e-mail Paul Lewis on paul@paullewis.co.uk
OVERDRAFTS
Some of Britain’s biggest banks
are getting rid of complex and unfair bank charges and replacing them with
simple fees. However, these new charges, although easier to understand, can be
far more expensive – especially if you go into the red by just a small amount.
The latest bank to make these changes is Lloyds TSB. From 2 December everyone
gets a free £10 buffer so if you go overdrawn by a small amount then there will
be no charge. However, once that £10 is exceeded all customers will pay a fee of
£5 a month for every overdraft which is used even where the bank has agreed to
it in advance. And those who take an unauthorised overdraft will also pay a
daily fee of £5 for borrowing between £10 and £25 and a daily fee of £10 for
amounts above that. The maximum daily fees that can be charged in a month is set
at eight. So an unplanned overdraft of £100 which lasts for a month and is then
paid off would cost a total of £85. Because these are fees not interest Lloyds
TSB does not have to declare the APR. Just as well. The calculator which the
Office of Fair Trading used to publish shows the APR in that case would be more
than 160,000%. There are some variations on these rules depending on the account
you have.
TRACE THAT PENSION
Millions of us pay into a
pension at work – but often we lose track of that money when we leave. Until
1988 if a company had a pension scheme you had to pay into it and if you worked
there for more than a couple of years your pension may well have been preserved
for you. It is not just work pensions that are lost. Millions of us paid into a
personal pension since 1986, but often only for a few years. So it is easy to
lose the details or decide it is not worth worrying about. But it can be.
The Pension
Tracing Service is dedicated to reuniting people with these lost funds. It has
details of 200,000 schemes and every year it helps around 16,000 people track
down a lost pension. They get an average of £16 a week and a lump sum of £1900,
though some have had lump sums as high as £20,000 and a pension of more than
£100 a week. The service is free and run by the Department for Work and
Pensions.
To find an
old pension you will need to remember where you worked and when. If you have any
paperwork so much the better. Before 1975 people who left a job normally lost
any rights to a pension. And even after that you may have given up those rights
if you left within a few years. But it is well worth checking. If you are
looking for a personal pension then it will help if you know the name of the
firm that ran it for you or any name or address related to it. Again, any
documents will be immensely helpful.
NO DOUBLE
DIPPING
The
High Court has decided that if you complain to the Financial Ombudsman about mis-selling
or bad treatment by a financial firm and get compensation then you cannot go to
court to get more. Before the ruling it was accepted that customers were free to
go to court if they thought the Ombudsman’s award was too low. But in a landmark
ruling in November Mr Justice Pelling ruled that a complainant who accepts an
award by the Ombudsman cannot then go to court to try to get more. However,
advisers believe that it is still much better to go the Ombudsman than to court.
Cases can be brought by individuals without any legal representation and the
Ombudsman can award up to £100,000 (expected to rise to £150,000 in 2012). If
you feel the Ombudsman has awarded far too little you can still reject the
settlement and take court action. But you cannot any longer accept the award and
go to court for more.
On 31 December 2010 the compensation limit for money in a bank
or building society rose from £50,000 per person per institution to €100,000 –
around £85,000. The rule which allowed banks to set off any mortgage or other
debt against the balance in the deposit account will also come to an end.
The new limit applies per person and per
separately authorised firm. A special scheme which allowed savers with money in
building societies which had merged to keep the £50,000 limit for money in each
society will end.
ACTIVATION SALES
When you get a new or
replacement credit or debit card you may be asked to call a number on the front
to ‘activate’ it or report its safe arrival. When you ring you may expect to
speak to your bank or card provider. But several are now contracting out this
job to a separate company which sells insurance and once you have confirmed
receipt of the card you will be given a fairly relentless spiel to buy insurance
against ID theft or losing your card. This insurance can be expensive – more
than £80 a year – and yet most of what it gives you is already covered free by
your bank or may already be part of your home insurance. If your ID or cards are
stolen and thieves use them fraudulently then the bank or card provider will
normally cover any losses. Which? The consumer group recently said this
insurance was “probably not worth paying for”.
CPP, the
main firm involved in these sales, confirmed to the BBC that only about one
person in 200 claimed on their policy each year. CPP also accepted that some
people had been signed up to the insurance even though they had clearly said
‘no’ to the sales person. CPP has apologised and refunded them. My advice? Put
the phone down once your card is working.
FURTHER
INFORMATION
Banks and building
societies and how they are grouped.
www.fsa.gov.uk/Pages/consumerinformation/uk_groups/index.shtml
Pension Tracing Service –
www.direct.gov.uk Put
pension tracing service in the search box - or phone 0845 6002 537.
e-mail Paul Lewis on paul@paullewis.co.uk