Banking group Barclays has conducted research which shows that many consumers do not fully appreciate the ISA changes which come into effect at the start of the new tax year on 6 April, 2010.

Last year’s budget saw Chancellor Alistair Darling raise the amount people could invest in an ISA from £7,200 to £10,200, and of that, some £5,100 can be held in a cash ISA. And because of that, says Barclays, people are potentially going to lose thousands through not fully exploiting their tax free ISA allowances.

The Barclays research revealed that just over 40% of people were not aware of the changes and what’s more, some 75% did not know that they could invest in a cash ISA from the start of the new tax year.

Andy Gray, head of savings for Barclays said:
“It’s surprising to see that the plans to increase ISA limits across the board haven’t really registered with UK consumers yet. We would urge people to review their savings to ensure they don’t miss out on their tax-free allowance for this year and from 6 April 2010 when the new limits apply to everyone.”

The research went on to break down the towns and cities where people lived who did not know about the changes.

The most ‘ISA aware’ locations turned out to be Cheltenham, Colchester, Derby, Edinburgh, Newport, Portsmouth and Worcester. Some two thirds of people living here were aware of the changes.

Contrast that with people living in Blackburn, Bradford, Brighton, Manchester, Newcastle and Wolverhampton. Here, over half of the people were unaware of the ISA changes.

As to the change in limits – from £7,200 to £10,200 – it came into force, for people born before 6 April 1960 on 6 October, and for all others over the age of 18, it will come into effect on 6 April, 2010.

No doubt the Government will hope that the increased tax allowance levels will stimulate saving, but it appears that it will be up to the financial sector itself to make people in the UK fully aware of what those changes are and when they will be effective.

Guest Article by Neil Camp

In today’s sophisticated financial sector, switching current bank accounts to save money is about as savvy as you can get.

As with all financial products, people should not thank that they owe their bank loyalty, or indeed, stay with a bank just because they have done so for years.

Banks are smart operators when it comes to what they will offer their customers and they realise, as everyone should, it’s a highly competitive market and in today’s comparison world, the consumer has the edge.

Without a good bank account comparison website, it would take a log time trawling through all the bank accounts of offer to find the right one for you.

Now one caveat on all that. People do build good relationships with their banks and there is something to be said for staying loyal if that translates to a good account and other financial product deals, such as loans and mortgages. That said, even those with good bank relationships, can always look to opening another account if that suits them at the time. Nothing is fixed in stone in today’s modern personal finance sector.

Current accounts come in various types which tend to include high interest current accounts, business current accounts and current bank accounts.

A good current bank account comparison tool should be able to calculate what you might gain per year from a different account.

They should also divide the accounts into key categories, making comparison easier. You could then start off by comparing all current bank accounts, then easy access accounts, straightforward current accounts, fixed rate accounts and ISAs.

This allows the user to then take each category in turn and see which account offers then the best deal.

Take the category current accounts. The information laid out before you should include the financial institution offering the account (Alliance & Leicester, NatWest for example), the account name (something like Premier Current for example) and any incentives to attract you as a customer, or keep you as a customer; how much interest is paid, if any, and when; and, details about any overdrafts that might be available and what interest rate is charged.

So there you are. Choose a good current bank account comparison website and it’s all mapped out in front of you.

Guest Article by Neil Camp

Winner of the first ever Consumer money Awards, organised by the national newspaper The Daily Mirror and financial data experts Moneyfacts, is Egg, one of the leaders in the online banking sector.

Egg won the gong for Best Online Savings Provider for 2009.

The awards were created to let consumers highlight and praise the companies who were offering a good service and some 40,000 of them voted last September in an online poll. The main idea was to find those banks and building societies which people thought were doing a good job, despite the current economic downturn and recession.

In the category won by Egg – Best Online Savings – consumers were asked to consider their top choices when it came to awarding merit to the best all-round online account, considering both on product value and charging structures, which had to be fair and transparent. A number of things had to be considered, including ease of use, account availability, additional terms and services and applicable introductory offers.

Sharon Maguire, Head of Egg’s Retail Banking and Wealth Management trilled:
“We’re thrilled with this award which is a reflection of all the hard work that we’ve been putting in to our savings products this year.”

For those that don’t know, Egg is a leader in the online banking sector, and their activities include a whole range of products, from savings, borrowing, through to insurance.

In their blurb, they put their success down to “…proudly offering value for money and great service, which has made us popular with savers, particularly for our savings accounts and Fixed Rate Bonds. This success has come about through helping customers to understand and manage their money more effectively.”

So there you are , if anyone doubted the idea of having an Egg for breakfast, then think again, it might make you a few bob.

Guest Article by Neil Camp

A large number of small businesses are having to rely on corporate credit cards to fund their businesses as banks continue not to offer traditional business loans.

It’s a worrying trend in the US, but one which could be repeated throughout the UK as banks rely on the greater interest gained on corporate credit card use to protect their positions.

Figures from across the pond suggest that US banks are lending around £8 billion less at the moment and suggesting instead that their customers choose their costlier corporate credit cards. Other figures show that business loans between $100,000 and £1 million were down nearly a quarter in 2008. Furthermore, studies have revealed that well over half of small business proprietors had raised business capital using a credit card.

And business leaders are unhappy, stating that credit cards are not only far more expensive, but are more rigid in their terms. And obviously, they offer no sense of advice, or help, that a business person might have usually received from a corporate banking advisor.

Small business owners are furious that a banking system, bailed out by tax payers money both in the US and in the UK, is apparently using that money to shore up their own finances and not pass it along into the greater economy.

And with many experts believing that renewed confidence from both the consumer and small industry is the only way out of recession, it would appear that banks are not playing ball.

Guest Article by Neil Camp 

The UK’s new Supreme Court has just scored a bit of a PR own goal when one of it’s first decisions denied about a million people the chance to screw their banks over overdraft charges.

All the hullabaloo aside, all the court has decreed is that the Office of Fair Trading cannot be allowed to look into the fairness of the charges which used to range from around £15 to nearly £50 for bounced cheques and other misdemeanours. Even though the banks heralded the Supreme Court’s observation that the overdraft charges were in everyone’s contracts with the banks (in other words, what is everyone moaning about), this was not a judgement on the legitimacy of the practice of charging exorbitant fines.

And nor did the banks even think they would win a decision such as this. They have fought every judgment against them by seeking a ruling from a higher court. Some observers said that even if the Supreme Court had found against them, they could have spun things out in the courts and via the Office of Fair Trading until 2015, they might then have been bought to account and had to pay billions in compensation to their customers.

As it was the banking representatives came out of the court punching the air, clinging onto the one decision for years that had gone their way. They knew, as did everyone else, that the Office of Fair Trading, even though it might have taken years to write the report, would have found the charging practices unfair.

With the Office of Fair Trading neutralised, the Supreme Court handed the banks a huge defensive position and allows them to draw back from what might have been a ruinous onslaught.

Conspiracy theorists of course will say they have been proved right. Banks had already paid millions out to customers in settlement – they never wanted to fight a case in open court unless a decision went against them and the floodgates opened. So just around the corner from the recession, the authorities stepped in and said that a test case should go before the courts to decide whether, or not, the banks were being unfair. It appeared to some that the banks, who were starting to see the problem looming up with the coming recession, had to pull strings with the Government and the Establishment to let them string things out. So it was decided that everyone’s claims, going through the County Courts at the time, were suspended until a test case was brought, not as to the legitimacy of the bank’s actions, but whether the Office of Fair Trading could make a judgement.

Local courts were simply fed up with banks saying they would defend every case rigorously and then, once they had exhausted all delaying tactics, caved in and reached an out-of-court settlement. This had to be stopped as it was wasting a lot of time, but to consumer groups and conspiracy theorists alike, it seemed like the banks had been handed a get out of jail free card. The worse case scenario would be that they would have to around 2015 until they had pay-off their customers (hopefully when they were out of recession); the best scenario would be that a court would find in their favour and let them claim a moral victory – which is indeed what has happened.

Consumer groups are livid, smell a very large rat and urge everyone to write to their MPs; the same guys of course who have just taken a battering over their hands being caught in the till. People shouldn’t expect too much sympathy there say many.

But, as one American politician once said, it’s not over until the fat lady sings. The decision as to whether the banks charges were fair, or unfair, has yet to be decided by a court. No precedent has yet been set. So, in many ways, it’s straight back to square one.

People with a grievance will flock back to the country courts once the banks think it right to send the boys around again and bully their customers for some quite substantial monies owed. The courts will become full again of people and their banks hammering out the rights and wrongs of bank charges. Hence the day of reckoning is yet to come and a case will need to be tested once and for all. Only then will banks be able to claim they were right, or their customers claim they were right.

The story ain’t over yet by a long way.

Guest Article by Neil Camp 

Research from high-street bank Lloyds shows that people are becoming more worried about the dangers of identity theft and that the recession has made them feel worse.

The report revealed that 76% of adults are currently worried about identity theft and furthermore, that 39% feel more at risk now than they did six months ago, with the recession playing a major part.

Some 52% of those worried about ID theft believe that the recession has increased the risk, mainly because they argue that as unemployment increases, more people are driven towards criminal activity and ID theft.

And a considerable 57% of the people questioning think that social networking such as Facebook, have made it easier to steal personal details. In the same survey carried out 12 months ago, it was 47% who felt the same, so there has been a considerable rise in fear in the implications of being listed on popular social websites.

And although as many as 38% of Brits have experienced ID fraud (some 18% directly), of those asked, an incredible 57% admitted that they have not done enough to protect themselves and 25% don’t know much about it all anyway.

This is despite the fact that studies by the UK’s Fraud Prevention Service, CIFAS, shows that it takes an estimated 48 man hours to repair the damage resulting from fraud, with the cost to victims is frequently as high as £8,000. The CIFAS figures also show that ID fraud is on the increase, with a 15% rise over the year.

And like many other financial institutions, Lloyds TSB is trying to make its customers aware of the dangers.

Jatin Patel, spokesperson for Lloyds TSB, said:
“As technology improves, it gets easier and easier for criminals to steal our identities and during tough economic times the temptation becomes greater. Protecting ourselves by shredding documents and protecting passwords is a good start, but having someone else keep an eye on your ID offers extra peace of mind.”

By someone the spokesperson means Lloyds TSB and they have introduced what they call ID Aware, claiming that it allows customers to keep on top of their credit status and safeguard their identity, providing credit monitoring services and an early warning system to alert the customer to any activity involving their account, including someone trying to lighten it with suspicious cash withdrawals.

They don’t mention if there is a cost to such a service, but with talk of banks trying to make their customers more responsible for their actions when it comes to their financial affairs (i.e. the banks are going to stop stumping up for this kind of fraud shortly), then this might be a way for a customer to insulate themselves against the worse.

Guest Article by Neil Camp

According to Financial Fraud Action UK, the snappy title of the body known as the voice of the industry for financial fraud matters (previously known by a worse non-de-plume, APACS3), says its latest report paints a picture of first the good news, then the bad.

The findings, drawn up in conjunction with The UK Cards Association and the Cheque and Credit Clearing Company, show that card fraud losses are down 23% to £232.8m in first half of 2009 (compared with same period last year); there’s been a first ever fall in card-not-present fraud losses; and, cheque fraud losses down 26% to £15.6m.

The bad news comes in the online banking fraud losses which show a rise of 55% to £39m.

The actual fraud to turnover rate on debit and credit cards amounted to 0.1% in the first half of 2009, meaning that only around a tenth of a penny is lost to fraud in every £1 spent on cards.

Katy Worobec, Head of Fraud Control, said:
“These latest fraud figures are good news but we know there’s no room for complacency. Whilst industry online security initiatives such as Verified by Visa and MasterCard SecureCode may be making their presence felt, the fraudsters are never going to shut up shop and, of course, there are emerging areas such as online banking fraud which has risen again.

“Although it’s difficult to prove, we think that one of the reasons for this dip in card losses may simply be as a result of fraudsters realising that they can prosper more by targeting foreign-issued cards – particularly those without chip and PIN protection and which currently have stronger currencies than sterling. The fact that we’ve seen a 36% increase in the first half of this year in the amount of fraud being committed on foreign issued cards here in the UK adds some weight to this theory.”

Helping the successful trend was a special police unit sponsored by the banking industry to stamp out organised card and cheque fraud across the UK. Known by the initials DCPCU, the Dedicated Cheque and Plastic Crime Unit is believed to have helped save around £13 millions of fraud in just the first six months of the year. This is in addition to the £315 million in fraud savings to the industry as a result of the DCPCU’s work since its launch back in 2002.

Other factors of course have also played a part, not least Chip and PIN which say Financial Fraud Action UK has undoubtedly continued to make it more difficult for fraudsters to commit fraud on our cards in the UK. This has resulted in losses at UK retailers down by 26% from the same period last year. Mail non-receipt fraud fell by 33%, and lost and stolen card fraud is down by 6%, its lowest level since 1991 when the industry collation of fraud losses began. Furthermore, the banking industry is continuing to work closely with retailers to raise awareness of the ways in which retailers can protect their Chip and PIN terminals from criminals.

The growth in the use of MasterCard SecureCode and Verified by Visa (online payment systems that make cards more secure when shopping on the internet), by both online retailers and cardholders has helped cut losses from phone, internet and mail order shopping fraud. They have fallen for the first time ever and now stand at £134 million. Another reason for this drop has been the increasing use of sophisticated fraud screening detection tools by retailers and banks.

Fraud abroad has also dropped, mainly because financial institutions are now more aware of unusual spending habits, which means a transaction is refused before it potentially becomes a fraudulent act.

A decline in the use of the cheque was one main reason why such fraud losses during January to June 2009 decreased from £21.2 million to £15.6 million, a drop of 26%. The majority of fraudulent cheque payments get stopped when the cheque is paid, thanks also to the financial industry’s tighter controls.

In amongst the general back slapping there was a bit of bad news, with a 55% rise in online banking fraud losses which totalled £39.0 million during the six months to June 2009.

This increase is due to criminals employing more sophisticated methods to target online banking customers through malware attacks. These target not the financial institutions’ own systems (far more difficult to broach nowadays), but go for the weak part in the chain, the customer. And there has also been more than 26,000 phishing incidents (bogus emails seeking personal details for fraudulent use) during January to June 2009. This represents a 26 per cent increase on the amount seen in the same period last year.

The financial industry, say the Financial Fraud Action UK, continues to do its utmost to raise awareness about the importance of having up-to-date anti-virus and anti-spyware software. It is working with PCeU – the Metropolitan Police Service Police Central e-Crime Unit – which was established to co-ordinate the law enforcement approach to all types of e-crime. It also provides a national investigative capability for the most serious e-crime incidents.

Guest Article by Neil Camp

Those looking for the best child trust fund in which to grow their offspring’s nest egg might be interested to learn that financial advice magazine Investment Life & Pensions Moneyfacts has once again chosen the same team, for the fourth time.

Taking the accolade is The Children’s Mutual which fought off more than 70 Child Trust Fund providers, including several national banks and building societies, to win the celebrated award.

Investment Life & Pension Moneyfacts come to their decision via their own analysis, plus opinions of its IFA readership. They state that the award recognises companies that have consistently offered the most competitive products, the best levels of service and shown the greatest innovation during the last 12 months.

Tony Anderson, marketing director of The Children’s Mutual, said:
“This is a great achievement for the organisation. To win the award every year since it was introduced makes me immensely proud of the hard work and professionalism of our employees here in Tunbridge Wells and our colleagues in partner relationships in Cheltenham and Glasgow.

“We try very hard to put customers at the heart of what we do and as a result we are the choice of one in four families opening a CTF account for their children. I’m delighted that our hard work and high standards continue to be recognised by professionals in our industry too.”

Richard Ealing, editor of Investment Life & Pension Moneyfacts, said:
“The Awards have become a highly sought after accolade of excellence within the financial services sector and recognise the outstanding achievements of providers which offer the very best products and service levels. The Children’s Mutual must have a winning formula. Being presented with this prestigious award on no less than four consecutive occasions is a magnificent achievement.”

Child Trust Funds are a government initiative. It sets out to provide a tax efficient, long term savings vehicle for all eligible children and each eligible newborn child (born on, or after 1 September 2002) receives a £250 Child Trust Fund voucher, or one worth £500 for low income families). This is given by the Government when their parents register for Child Benefit. A second contribution of £250 (£500 for low income families) will be given by the government when the child reaches seven. Furthermore, parents, family and friends can all then add to this account up to a maximum value of £1,200 each year.

The Children’s Mutual is one of many tailor-made funds that offer a home for the government’s largesse. They claim to be the only UK company that specialises in long term savings for children. And they say that they are currently the choice of one in four parents for their child’s Child Trust Fund, with more than 700,000 accounts. And, they add, this expertise has led several financial institutions and family-focused high street retailers to choose The Children’s Mutual as their stakeholder Child Trust Fund provider.

Guest Article by Neil Camp

Saxo – the bank, not the salt company – predicts that Western financial markets will undergo a ‘Japanization’ effect, which will result in higher price earnings ratios and lower yields on both corporate bonds and treasuries. And the reason: the need for continued monetary stimuli and the long term government deficits?

David Karsol, chief economist at Saxo Bank, said:
“Because Western economies are more flexible and able to embrace the necessary changes, we do not think that things will get as bad as was the case in Japan. However, it is increasingly evident that the current scenario in the West bears a close resemblance to post-1990 Japan, and it looks progressively like we have entered a new regime in which everyone assumes that large companies will be bailed out. This means that default risk is ‘priced out’, and we see higher price-to-earnings ratios and lower yields on fixed income.”

Saxo Bank, which is a Copenhagen-based investment specialist, goes on to predict that in the fourth quarter of 2009, the American economy will return to positive GDP growth in the second half of the year, but warns that the sustainability of this growth is questionable and will be largely due to government spending and inventory restocking. Also, US unemployment will continue to rise over the coming months, and that this will further hinder debt repayments and consumption.

And Mr Karsol believes a USD short seems to be a vote for the global recovery and has become the, newer and better carry trade. He said:
“The very low US’s yields and need for external financing and increasing reluctance from China to buy greenbacks is a toxic cocktail that could drive the currency even weaker in the near term.”

As regards the end of the year, Saxo Bank believes that market dynamics indicate a shift from this year’s equity market rally. Global equity markets rallied 59% from the March lows through to August, and looking ahead, Saxo Bank thinks that the core dynamics indicate a shift in performance towards micro trends and sector-specific growth and valuation stories.

Mr Karsol again:
“Most indicators of economic activity are stabilising, but at very depressed levels. We believe investors should continue to take cyclical risk through regional allocations, with particular emphasis on emerging markets over Europe and the US, where it will be difficult to maintain and improve growth.”

For those interested, Saxo Bank has offices in Australia, Amsterdam, Athens, France, Italy, Japan, Singapore, Spain, Switzerland, UK, and the United Arab Emirates.

Guest Article by Neil Camp

As students across the UK head to their universities and colleges to start the new year, a high street bank is encouraging them to eat healthily whilst staying within a budget.

Although for some observers a bank encouraging another section of society to stay within a budget might seem a tad amusing, given last year’s bail-outs of the banking sector.

Nonetheless, Lloyds TSB has launched its ‘Budget Cook Off’ section of the Savvy Saver student hub, an all round guide for students, advising them on how to manage finances during their time at University. No doubt a part of the guide will advise students against helping out prime ministers by rescuing banks, or buying toxic mortgage debts from the US.

Included in the range of Lloyds TSB tips is information on how to make sure a healthy diet is maintained throughout the day, even when students are pushed for time, or under stress from upcoming exams or deadlines. The ‘Budget Cook Off’ section also advises prospective students on how to find the best deals on food in the shops and habits to avoid, such as junk food, eating out and paying ridiculous bonuses to people who pretend to work for a living, in order to make the most of their money.

The Lloyds TSB bankers are obviously taking students to their hearts, having conducted some research into what some might see as the blatantly obvious. The pin-stripes discovered that out of a thousand 17-25 year olds who hoped to start a degree course in the autumn, some three quarters of would-be freshers thought that money management was especially important in the current economic environment. Maybe the remaining quarter of would-be freshers were children of bankers, with no real need to worry about money.

Catherine McGrath, director of current accounts, Lloyds TSB, chirruped:
“We want to do everything we can to support young people manage their finances responsibly, but also have fun and enjoy their studies. We hope the hub will show them that it is possible to study on a budget, and also that they’re not alone in being concerned about looking after their pennies during their degree course.”

How kind, although maybe a deeper understanding about student cash-flow might have been a better consideration.

Guest Article by Neil Camp