe as a result of a physical illness.  An LPA is easy to arrange.  Someone setting up an LPA, often referred to as a ‘donor’, can choose one or more attorneys to look after their finances.  Usually, attorneys may include a spouse, children, other relatives or friends.  What is key is that the donor has total trust in the person or people they propose to appoint.  Attorneys can be instructed to act together which means they cannot act separately.  Alternatively, they can be set up together and separately, meaning attorneys can take decisions together as well as separately.  A donor can include restrictions in the LPA that can curtail what attorneys are allowed to do.  But for most people it is best to get a specialist to arrange such a vital matter.  Setting up LPA’s should not be expensive. An LPA is like a key insurance policy for most adults. In terms of planning for an uncertain future, it’s a vital tool. 
 
According to experts, as many as three out of every four people are failing to protect their assets in the event that they become mentally incapable.

WHAT HAPPENS WHEN THERE IS NO WILL?

1. If you are a MARRIED COUPLE WITH/WITHOUT CHILDREN (or a same sex couple who has entered into a civil
partnership agreement)

If one partner died any survivor is only entitled to a maximum of £250,000 if they have children or £450,000 if not. The balance is maintained in a restrictive trust where the survivor can only access a poor rate of interest upon 50% of the balance and is subject to some complicated rules.

 

2. If you have MINOR CHILDREN

The law determines who will raise your minor children in the event of your deaths; as a result your children could well become Wards of Court and be placed into state care, particularly whilst the courts are deciding over a period of weeks/months who is most suitable to raise them.

 

3. If you or your partner have AN EX-SPOUSE/PARTNER

An ex-spouse or partner could have a claim to some or all of deceased person’s estate. If a claim is made the claimant’s costs can be borne by the deceased person’s estate. The distribution of the estate is delayed until the claim is settled. A current partner may have to sell the family home to settle any claim awarded by the courts.

 

4. If you or your SPOUSE/PARTNER HAVE STEPCHILDREN

If you have stepchildren it is possible that you:

a) Would like to treat them exactly the same as any natural children you may have (but unfortunately the Law does not).
b) Would like them to benefit from your estate in the event of your death.

The Law gives priority to natural children over stepchildren and also other family members such as parents, aunts and uncles have precedence. Therefore stepchildren cannot inherit without a Will.

 

5. If you are a COUPLE WHO COHABIT (mixed or same sex couple)

The Law says an unmarried partner is entitled to nothing. Although you may share everything, in the event of one of your deaths the deceased’s family such as parents, brothers, sisters etc would be the beneficiaries. A common-law spouse may have to move out of his/her home as it could now be owned by the deceased’s family.

 

6. INHERITANCE TAX

Any person dying or the last to die of a married couple or a same sex couple who has entered into a civil partnership agreement who leaves a total estate of over £325,000 has an Inheritance Tax liability which is taxed at 40% of the excess. It should be borne in mind that the Tax Demand has to be usually settled BEFORE the Grant of Probate (the authority for the assets to be distributed) can be obtained. To settle the tax, the family may have to raise the money from their own resources to pay the bill. All assets are included and if you add all your assets together most people are worth far more than they thought e.g. house, contents car, life insurance, pension, death in service payments from employment, savings, personal possessions etc.

 

How do you avoid all of these issues?  Make a Will!  Call me on 0844 241 3207  for an intial discussion.  It will cost you less than you think!