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The Harrington Brooks Blog

News, comment and views from the team at Harrington Brooks.

What We’re Doing for Our Wonga Customers

Posted by Charlotte Campbell on

As you may remember, Wonga wrote off £220m of debts for 330,000 customers earlier this month after it was found to be using insufficient lending checks on borrowers.

We have begun to identify which customers are affected and over the next few weeks we will have communicated with all customers who have a Wonga loan on their plan with us to ensure they are informed at all stages as to the potential changes to their plans.wonga

Once we are authorised to remove customer’s debt from their Financial Management Plan, any contributions they make will be dispersed among their other creditors, so they can pay off their remaining debts quicker. In the case of IVAs, their contributions will be dispersed among their remaining creditors but in most cases their plan term will remain the same.

We are working to get all the plans of affected customers updated as soon as possible.

FMP customers should email wonga@harringtonbrooks.co.uk if they have any queries, or complete the Wonga survey we have emailed to them to update their plans. IVA customers should forward their confirmation email from Wonga, or email any questions, to ivaclaims@harringtonbrooks.co.uk.

Confused About Credit Unions?

Posted by Charlotte Campbell on

Update: Please note that a number of credit unions have cut off dates for Christmas Loan applications. Visit findyourcreditunion.co.uk to see the closing dates of unions you may be eligible to join.

Around a million people in the UK are currently members of a credit union, a figure set to rise to 3m over the next 10 years following the government’s aims to invest £38 million in them. But what are credit unions, and can you trust them?iStock_000012193904Small

View our Credit Union Guide for an overview.

The FCA’s Changes in Approach to Supervision

Posted by Jack Boardman on

Since March, 2014, the financial sector has seen vast changes in its regulation. But which were already there, and which have been implemented since new regulators, the FCA, took over from the OFT?

The FCA have published ‘What’s new and what’s not,’ a guide to the FCA’s approach to supervision. A prominent change is the FCA’s new three pillar supervision model, in place of the old Advanced Risk Responsive Framework (ARROW) model. The previous ARROW model was rooted in assessing products and their target audience, conflicts of interest and complaints. The FCA’s new approach focuses on:

      • Securing an appropriate degree of protection for consumers

 

      • Protecting and enhancing the integrity of the UK financial systems

 

    • Promoting effective competition in the interest of consumers.

Compliance Headlines Newspaper Torn New Business Regulations Com

Regulated firms now abiding by the FCA’s Principles of Business will be supervised under the FCA’s model for the 10 principles of supervision:

      1. forward looking and more interventionist

 

      2. focused on judgment, not process

 

      3. consumer-centric

 

      4. focused on the big issues and causes of problems

 

      5. interfaces with executive management/boards

 

      6. robust when things go wrong

 

      7. focused on business model and culture as well as product supervision

 

      8. viewing poor behaviour in all markets through the lens of the impact on consumers

 

      9. orientated towards firms doing the right thing

 

    10. externally focused, engaged and listening to all sources of information.

Whereas the FCA’s principles of business offer an ethos by which firms are to operate, the principles of supervision outline the “issues and behaviours” the FCA will pay attention to. This will particularly focus on a firm’s:

      • Business model and strategy

 

      • Culture

 

      • Front line business processes

 

      • Systems and controls

 

    • Governance

The FCA’s changes to the sector have been widely welcomed, with the new supervision over firms and customer-centric approach taking a positive effect.

Read here more information on the FCA’s guide to supervision.

Let’s Talk About Debt

Posted by Charlotte Campbell on

Let’s Talk About Debt : Changes for the better

In the wake of news from Wonga and as sweeping changes hit the debt resolution industry, Harrington Brooks release their first quarterly comment “Let’s Talk About Debt”.

Financial Problems

Talking about debt reduces stigma, and makes it easier to find a solution.

Debt can be a difficult issue for people to talk about, but admitting there are issues with your finances is a key step in getting back on track. That’s why it’s important we talk about debt. Currently:

  • 6,405 new debt problems are dealt with by Citizens Advice Bureau every working day (The Money Statistics October 2014, Money Charity).
  • Advice relating to debt represents 30% of all advice provided by Citizens Advice Bureau (CAB). The volume of debt advice has decreased by 14% against last year.
  • 297 people are declared insolvent or bankrupt daily.
  • 71 properties are currently repossessed daily.

We also report that consumer credit lending is the highest it has been in 3 years and that six in ten people in debt affected by mental health problems, leading to Citizens Advice calling for more responsible lending.

Research conducted by Economics Help suggests raising interest rates by 0.5% will increase the cost of a £100,000 mortgage by £60 per month. The Money Charity this week also reported that 9.24m households have no savings plus there are a further 3.43m that have under £1,500. Could credits union help? Read our Guide to Credit Unions.

So, there are thousands of families which remain financially vulnerable and the stigma that debt carries may prevent people from seeking help. Let’s talk about debt and change attitudes.

“Let’s Talk About Debt”

Ofgem Concerns over Big 6 Profiteering

Posted by Charlotte Campbell on

Energy watchdog Ofgem has demanded an internal audit of the big 6 energy companies following concerns about profiteering, after drops in wholesale gas and electricity prices have not been reflected in household bills.

The annual profits made per customer have shot up in the past 5 years by £40, creating combined earnings of £17bn. This per customer profit is set to rise by a further £62 over the next year, according to Ofgem calculations.

Electricity and gas bills make a huge difference to monthly finances

Electricity and gas bills make a huge difference to monthly finances

However, the big six have had a drop in annual profits, from £3.5bn in 2012 to £2.8bn in 2013. This has been blamed partly on plant closures.

Who are the big six?

  • E.ON
  • Npower
  • Scottish Power
  • SSE
  • Centrica
  • EDF

Rachel Fletcher, senior partner at Ofgem’s market division, said of their decision to refer the big six to the Competition and Markets Authority (CMA).

“What we are not seeing is any reduction in the standard tariff… yet again that raises the question about whether there is competition in the market.”

We know that when you’re on a tight budget, your monthly bills make a massive difference to your finances. That’s why we offer all our customers a comparison and switching service with our partners Uswitch, to make sure you’re paying the most suitable tariff for your household needs.

Payday Lenders Competition Encouraged by CMA

Posted by Charlotte Campbell on

The Competition and Markets Authority has proposed that payday lenders make their prices and costs more transparent so as to create greater competition in the sector.

Recommendations should make it easier for borrowers to work out which provider is most suitable for them.

Recommendations should make it easier for borrowers to work out which provider is most suitable for them.

Simon Polito, chair of the CMA’s Payday Lending investigation group, has said:

“Greater price competition will make a real difference to the 1.8 million payday customers in the UK. At the moment there is little transparency on the cost of loans and partly as a result, borrowers don’t generally shop around and competition on price is weak.”

Their proposals also include allowing borrowers to research their options without damaging their credit records and giving borrowers access to information on how much they have paid on their latest loan.

The FCA have already suggested that fixed default fees should not exceed £15 and the overall cost of a payday loan should never exceed 100% of the total loan amount.

Richard Lloyd, of consumer association Which? thinks the recommendations should only be the beginning of a reform:

“More must be done to put consumers firmly in control of their borrowing, starting with [regulator] the Financial Conduct Authority looking at the whole of the credit market and cracking down on excessive fees across all forms of credit, including unauthorised overdrafts.”

Problem Debt Costing the UK £ 8.3 Billion

Posted by Jack Boardman on

A new report from charity, StepChange, was released this morning on the issues of ‘problem debt,’ stating it costs the UK £8.3 billion.

The Social Costs of Problem Debt

"All too often, people face their debt burden alone, which can worsen the anxiety they are feeling."

“All too often, people face their debt burden alone, which can worsen the anxiety they are feeling.”

  • £89 million due to worse education and employment outcomes for young people.
  • £19 million due to poorer physical health.
  • £5 million due to increased ‘desperation’ crime.
  • £2.8 billion cost of losing a home or being evicted.
  • £2.3 billion costs due to job loss or lost productivity.
  • £960 million mental health costs.
  • £790 million relationship breakdown costs.
  • £658 million extra costs of older people needing to move into care homes earlier.
  • £443 million cost of employees in small businesses losing their job.
  • £229 million costs due to increased risk of children being taken into care.

Mike O’Connor, CEO of StepChange, said:

    “Many people are plagued with severe financial worries that can have a huge impact on their health.
    “All too often, people face their debt burden alone, which can worsen the anxiety they are feeling. We would encourage anyone who is struggling with debt to take that first step and seek free confidential advice.”

The report was carried out by Baker Tilly, analysing the data of 109,397 StepChange customers. The charity saw a 37% increase in clients seeking debt advice between 2012-13, and are expecting a further 20% increase in the 2014 Statistics Yearbook. With an estimated 2.9 million people in the UK facing problem debt, the report suggests that if the 2.9 million could find help a “conservative” estimate of £3.1 billion could be saved in social costs.

“Problem debt is a brake on people’s capacity to work, or to return to work, a brake on aspiration and a brake on potential. The impact affects us all and we cannot afford to walk on by.” – Mike O’ Connor, CEO of StepChange.

Debt Action Plan

The result of the findings is a call from the charity for the Government to commence a Debt Action Plan, which includes:

  • Savings help for people on low and middle incomes to build up precautionary savings.
  • A new statutory scheme supporting people through temporary financial difficulty, accessed via debt advice.
  • Government committing to the highest standards in debt collection practice where it acts as a creditor, e.g. council tax collections.
  • Helping the free debt advice sector bridge the advice gap so that everyone who needs help with their debts is able to get debt advice.
  • Providing proper funding for the tools to help people manage their debt, so that debt advice can help as many people as possible.

A Treasury spokesperson stated:

“A key part of the Government’s long term economic plan is to boost hard-working peoples’ financial security at all stages of life.
“That’s why we’ve taken action to deliver the biggest ever increase to the annual subscription limits for Isas, a radical overhaul of pensions so that people can access them more flexibly, and major changes to the starting rate of savings income tax which will benefit over 1.5 million people.
“The Government has taken a series of steps to help those with problem debt, including giving the Money Advice Service (MAS) responsibility for funding and coordinating the free debt advice sector, and giving the Financial Conduct Authority robust powers to protect customers that use debt management firms.”

Debt among over 55s at a high

Posted by Charlotte Campbell on

A report by Aviva has shown an increase in monthly spending among over 55s, as their confidence in the economy grows to a post-recession high.

The average person in that group owes &pound 2,269 in total, including &pound 817 on their credit card, &pound 765 in personal loans and £104 on their overdraft.

Rising value of houses is a key component in the increase in confidence.

Rising value of houses is a key component in the increase in confidence.

Savings have fallen among the over 55s, with the typical amount put away coming to £46 per month. Clive Bolton, Aviva’s managing director retirement solutions, warns against becoming over-confident with spending:

“People nearing or at retirement need to really match their borrowing and spending habits with their income and retirement savings, so they have budgeted for their money to last the whole of their lives.”

The typical monthly spend among over 55s is £846, following an increase in spending on luxuries like holidays, clothes and going out to eat.

If you are struggling with your debts and want to become financially stable so you can plan for the future, why not call one of our advisers today? They’re trained professionals who will run through your circumstances and help you find the most suitable course of action for your needs.

Universal Credit Rolled Out in Place of Benefits

Posted by Jack Boardman on

“A welfare state fit for the 21st century.” On the 29th September the DWP announced the rollout of Universal Credit to all Jobcentres across the country from early 2015.

Iain Duncan Smith, Work and Pensions Secretary, said:

“(Universal Credit) has now rolled out in the north west of England – to couples, shortly to families, to more than 1 in 8 jobcentres by Christmas – safely and securely as I always said.

“Today I can announce that we are going to accelerate the delivery of Universal Credit from the new year, bringing forward the national rollout through 2015/16 to every single community across Great Britain. Secure national delivery, yet at the same time, delivering that life change at a local level; strengthening community partnerships, helping vulnerable households. Not just helping the economy but reducing child poverty as well.

“It is bringing up to £35 billion in economic benefits to Britain over the next decade, helping people to get into work quicker and stay in it longer, making a lasting difference to people’s lives now and for generations to come. Universal Credit is going nationwide. I promise you we are going to finish what we started.”

Universal credit is a new government reform, turning six benefits and tax credits into one monthly payment. It is designed so that you benefit more from being in work than on benefits.

Universal credit is a new government reform, turning six benefits and tax credits into one monthly payment. It is designed so that you benefit more from being in work than on benefits.

What is Universal Credit?

Universal credit is a new government reform, turning six benefits and tax credits into one monthly payment. It is designed so that you benefit more from being in work than on benefits.

Universal Credit will replace:

  • Jobseeker’s Allowance
  • Housing Benefit
  • Working Tax Credit
  • Child Tax Credit
  • Employment and Support Allowance
  • Income Support

It is currently being introduced in stages, and already available in North-west England, Inverness, Harrogate, Shotton, Hammersmith and Bath.

What does Universal Credit mean for you?

Universal Credit may be available to you if you’re on low income or out of work.

If you’re unable to work, Universal Credit will support you, and if you start work or see an increase in hours, Universal Credit will top up your earnings.

There are no limits to the number of hours you can work a week if you receive Universal Credit. Your payment will reduce gradually as you earn more and you won’t lose all your benefits at once if you’re on a low income.

If you’re successful in your claim, you’ll usually get your first payment 1 month and 7 days after you made your claim.

How to claim

To claim you’ll need the following list of things at hand:

–       Postcode

–       National Insurance number

–       Details of the bank, building society or Post Office account you want Universal Credit paid into

–       Your rent agreement (if you have one)

–       Details of your savings or other capital

–       Details of any income that’s not from work (eg. From and an insurance plan)

–       Details of any other benefits you’re getting

–       You might also need these details for people who live in your home, eg. Your partner.

You can make your claim here. gov.uk/apply-universal-credit

Call the Universal Credit helpline if you need help making your claim online.

Telephone: 0345 600 0723
Textphone: 0345 600 0743

If you don’t have access to a computer and the internet at home, look up a list of computer drop-in services and libraries at gov.uk/

Hot Topic: Has the FCA done enough to regulate the debt management industry?

Posted by Jack Boardman on

The provision of debt management services and the FCA’s new regulations continue to be a hot topic, widely debated in the news and parliament.

matt_cheetham

“What should be important is the quality of the advice and ongoing service rather than who pays for it.” Matt Cheetham, CEO of Harrington Brooks.

Matt Cheetham, CEO Harrington Brooks, speaking yesterday at a round-table debate hosted by CSFI, London:

“Regulation has been a much needed catalyst to raise minimum standards across both debt managers and creditors but to some extent, that’s not addressing part of the problem which is about education”.

The debate between Matt Cheetham and Damon Gibbon, Director of the Centre for Responsible Credit acknowledged the FCA’s regulatory efforts and also raised the point: “What should be important is the quality of the advice and ongoing service rather than who pays for it.”

Read more