Weekly Round-Up: 16th March 2018
UK Finance has responded to the Payment Systems Regulator’s (PSR) publication of the outcome of its consultation on authorised push payment scams. The Trade Body for UK Banks said that authorised push payment scams cost consumers £236m in 2017, the first time this data has been collected. There were 43,875 reported push payment scams last year, 88 per cent of which hit consumers. The rest were aimed at businesses. Banks paid back £60.8m, just 26 per cent, of push payment scams.
Push Payment scams include those where a scammer hacks an email account and monitors emails, leaving the scammer able to push payment requests through as if they look like they are from a solicitor, broker, etc., resulting in vulnerable or naïve customers making payments to the fraudsters bank account. These are startling numbers, not least that only 26% of customers have had support from their bank. UK Finance state that tackling fraud and scams is the number one priority for the finance industry, and they have successfully prevented more than £6 in £10 of attempted fraud.
The Industry has also introduced new standards on how banks respond to victims of authorised transfer scams. However there is always more to do, which is why UK Finance are working with the Joint Fraud Taskforce to deter and disrupt criminals and better trace, freeze and return stolen funds.
The price of a Car
Figures published today by the Association of British Insurers (ABI) highlight that the average cost of a motor insurance claim has risen to the highest level on record. The latest motor insurance claims statistics for 2017 show that the total amount paid on all motor claims, at £8.1billion, remained virtually unchanged from 2016, and the average claim, at £2,936, was the highest on record. Increases in the cost of theft claims and vehicle repairs contributed to this rise.
The average personal injury claim in quarter 4 of 2017, at £10,816, was the highest quarterly figure since quarter 2, 2016 although the number of personal injury claims in 2017 fell slightly on 2016, with 320,000 claims settled. However, claim volumes remain significantly higher than should be expected given the continued fall in road traffic casualties. Despite the reduction in road casualties, whiplash-style claims reported to the Compensation Recovery Unit have been rising.
Britain’s motorists are paying a heavy price for delays in the Government implementing its proposals to reform how personal injury compensation is calculated (the Discount Rate). With the price paid for the average comprehensive motor insurance policy having jumped by 9% in 2017 to a record high of £481., reforms cannot come soon enough for millions of insurance customers. The ABI estimates that a UK motorist can now expect to pay on average a total of £31,650 on motor insurance during their driving lifetime. This is up 5% on 2014. It equates to more than the price of the average new car, or the average UK salary.
Flat but still up
According to the latest figures from the Halifax, house prices in the last three months to February were 1.8% higher than in the same three months a year earlier, slowing from the 2.2% annual growth recorded in January. House prices in the latest quarter (December-February) were -0.7% lower than in the preceding three months (September-November), the first decline on this measure since May last year.
On a monthly basis, prices grew marginally by 0.4% in February, following two consecutive monthly falls with the average price in February being £224,353, down slightly from November’s high of £226,408. Reflecting the observations made by the Nationwide in their analysis, Halifax also suggest a flat housing market underpinned by a strong labour market. The number of people in employment rose by 88,000 in the three months to December and was almost entirely accounted for by full-time jobs. The strength of the jobs market may finally be benefitting wage growth, with the annual growth rate accelerating from 2.3% in November to 2.8% in December. However, earnings are rising at a slower rate than consumer prices.
Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards. While it is expected that price growth will remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.
Savings will see me through
New research shows just under three quarters of people describe themselves as “in control” financially, but worry about money and health issues according to Protection Review’s The Syndicate. Confidence in protection insurance as a support mechanism is high but people are more likely to depend on their partner and savings. The public has low expectations that insurers will pay claims, but strongly believe they should – sometimes even in the event of non-disclosure and they also acknowledge the need for higher premiums for those with habits affecting their health
The 2018 report from The Syndicate, the research arm of Protection Review, has found that most people feel confident in managing their finances. 45% of the sample said they took an interest in their finances, didn’t postpone financial decisions and didn’t find financial matters confusing. 68% said they were good at managing their money with 71% of the sample describing themselves as “in control” of their finances.
Questions on the financial situation of households provided insights into how comfortable people feel about their current financial situation. Having been presented with many options ranging from macro to micro concerns, the results showed that “Having enough money” and “My health” were selected by 45% of the sample and were significantly more popular as choices than the other options presented, with Terrorism and Brexit at 33%. The research identified that people’s two main concerns for the future were their health and having sufficient money. The most likely coping mechanism should the worst happen was to ask a partner or family for support. Despite this, 64% of the sample admitted that they would be uncomfortable asking anyone for financial support and 54% suggested that they would try and seek support from other means first to avoid asking for help.
When asked how confident they were that their savings would support them for longer than 6 months in the event of a loss of income due to illness or accident, 68% of the sample expressed confidence in their savings, compared to 88% believing that insurance would offer support if needed. Insurance was the highest scoring support mechanism with the State scoring 79%.
Weekly Round-Up: 9th March 2018
Flat in Feb
According to the latest report from the Halifax, house prices continue to remain broadly flat, as they have since the end of last year. The annual rate of growth has slowed from 2.2% in January to 1.8% in February, the lowest rate of growth since March 2013.
The Lender highlighted positive trends in the labour market which continues to perform strongly with the number of people in employment rising by 88,000 in the three months to December. Notably, this is almost entirely accounted for by full-time jobs. The strength of the jobs market may finally be benefitting wage growth, with the annual growth rate accelerating from 2.3% in November to 2.8% in December. However, earnings are rising at a slower rate than consumer prices.
Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards. While The Halifax expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.
Mother’s day gift
Financial protection may not be top of the list when it comes to Mother’s Day gifts this year, but research from Scottish Widows reveals that 60% of women in the UK with dependent children have no life cover, leaving their families in a precarious situation if the worst were to happen. The research also shows that only 13% of mums have a critical illness policy, leaving many more at risk of financial hardship if they were to become seriously ill.
Three in ten (31%) mums admit their household would be placed at financial risk if they lost their income due to unforeseen circumstances. One in four (25%) claim they could only pay their mortgage for a maximum of three months, while two fifths (39%) say they would have to use their savings to pay for such adverse circumstances. The research also suggests that many mothers are underestimating the value of their role within the household. Almost a quarter (24%) say that they’ve not taken out life insurance because it’s not a financial priority or they don’t think they need it. And 7% of mums without critical illness cover say they’d rather take the risk of not having it than take out a policy.
However, on top of any day jobs, mums spend almost 23 hours a week on childcare and chores such as school runs and housework – tasks which they believe their families could not afford to pay for should the worst happen to them. Three fifths (61%) of women with dependent children also say their household would struggle to complete everyday responsibilities or pay household bills if they were to fall ill or pass away.
Lack of planning is leaving many families in a vulnerable position. When asked how they’d cope should they or their partner not be able to work for six months, three in ten (29%) mothers say they’d rely only on state benefits. And more than half (57%) don’t have the protection of a will or guardianship arrangement in place for their families. With a new Bereavement Support Payment system now in place, which may result in a significant reduction in the period over which support will be available, it’s more important than ever for mothers to review their financial protection needs. This is especially the case for cohabitees, who still don’t qualify for bereavement benefits.
First-Time Sellers see potential interest rate rises as their biggest challenge to moving up the property ladder – according to Lloyds Bank’s annual Second Stepper report, which tracks the challenges faced by First-Time Sellers. The report reveals one in three (35%) of these households believe it will be more difficult to sell their home this year, with worries over the economy, the size of the deposit they’ll need and a shortage of family-friendly properties.
Second Steppers are mostly couples and young families moving on from their first-time buyer homes to secure more space and a garden who typically bought their first property in 2014, when the average price of a First-Time home stood at £167,137. Based on the latest house prices figures, selling their home for the average First-Time Buyer house price of £211,296 would provide them with an average equity injection of £85,877 for their next home. That’s grown from £68,629 four years ago.
The gap between the sale of their current property and the cost of their perfect home – usually a detached property – is now £135,985. However, the average equity level of £85,877 can help reduce this gap by 63%, meaning that Second Steppers need only add an extra £50,108 to their existing mortgage. However, across the country, there are significant regional variations in the size of this gap. In Northern Ireland, people will need to find £73,499 extra to make the step to their desired second home. At the other end of the scale, people in London need £330,599 to make the jump.
Just over a third of Second Steppers (35%) think it will be harder to sell their existing property this year than it would have been a year ago. In addition, over a quarter (29%) are worried about the uncertain economic climate, deposit size remains a key challenge (30%) and around one in four (26%) are struggling to find the right property to move to. Getting handy with home improvements is a solution for many Second Steppers if they can’t sell their current home – increasing from 34% in 2016 to 40% in 2017.
The report also reveals some optimism. Two out of five (40%) believe the market conditions for Second Steppers has improved compared to last year and 52% feel there are now more First-Time Buyers in the market, up from 43% in 2016. Over half (52%) also think the stamp duty changes announced in the Budget last year will increase the number of First-Time Buyers entering the market even further.
When looking for their ideal home, Second Stepper’s ‘must haves’ include a driveway or off-road parking (61%), a garden (59%) and a kitchen/diner (56%). Almost two thirds (64%) of Second Steppers have regrets about their first property purchase, with over a third wishing they had bought a bigger property. Just over one in 10 admit that they rushed to get on the property ladder and bought their first home without looking at the details.
5 a day
Millennials are adopting unhealthy habits to keep their weight down, with more than half of UK adults aged 25-34 (51%) skipping meals, analysis from Aviva’s Wellbeing Report shows. Cutting out meals is marginally more common amongst men in this age group: 54% compared to 50% of women aged 25-34.
When it comes to their diet, millennials are willing to sacrifice their health and wellbeing for social purposes, with two in five (42%) saying they starve themselves before an evening out. Close to half (49%) also admit they would rather look good than have a healthy diet. Millennials were found to eat just two pieces of fruit or vegetables per day – less than the national average of three pieces, according to Aviva’s data. Fewer than one in five (17%) manage to eat their ‘five a day’, behind the national average of 21% across all age groups.
In contrast, they were most likely to have a diet made up of unhealthy snacks, with two in five (41%) snacking on treats such as chocolate or crisps at least once a day and nearly more than half (57%) stating they sometimes eat ‘naughty’ foods in secret. Many millennials have excuses at the ready however, with three quarters (77%) saying they find healthier foods too expensive and half (51%) saying they are too busy to prepare healthy meals.
Weekly Round-Up: 2nd March 2018
Credit card charged
The Financial Conduct Authority (FCA) has this week published its final policy statement on new rules for the credit card market. The FCA estimates the changes will save consumers between £310 million and £1.3 billion a year in lower interest charges. The new rules are now in force, but firms have until 1 September 2018 to comply. The changes will provide more protection for credit card customers in persistent debt or at risk of financial difficulties. The changes are being introduced following a comprehensive study of the credit card market. The study analysed the accounts of 34 million credit card customers over a period of five years, and surveyed almost 40,000 consumers.
Figures show that customers in persistent debt pay on average around £2.50 in interest and charges for every £1 that they repay of their borrowing. There are a total of 4 million accounts in persistent debt and firms have few incentives to help these customers because they are profitable. Under these new rules firms will be required to take a series of escalating steps to help customers who are making low repayments over a long period, beginning when the customer has been in persistent debt over 18 months. After this time firms need to contact customers prompting them to change their repayment and informing them their card may ultimately be suspended if they do not change their repayment pattern.
Once a consumer has been in persistent debt for 36 months, their provider will have to offer them a way to repay their balance in a reasonable period. If they are unable to repay the firm must show the customer forbearance. This may include reducing, waiving or cancelling any interest, fees or charges. Firms who do not comply with the new rules could be subject to action by the FCA.
Credit card firms have also agreed to voluntary measures, which will give customers control over increases to their credit limit. Under the measures agreed by credit card firms customers can opt-out from receiving automatic credit limit increases. Customers in persistent debt for 12 months will not be offered credit limit increases, this should result in around 1.4m accounts per year not receiving such offers.
Pay back time
According to the latest figures published by UK Finance, Gross mortgage lending in January is estimated to have been £21.9bn, 9.7 per cent more than a year earlier. Card spending was 5.8 per cent higher than in January 2017, although higher repayment levels meant that the pace of borrowing saw little change, growing at 4.8 per cent annually. Meanwhile UK businesses’ deposits grew by 7 per cent in the past 12 months, while borrowing over the same period contracted slightly by 1.4 per cent. Within business sectors, manufacturers’ borrowing expanded modestly, while construction and property-related sectors contracted.
Higher levels of repayments on credit cards is expected at this time of year as customers pay off their festive spending, meanwhile, households were careful with their outgoings as wage growth remains below the inflation rate. The increase in gross mortgage lending of almost 10 per cent compared to the same period last year, and higher than the monthly average, was a direct result of customers who took advantage of mortgage deals on offer at the end of 2017.
UK Finance suggest that business sentiment remains positive with confidence in short term trading conditions buoyed by the recovery in international markets. Investment levels remain broadly unchanged and borrowing continues to err on the side of caution, as companies adopt a ‘wait and see’ attitude to trading uncertainties, opting to use their deposits as buffers for spending decisions.
Are we content?
The jaw-dropping value of possessions owned by the UK’s 27 million households, and the amount that is uninsured is laid bare this week by the Association of British Insurers. The value of the UK’s household contents is now nudging towards £1 trillion (one million million: £1,000,000,000,000), with the value of possessions owned by all UK households now worth £950 billion – that is more than central government’s entire spending last year (£675 billion), more than the combined value of all homes in Scotland, Wales and Northern Ireland (£630 billion) and eleven times greater than the wealth of the world’s richest man – Jeff Bezos, founder of Amazon (£84 billion). And if you remember back to the financial crisis of 2008, its greater than the Government bail out of the banks (£850 billion).
Worryingly, with over a quarter (28%) of households without home contents insurance, this could leave £266 billion worth of possessions uninsured against risks such as theft, fire, flooding and accidental damage. This despite the fact that the average cost of home contents insurance, at £141 a year, works out at less than £3 a week, with the weekly cost of a combined buildings and contents policy less than £6 a week.
I will survive
According to the latest Office for National Statistics data, in England as a whole, 1-year survival estimates for cancer patients were above 75% and 5-year survival estimates were above 50% for the majority of cancer sites, with the exception of cancer of the lung, oesophagus and stomach. The highest 1-year and 5-year survival estimates in England, from the 14 cancer sites observed, were in prostate cancer for men (96.3% and 88.3%, respectively) and in breast cancer for women (95.6% and 86.0%, respectively) diagnosed between 2011 and 2015.
For the 10 cancer sites recorded for both sexes, 1-year cancer survival is generally higher in men than in women, except for kidney cancer, lung cancer and non-Hodgkin lymphoma. Kidney cancer survival for both men and women was the same at 76.6%. Lung cancer survival was 35.4% for men compare with 42.0% for women, while non-Hodgkin lymphoma survival was 78.0% for men and 80.5% for women. For lung cancer, this can be attributed to difference in cigarette consumption between men and women as discussed in Cancer Registration Statistics, England: 2015.
The largest difference in 1-year survival between men and women was for bladder cancer (13.1 percentage points): at 78.7% for men and 65.6% for women. This sex difference in bladder cancer survival has been reported worldwide and a number of reasons such as tumour biology, sex hormones and earlier diagnosis in men have been suggested to explain the difference.