Monday, 27 October 2014

Business groups call on government to scrap legal reforms that will cost businesses and taxpayers £160m per year

There have been warnings from Business groups, including accounting and insolvency bodies, the institute of Credit Management, and the British Property Federation, that government legal reforms could cost creditors over £160 million per year from next April – with rouge directors being the big beneficiaries.

Six influential business groups have signed and sent a letter to the Prime Minister, David Cameron and Justice Secretary, Chris Grayling, outlining their concerns and calling for the government to scrap the planned change.

The letter highlights the planned changes and describes them as being “anti-business, will increase tax avoidance and evasion, and will benefit directors of insolvent companies who have committed fraud or behaved recklessly.”

From April 2015, insolvency litigation will no longer be exempt from the crackdown on ‘no-win, no-fee’ legal funding introduced by 2012 reforms. This type of funding is often the only way creditors can afford to pay for court cases to retrieve money from rouge directors that have wrongly taken money out of a failed business.

Under the current system, successful claims see both creditors’ debts returned and the rouge director charged for the cost of the court case.


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Wednesday, 22 October 2014

Rising Property Values Prompt Equity Release Loans

Borrowing drawing on the equity tied up in people’s property has hit its highest quarterly level since records began in 2002, figures show.

The Equity Release Council trade body has stated that equity release lending totalled £375.5m in the third quarter of the year. 

More than 5,500 people aged over 55 released equity from their homes over the same three months, it added. 

However, the Money Advice Service suggests this form of borrowing can be “expensive and inflexible”.

The average value of equity release also reached its highest level since 2002 in the third quarter of the year, with homeowners typically “releasing” £67,467. 

Nigel Waterson, chairman of the Equity Release Council, claimed that for many people aged over 55, pension savings were failing to cover rising costs. 


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Public Borrowing Rises to £11.8bn in September

Government borrowing increased to £11.8bn in September, an increase of £1.6bn in comparison with a year earlier, according to the Office for National Statistics. 

The latest figures have been a setback for Chancellor George Osborne, who in March pledged to cut the budget deficit by more than 10% over the next 12 months. 

Between April and September borrowing was £58bn, a rise of £5.4bn compared with the same period last year. Economists were forecasting that borrowing would become stable. 

That is an increase of 10.3%. Last month’s figures showed borrowing between April and August was 6% higher than a year earlier.

“We have seen stronger growth in receipts this month, but as today’s figures show, the impact of the great recession is still being felt in our economy and the public finances,” a treasury spokesman said. 


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Tuesday, 21 October 2014

Bank OF England Says Keep Interest Rates Low For Now

Interest rates should remain low to avoid long-term economic stagnation, the chief economist at the Bank of England has said.

Global markets have tumbled this week, with investors disconcerted at the lack of growth in Europe and especially Greece, the impact of Ebola, and worrying economic data from China and the US.

Previously, UK interest rates had been expected to rise early next year.

Andrew Haldane said in a speech he was downbeat over the UK economy because of weaker global growth, low wage growth and financial and political risks.

He said there was still plenty of reasons to be cheerful. Growth is set to be the fastest of any major economy this year and inflation and borrowing costs are low, he said.


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Government To Consult On New Peer-to-Peer Lending ISA

The government is considering setting up a separate tax free individual savings account (ISA) for people who want to lend out money.

The new ISA would be for people who lend money via Peer-to-Peer (P2P) borrowing sites.

It would be in addition to the two longstanding ISAs for cash and shares.

Peer-to-peer websites, like Zopa and Rate Setter, accept money from savers which they then lend out to individuals or businesses.

Often they attract an above-average return, albeit with more risk. Lenders can, in theory, lose their money, if the borrower is unable to pay it back.

The idea has snowballed: £1.8bn has been loaned through such sites so far, and the industry believes including such lending within ISAs will boost it further.


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Monday, 20 October 2014

Eurozone Gloom Hits Markets And Oil

Global stock markets plunged and the price of oil collapsed to its lowest level in more than fouryears this week as pessimism about the economic outlook for the Eurozone gripped investors around the world.

The FTSE 100 index of the UK’s leading shares fell 91.88 points, or 1.43pc, to 6,3339.97, its lowest mark in a year and 7.82pc below highs of 6,878 in May.

The “fear index” which is a measure of investor anxiety, known as the Vix, leapt by nearly 25pc as a draft of gloomy economic data emerged.

UK construction data showed output contracted by 3.9pc in August, much worse than analysts had predicted. Reports also emerged that Germany’s central bank would cut its official growth forecast next week.

The impact of Ebola and lurking geopolitical risks have added to the pessimism.

Source: The Telegraph

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Wednesday, 15 October 2014

The Money Statistics - October 2014

The latest money management statistics have now been published by The Money Charity, which was known as Credit Action until October 2013, and is the UK’s financial capability charity.

These figures have been produced since 2005 and were previously called the debt statistics, but have now been renamed to encompass a wider range of how we spend money in the UK.

The key figures for October 2014 can be seen below.
• £55,008: average household debt (including mortgages) in August, up from £54,981 in July
• 6.7%: percentage of household pre-tax income saved
• £521: average annual increase household debt per UK adult
• 6,405: new debt problems dealt with by Citizens Advice Bureau every working day
• £115,940: average mortgage size for households with mortgages
• 1,000: number of people who became redundant every day between May and July
• 4 Minutes and 51 Seconds: time between each bankruptcy and/or insolvency
• £162.6bn: outstanding consumer credit debt at the end of August 2014
• £4,347 per second: government borrowing in July 2014
• £29,013: average first-time buyer deposit

If you know any businesses or individuals that are struggling with debt, recommend they visit our website to see how we have helped similar people. We are happy to provide a free initial consultation without obligation.

There is Life after Debt!

Source: The Money Charity

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Tuesday, 14 October 2014

No State Pension For Under 35s

Younger generations will receive a “derisory” state pension in retirement because the cash reserves that fund payouts to the elderly will run dry next year, a report will warn. 

A think tank claims to have discovered a “serious flaw” in the national accounts that within 12 months will leave the Government short of money to pay pensioners. 

As a result, the Treasury will be forced to raid income tax receipts to ensure old-age payouts continue, according to the influential Centre for Policy Studies.

Michael Johnson, an academic at the think tank, which has links to the Conservation Party, said his research indicated the state pension was “unsustainable”.

Millions of taxpayers under the age of 45 faced steep tax increases and would have to wait longer to collect a state retirement income, he claimed, while the under-35s should prepare for the state pension to be scrapped.

Official figures this week showed Britain’s state pension bill will quadruple to £420 billion over the next six decades as the population ages.

Article Source: 

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Monday, 13 October 2014

UK Interest Rates Remain at Record Low of 0.5%

The Bank of England has held UK interest rates at a record low of 0.5%.

It has also decided not to extend its quantitative easing programme, designed to stimulate lending in the economy, beyond the £375bn already spent. 

Rates have been at 0.5% since March 2009, with the market expecting a small rise early next year. 

There has been increasing speculation over when the bank will start to raise the rates again.

Markets are expecting a rise at some point next year. However some think it could be later this year due to the General Election which is scheduled for May 2015. 

The UK economy has been growing strongly this year – with GDP rising by 0.9% between April and June, following a 0.7% rise in the previous quarter – and is on course to outperform many other developed economies this year. 

Article Source....

Thursday, 9 October 2014

Problem Debt Costs the UK Economy £8.3bn, Charity Warns

A charity says the problem of mounting personal debt is costing the British economy £8bn annually, due to the burden it puts on state services.

StepChange, which hears from half a million people in financial difficulty each year, said dealing with housing problems and job losses due to stress made up the bulk of that figure.

It added the government could save £3bn if it offered people effective help.

The Treasury said it had “taken a series of steps” to help those in debt.

Problem debt which is defined as debt that people have taken on but cannot afford to repay as required.

The biggest cost caused by problem debt was that of having to rehouse, and provide higher housing benefit payments for, people who lose their home after falling behind on mortgage or rent payments.

Approximately 2.9 million people in the UK are estimated to have some form of problem debt, and StepChange said it expected there would have been a 20% year-on-year rise in those using its services by the end of 2014.


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Friday, 3 October 2014

Wonga Sees Profits More Than Halve

Profits at payday lender Wonga have fallen by more than half, the company has announced.

In the year to the end of December 2013, profits fell by 53% to £39.7m.

The company blamed “remediation costs” – money it had to pay back to customers as a result of its own mistakes.

Wonga also say that they expect to be “smaller and less profitable” in future, in part due to new controls set by the regulator, the Financial Conduct Authority (FCA).

Since July 2014, all payday loan companies have had to conform to new rules, which limit roll-overs of loans and force them to increase affordability checks. From January 2015, they will also have their charges capped.

In June this year, the FCA ordered Wonga to pay £2.6m in compensation to 45,000 customers, after fake letters were sent out from non-existent law firms.

At the same time Wonga was told to compensate 200,000 customers who were overcharged, as the result of a technical issue.

In total costing the company £18.8m.

Wednesday, 1 October 2014

Economic Recovery Comes With Cash Flow Woes For Some

The number of businesses just paying the interest on their debts – a key characteristic of ‘Zombie businesses’ – has jumped from 103,000 in November 2013 to 154,000 now, according to research by insolvency trade body R3. This is at its highest level for eighteen months.

But rather than a return of the ‘zombie business’ phenomenon, insolvency practitioners suspect that late payment and over-trading problems associated with economic recovery are behind the rise.

‘Zombie Businesses’ emerged after the 2009 recession when thousands of businesses that might have been expected to fail were kept afloat by a combination of low interest rates, lenient creditors, and a sluggish recovery.

100,000 businesses say they would not be able to pay their debts if there was a small rise in interest rates, while 64,000 say they struggle to pay their debts when they fall due.

‘Zombie business’ numbers peaked at 160,000 in November 2012 before falling back to 102,000 in August 2013.