This piece first appeared in Saga Magazine in December 2010
The text here may not be identical to the published text  

Money News

Mortgage aid cuts, Child benefit cuts, Foreign currency safety, nPower rebates

MORTGAGE INTEREST CUT HURTS OVER 60s
Almost 120,000 people over 60 have had the help they get with their mortgage cut by 40%. The average cut is £16.50 a week for those aged 60-64 and £11 a week for older claimants. Almost half of those affected are also disabled. 

From 1 October the Government cut the amount of help with mortgage interest given to people on means-tested benefits including Pension Credit, Jobseeker’s Allowance and Income Support. The biggest group to lose out are those on pension credit.  The amount of help with a mortgage has always been limited. Nothing is paid towards the capital debt and no interest is paid on the part of the loan above £100,000 for those aged 60 or more (the limit is £200,000 for younger people). The interest on the amount below that limit is paid at a fixed rate which was fixed at 6.08% from December 2008. But from 1 October it was cut to 3.63%. Although 6.08% was higher than many people were actually paying on their mortgage, over half of those getting help pay more than 3.63%.

The Council for Mortgage Lenders, which represents the banks and other mortgage providers, opposed the cut and refused to offer any blanket help for the people affected. Shelter warned it could lead to rising arrears and repossessions.

CHILD BENEFIT

The Government has announced major changes in child benefit. It will continue to be paid in full to all mothers who claim it. But from 2013 it will be taken back through a tax charge if she or her partner or spouse pays higher rate income tax. Four years later Child Benefit itself it will disappear when it becomes part of a new means-tested system of support called universal credit.

If you get child benefit for a child under 12 and do not work then you are automatically credited with a National Insurance contribution for each week. That will help ensure your state pension is not reduced. When the new system comes into effect the government has said these credits will continue – though it is not clear at the moment how that will be done.

Remember the credit is only paid while at least one child is under 12. After that you should check your National Insurance record and, if you have fewer than the 30 year’s contributions which are now needed for a full state pension, make sure you fill the gap by working or paying them voluntarily before you reach state pension age. 

CURRENCY SWAPS
How safe is your foreign currency order? It is something we all have to consider after 13,000 people lost £20 million when Crown Currency Exchange went into administration at the end of September. One couple lost the £110,000 they sent for conversion into euros to buy a house in Italy.

Crown Currency had traded online for five years, offering rates that consistently topped the best buy tables and building a reputation for delivering the euros and dollars on time. But on 30 September Barclays froze its bank account and the firm collapsed the following Monday. No-one knows where the money has gone and there is no compensation scheme. Customers will be lucky to get back 10p in the pound sometime in 2011.

If you want to order your currency online you can protect yourself by checking the firm out on the Financial Services Authority website.

On its front page www.fsa.gov.uk click on ‘Register home page’ then click the tab marked ‘Payment Services Firm Search’. Put in the firm's name and if you get a list of firms click on the one you want.

That brings up the firm’s record. If it is classified ‘Small Payment Institution’ then you have no protection at all if it goes out of business. But if it is listed as ‘Authorised Payment Institution’ then the FSA has made sure it keeps customers’ money in a separate bank account and has sufficient capital to meet its orders. Your money should be safe. Though if it turns out not to be there is still no compensation.

Of course the safest way to get foreign currency is to visit a High Street bureaux de change. You hand over Sterling and take away your foreign currency. You may pay slightly more – though not too much if you research the best rates. But at least you will not lose the lot.

NPOWER TO THE PEOPLE
If you bought your gas from npower at any time between May and October 2007 you are due a refund after npower admitted overcharging almost all of its customers in that period. It has written to 1.8 million customers offering them an average of £35 plus VAT and interest. The total cost to npower will be around £70 million.

If you have got one of these letters all you have to do is take it to the nearest post office to get the cash. However, half of these customers have already moved to another supplier and may have moved house and miss the letter. So if you were an npower gas customer in that period but have not heard from npower by the end of November you can register for the payment anyway. Not every gas customer is entitled as some tariffs, including pre-payment meters, were not affected.

Find out more at www.consumerfocus.org.uk or www.npower.com or call 0800 975 7938.

Consumer Focus, which used its legal powers to force npower to agree to this deal, is one of the public bodies the Government has decided to scrap. It will disappear in 2011.

go back to Saga writing
go back to writing archive

go back to the Paul Lewis front page
e-mail Paul Lewis on paul@paullewis.co.uk

All material on these pages is © Paul Lewis 2010