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The Financial Services Authority have announced that lenders have agreed to stop automatically adding controversial payment protection insurance to quotes for loans when borrowers apply online.  This means that loan and credit card companies will no longer be able to bump up the cost of otherwise cheap loans by automatically adding the coverage of a payment protection insurance to online quotes.

Many lenders’ websites often include the payment protection insurance by using pre-ticked boxes that applicants need to un-tick if they do not want the insurance – something easily overlooked by applicants.  The Financial Services Authority has stated that this type of practice leads to many borrowers ending up purchasing payment protection insurance on personal loans and other forms of credit without making an active decision to do so.

Payment protection insurance covers repayments for a period if the borrower is unable to pay due to an accident, sickness or unemployment. Many lenders would often require this insurance to be taken on for large loans, however payment protection insurance as a product has been criticised for being overpriced and often sold to customers who would not be able to benefit from any claims.

Many firms have now agreed to change their online quote system to allow the customer to actively choose to purchase the payment protection insurance.  By allowing the customer to make an active decision they will then be able to know whether or not it is the right choice for them as well as being able to know if it applies to them.  The change that has been announced by the Financial Services Authority means that borrowers can now actively choose to buy payment protection insurances instead of it being automatically sold – or mis-sold - to them.

The Financial Services Authority is asked, again, to pay more attention to misleading advertising by financial services companies. This is the claim an MP made last Thursday.

Labour MP John McFall, chairman of the House of Commons Treasury Select Committee, said in a letter to the Financial Services Authority (FSA) that it is responsible to do more to address poor advertising practice among banks, insurers and other financial firms,

He said the FSA offered “no scrutiny and little incentive for advertisers to keep to the rules”.

The Financial Services Consumer Panel, which advises and monitors the FSA’s policies and activities, found a “worrying” level of breaches in advertising campaigns embarked on by financial firms.  The trend is followed mainly by doorstep lenders, unsecured loan lenders, credit card companies, and IVA brokers.

The Panel’s survey showed that 57 per cent of financial promotions do not comply with advertising rules.  This includes almost 80 per cent of insurance promotions and half of the mortgage and homeowner loan promotions. This translates to several thousand advertisements in the high or medium risk category each year.

The FSA had taken 12 enforcement actions against financial promotions in the last two years.  These resulted in fines of 1.5 million pounds.   It has investigated 820 cases of misleading advertising since April 2004.

“Where there’s a misleading promotion we do ask the firm to take immediate remedial action and either amend or remove that promotion, so there’s quite a lot of work going on in the background,” Abi Jones, an FSA spokeswoman, said.

She declined to comment on whether the regulator would want a relaxation in laws to allow it to name more offenders, or if it had yet responded to McFall’s letter.

McFall said the FSA should look at the Advertising Standards Authority model, which involves naming advertisers that break its rules and a clear record of its judgements, to assess whether any of its aspects would be useful in financial advertising.

As the fear of online shopping fades into the past, consumers are turning in droves to online shopping. They purchase everything from cars to secured loans, purses to insurance.

Online retailers are stealing market share from the High Street, according to experts, with  this year’s Christmas spending set to soar 40 percent.  Broadband take-up, improvements in the selection and the growing popularity of ‘social networks’ have driven Internet shopping into a multi million dollar industry.

Consumer confidence in online shopping and lifestyle changes will also boost online retailers’ sales.

James Roper, chief executive of e-tailing trade body, Interactive Media in Retail Group, said Internet shopping had become a “traditional part of Christmas” for many consumers.

Only 10 years ago, 17 million UK shoppers spent 200 million pounds online in the 10 weeks prior to Christmas. This year, 25 million people are expected to spend 7 billion pounds in the weeks leading up to Christmas. This is 4 million pounds every hour day and night.

That would represent a 40 percent increase on the 5 billion pounds spent online the same period last year and is more than double the 3.3 billion pounds recorded in 2004.

A round-table discussion among key players, Stuart Rowe, spokesman for entertainment goods e-tailer Play.com, said: “We can see, not just a good Christmas this Christmas, but real long-term growth.

“That’s going to come from the High Street. A lot of High Street players are coming online, but we see that as a positive thing.

“It’s going to grow the market, and get High Street consumers used to shopping online.

“It adds to the confidence of the online arena when you start to see brands with heritage coming online.”

Heather Hopkins, vice president of research for competitive intelligence services firm Hitwise UK, said 2 percent of online sales are coming through ‘social networks,’ such as Myspace and Bebo.  That figure will grow to 3 percent over Christmas.

This month over a million new cars will be sold bearing the new ‘56 numberplate but drivers are in danger of paying a high penalty on their insurance premiums warns MoneyExpert.com.

MoneyExpert.com have calculated the costs of drivers choosing to pay their insurance premiums by direct debit and the results are not pretty!

“Motor insurance is expensive and opting to pay by direct debit is a popular way to spread the cost,” says Sean Gardner, chief executive of MoneyExpert.com. “However, this comes at a cost - insurers argue they are making a loan to customers if they let them pay in this way.”

It seems that insurance companies are loading direct debit premiums with charges amounting to 21.5% APR on average, effectively wiping out any benefit that car buyers have gained by bartering on the forecourt.

Insurers defend their premium-loading action by claiming that this covers them for essentially ‘loaning’ the full premium amount to car drivers, but the small print says otherwise. They assert that drivers are increasing insurance companies’ risk by not paying the full amount up front but any driver defaulting on their direct debits will soon find their policy cancelled and cover withdrawn.
“Insurers have a reputation for being moneygrabbing and slow to pay out,” says Abbi Rouse of Interfinancial, the online loan brokers. “This is just another way of milking consumers, particularly those who are unable to pay the full amount before cover commences.”

With direct debit costs typically adding hundreds of pounds to an annual policy, car drivers would be wise to shop around for cover. Only 17 fully comprehensive motor insurance policies charge under 15 per cent APR for their Direct Debit payment option, leaving many charging more than the average credit card.

For car drivers who are planning on taking out a secured personal loan to fund their car purchase, including lump-sum insurance in the amount borrowed can save hundreds of pounds a year in unwanted interest payments.

“A typical personal loan is currently about 9.9% through us,” says Rouse. “By arranging to buy your car with a secured loan you benefit in many ways. Firstly, you are effectively a cash buyer when you reach the forecourt, enabling you to haggle over the price. And secondly, you can pay your insurance up front, avoiding direct debit penalties.”

Interfinancial offer great-rate personal loans, both secured and unsecured. If you are interested in secured personal loans with bad credit or unsecured tenant loans with poor credit history we are also able to help.

New research from car insurance firm Churchill has highlighted a shocking fact: most parents don’t know the rules about children’s car seats.

Churchill questioned 1572 parents and found that two thirds were unaware of new rulings coming into force on 18 September 2006. Under new UK laws from that date all children up to the age of 12 (or those under 1m 35cm/4′5″) must use some form of safety seat.

The research also highlighted a high degree of ignorance when it comes to replacing car seats. Up to 85% of parents surveyed did not realise that a car seat should be replaced if involved in an accident. Most of those questioned said that if the seat did not have any visible damage they would not replace it whilst others said that the expense would put them off buying a new one.
Luckily insurers are starting to wake up to the necessity of replacing potentially damaged car seats. Churchill and Sainsbury’s Bank are two such insurers who offer replacement car seats for those involved in accidents.

“We strongly advise against purchasing second hand seats as it’s impossible to know their history,” says Richard Clark, car insurance manager at Sainsbury’s Bank.
“Child car seats involved in accidents may look fine but there is a chance that they could be harbouring hidden faults, even a small collision can put a seat under strain. That is why we offer a new for old replacement after an accident on all comprehensive policies, and advise against the purchase of second hand child car seats.”

Each year around 30 children aged 11 or under are killed while travelling in cars and around 450 are seriously injured, according to statistics from www.childcarseats.org.uk. Sainsbury’s research in May 2006 found that over one million drivers admitted to driving with a child under seven with no form of car seat or booster.

“We urge motorists to abide by the new law and always ensure that if they have small children in their cars, they are in the appropriate seating. If they are small children, this will mean a child car seat,” says Clark.

Parents who fail to comply with the new laws could face a fine of up to £500.

~ For competitive loan rates for buying a new car, why not visit www.allaboutloans.co.uk. By taking out a lump sump personal loan you can benefit from the best forecourt deals, and leave yourself enough cash to buy a new child car seat. For more advice visit our friendly Forum.

So you want a credit card, a new savings account, or a secured loan. If you’re just shopping around, it would make sense to use an unbiased money comparison website, right? It would seem not, according to the latest news and research.

New research shows that whilst the comparison sites give a good idea of what is out there, they do not show every product on the market. Many print or offline best buy tables will show great deals which simply do not appear in the online tables. One reason is that some companies simply do not want to appear in the tables.

Many of the so-called best deals are also offered by financial service providers outside the UK, meaning they are beyond the remit of UK regulations. This does not necessarily mean that you loose out on good service, but if that company folds, you could be left in the lurch.

What you won’t see on the comparison sites are some of the finer details: some companies offer a fee reduction for holders of multiple policies. Additionally, the lack of detail on the tables means that what looks like a good deal in terms of money offers far fewer benefits than another more expensive product.

“These comparison sites are very useful,” says Abbi Rouse of Interfinancial Limited, the online loans brokers. “They give people a good idea of the products out there. But nothing beats speaking to a real person with experience of the industry.”

Another problem which comparison site users are discovering is the ‘one size fits all’ dilemma.

The sites, and indeed the service providers themselves, use differing information to calculate their premiums and rates. It is vital that clients check the small print to make sure that what they want is what they get, particularly with regards to insurance cover.

“People don’t like filling in long questionnaires, so the websites try to keep them as short as possible,” says Brian Brown at Defaqto, the product research company. “This means that a lot of assumptions are being made about the kind of product you are looking for. If these assumptions are wrong, and incorrect information is passed on to [an] insurer, you could have a worst case scenario whereby it is only after you have an accident that you discover you are not covered.”

But there are other problems relating to the comparison services, which may end up doing the customer no service at all: Financial service providers are now finding themselves pressurised to beat their competition by scoring high on the comparison site tables. With price, not service, leading the field, many providers are skimping on the service details in order to provider the lowest price.

“Companies have to play the supermarkets’ game. If they don’t produce premiums that make it into the top five, then they won’t sell any business,” says Brown. “This means we will see the increasing development of cheaper products, which cost less but offer fewer benefits. Other companies will simply withdraw, which could lead to less competition and rising prices in the future.”

So, what is the answer?

“By all means use the comparison sites to do your research,” says Rouse. “But don’t discount getting an actual quote from a broker. They have access to all the best rates and can give you a better picture of which product is right for you. If you decide to go for the cheapest, that’s your choice, but sometimes paying a little more can get you a better deal in the long run.”

Interfinancial Limited offer secured loans, unsecured loans and UK loans with bad credit. Poor credit history need not be a barrier to getting a loan. Fill in our fasttrack application form for a competitive quote. Our new online Forum offers advice and chat on loans and credit.