All posts by Mark Scott

About Mark Scott

Is the Company Director of Swift Money Limited. He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

New Report Warns Average UK Family Will Be 15k In Debt By 2020.

New Report Warns Average UK Family Will Be 15k In Debt By 2020.

A recent TUC (Trades Union Congress) report shows that the average UK family will be £15k in debt by the year 2020. The shocking report revealed that UK households are heavily dependent on credit cards and payday loans. Unsecured debt per household expected to hit £13,900 by the end of 2017. The TUC reports that Britain is in a living standards crisis given that millions of families in the UK use credit cards and payday loans to pay for essentials. According to the report, UK households are ”running on empty”.

Back in 2016, unsecured debt per UK family stood at £13,200 which is the highest ever unsecured debt figure since Britain and the world at large was hit by the financial crisis. The figure is only a small margin below the £13,300 peak in 2007. The report highlights unsecured debt as debt from; payday loans, credit cards, store cards, car loans, bank loans and student loans (mortgage payments are excluded). The TUC report blames the low investment and low wages for the debt crisis and stresses that these difficulties have to be solved by the next government if we expect the average debt per household to reduce.

UK wages are still below the pre-financial crisis level by approximately £20 a month. This simply shows that it has taken more than a decade for UK wages to recover fully. What’s more shocking is; official figures indicate that real wages have begun falling again. The TUC report believes that the increasing level of household debt in the UK should be the most important concern for political parties and the next government given the UK economy heavily relies on household spending to sustain growth.

Consumer spending has skyrocketed in the past eight years. One notable segment is the amount of money Britons borrow to buy new cars every year. The figure currently stands £30 billion. This is against the official government debt figure of £1.7 trillion whose interest payments demand £10 million monthly as of April 2017. The savings ratio has also reached a record low. The latest figures show that the ratio of income to savings in the UK stands at just 3.3%.

The UK household debt crisis looks worse from a legal perspective given County Court judgments relating to consumer debt have risen to 35 percent in England and Wales. The debt crisis has also attracted the attention of the Bank of England which has currently launched an investigation on unsecured lending to UK households.

According to the TUC General Secretary, Frances O’Grady, the increasing household debt is pushing Britain’s economy into a danger zone. O’Grady attributes the problems to the fact that UK wages haven’t recovered fully since the financial crisis forcing families to rely on payday loans and credit cards to cater for household bills. She stresses that the next government needs to act urgently to increase the minimum wage as well as end pay restriction affecting public servants like firefighters, nurses and midwives otherwise economic growth won’t be sustainable.

According to O’Grady, the next government must do more for many parts of Britain where good jobs are minimal or non-existent. She argues that communities lacking well-paying jobs have an opportunity to thrive in the future if the government invests adequately in training, broadband, transport links and decent housing.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Summary of the UK Payday Lending Market Investigation by the Competition Market Authority (CMA)

Summary of the UK Payday Lending Market Investigation by the Competition Market Authority (CMA)

Just recently, the Competition Market Authority (CMA) conducted a payday lending market investigation. Below is a summary of the findings as well as recommendations.

Overview

According to the CMA investigation, the average size of a payday loan in the UK stands at £260 and almost all loans are £1000 or less in value. The loans vary depending on repayment terms with most loans repayable in a month or less with a single instalment.

The average term of most payday loans in the UK is just over 21 days or three weeks.
In terms of growth, the UK payday loan industry grew the fastest from 2008-2012. During this period, payday loan lenders we issuing approximately 10.2 million loans per year valued at approximately £2.8 billion. Growth has been reducing since then. In 2013 for instance, payday loan industry revenues dropped by 5%. The market also contracted in 2014 with the number of new loans falling by approximately 27% between January and September 2014.

The year 2014 saw four out eleven major payday loan lenders, as well as many small lenders, stop offering payday loans. The market hasn’t recovered since following the introduction of Price Cap Regulation in January 2015 which saw many payday lenders unable to operate profitably under the new regulation.

In-depth CMA findings

The CMA payday lending market investigation reveals a lot of information on various aspects of the industry. Here’s what you need to know;

1. Payday loan usage/no. Of loans taken per customer

According to the CMA report, most payday loan customers take out many payday loans over time with the average lender taking out approximately six loans every year. In regards to borrowers’ lender preferences, most borrowers use two or more lenders.

2. Online vs. high street borrowing

In regards to loan platforms, most payday loan customers today prefer taking out loans online i.e. 83% vs. 29% who take out loans on the high street. 12% of all payday loan users borrow using both channels today. On amount, borrowers borrow more online i.e. £290 compared to the high street £180.

3. Borrower loan application assessment

Most payday lenders today have developed computerised risk models that help them conduct thorough assessments on their client’s credit worthiness as well as their ability to repay the loan successfully. Borrower assessment has been and is still part of every lender’s loan application process. The sophistication of risk models, however, varies from one lender to another. In regards to loan application success, the number of loan applications turned down was above 50% for most of the major lenders back in 2012. The figure continues to rise to date as lenders become more cautious in the wake of the new FCA regulations.

4. Payday loan customer profile

The CMA investigation shows that the typical online payday loan customer in the UK has an average income of £16,500 while high street borrowers have an average income of £13,400. In general, most people who have been using (and are still using payday loans) in the UK earn less than the average income in the UK which stands at £17,500.
In regards to gender and occupation, most payday loan customers in the UK are male working in full-time jobs. They also happen to be younger (than average) and living in larger households.

Most payday loan customers also happen to have experienced financial problems in the recent past. According to the CMA investigation, 38% of all payday loan customers have a bad credit score/rating while 10% have been visited by a debt collector or bailiff. In a nutshell, 52% of payday loan customers have faced some debt problems in the near past. The number of people who repay their payday loans in full has also decreased over time.

It’s also worth noting that most payday loans are taken on Fridays at the beginning or end of the month. Most borrowers also seem to be under some financial pressure when borrowing leaving little room for assessing other suitable credit alternatives that may be available to them. In fact, less than 50% of all payday loan borrowers shop around effectively before taking out payday loans. The typical payday loan customer is also recurring. Repeat customers account for a majority of payday loan business. Most borrowers also take loans from multiple lenders mainly because of problems with existing lenders i.e. late repayment, outstanding loan/s, etc.

5. Payday loan usage

In regards to usage, most payday loan consumers (53%) use payday loans to cater for living expenses like utility bills and groceries. 10% take payday loans to pay for vehicle/car related expenses while 7% take payday loans to pay for general shopping such as clothes and household items. Only 52% of payday loan consumers use payday loans to pay for emergency-related expenses. This is despite the fact that payday loans are actually meant for catering for emergency expenses.

Recommendations

The CMA investigation reveals some difficulties in the industry which need to be addressed. Luckily, the CMA has given recommendations for dealing with these problems. Here’s what needs to be done;

1. There is a need to boost the effectiveness of price comparison websites

Most payday loan customers don’t have the luxury of choice when taking out loans as revealed in the investigation. Since borrowers take loans under duress, better price comparison websites can help borrowers shop for loans more effectively regardless of the time constraints or other problems present when taking out loans.
Better price comparison websites will also create a perfect environment for competition which will, in turn, result in better payday loans in every regard from the pricing/fees/charges to variety. Existing price comparison websites have numerous limitations that make it impossible for payday loan customers to make accurate comparisons.

2. More transparency on late fees/overall cost of borrowing

The CMA also feels there is a need for more transparency on fees charged in the industry by different lenders. The Authority believes the FCA needs to take more action to ensure all lenders have a legal obligation to disclose all their fees/charges on previous loans clearly to allow effective cost analysis.

3. Cooperation between the FCA, payday lenders, credit reference agencies and authorised price comparison websites

The CMA also feels the FCA must cooperate with all industry players more so lenders, credit reference agencies, and price comparison websites to improve payday loan borrower abilities to search the payday loan market extensively without compromising their credit history.

4. Real-time data sharing

There is also a need for real-time data sharing according to the CMA. Such efforts will benefit both borrowers and lenders. When lenders are able to get real-time access to their clients’ credit information, they will be in a position to do better borrower assessment and in turn, avail the best possible terms.

5. Increased transparency on the role of third parties like lead generators

The CMA also feels there should be more transparency on the role played by third parties like lead generators, affiliates, brokers, etc. since most of them pose as actual lenders when that’s not the case. The CMA stresses the need for the FCA to do more to make sure borrowers know upfront if they are applying for loans directly or indirectly. This move will reduce instances of erroneous expectations since most third parties tend to overpromise or provide inaccurate information.

Summary

The UK payday loan industry is far from its peak in 2012. The number of payday lenders has reduced following the introduction of the price cap regulation by the FCA. Lenders have also become stricter today. Unscrupulous lenders may have reduced, but borrowers remain vulnerable even after the new regulation since most of them borrow under pressure. There is hardly any time to compare payday loan lenders effectively, and price comparison websites are doing very little to help. This explains why the CMA is calling for better price comparison websites among other recommendations like transparency on fees, real-time data sharing and cooperation between the regulator, lenders, credit rating agencies and price comparison websites. Third parties also need to be more transparent when promoting lenders to ensure payday loan customers make the best possible decisions when taking out loans.

Financial education is also important to reduce over reliance on short-term credit to cater for living and emergency expenses. Financial education is bound to improve the customer profile of the typical payday loan user.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
How Has The UK Short Term Credit Market Been Revolutionised by The 2015 FCA Price Cap Regulation?

How Has The UK Short Term Credit Market Been Revolutionised by The 2015 FCA Price Cap Regulation?

Since the FCA introduced price cap regulation back in 2015, there have been changes in the short-term credit market.

The latest Social Market Foundation (SMF) report commissioned by the CFA (Consumer Finance Association) offers the latest assessment on the impact of price cap regulation on the short-term credit market in the UK with a special focus on cost as well as access to loans. The report contains information gathered from industry data as well as short-term credit consumers in the UK.

Considering 6.8 million UK households still live below the poverty line, a significant number of UK households rely on credit. Changing employment and work patterns as well as state benefit changes have also resulted in income instability which has, in turn, increased dependence on credit. Rising inflation and housing costs have also increased the need for short-term credit in the UK.

Let’s not forget the poor saving habits in the UK. A previous SMF research study shows that 40% of UK citizens have less than a week’s worth of income as savings. With this in mind, the health of the UK short-term credit market can’t be overlooked since most people with financial difficulties turn to short-term loans. Considering the FCA price cap regulation is the latest and most significant UK credit market event, how is the market now?

What has changed?

1. Cost of loans

According to the latest SMF report commissioned by the CFA and produced independently by the SMF, the cost of loans has fallen significantly. The latest industry data shows that the cost of loans has reduced by from 1.3% (in 2013) to 0.7% currently. In a nutshell, loans cost less now. It gets better! Loans are cheaper than the 0.8% initial cost cap set by the FCA which is an indication of healthy competition in the industry.

2. Default fees

Industry data also shows that default fees have fallen. The proportion of short-term loan on which borrowers pay additional over and above contractual interest has halved from 16% back in 2013 to 8% currently. In cases where loans are subject to default fees, the total amount of fees including interest charged after default has dropped from £45 to £24. However, concerns linger on whether the fees are still high considering they represent approximately 10% of the value of most short-term loans taken in the UK.

3. Borrower perceptions and experiences

According to the latest SMF survey, consumer perceptions have improved on affordability. Consumers are of the notion that short-term loans have become affordable. 56% of recent borrowers agree that short term loans have become more affordable. Only 43% of borrowers who took out short term loans before 2015 believed they were affordable. Although there are consumers who insist that loans haven’t become affordable, a majority of such opinions can be attributed to the fact that some borrowers assess affordability based on their own ability to service loans.

In regards to experience, most people (90%) feel short term loans are the most convenient source of short-term credit today. Some concerns have however been expressed on repayment. Approximately 20% of all recent borrowers today state that they have problems repaying short-term loans as planned or in time.

4. The size of the short-term credit market (Number of loans sold)

The latest industry data shows that the number of loans sold decreased significantly over the January 2016 to April 2016 period. The loans taken during this time were 42% lower compared to the same period in 2013. Industry experts attribute the fall to a decreasing number of lenders during this period. Many short term loan lenders exited the market between January and April 2016 after finding it extremely difficult to operate in the confines of the new price cap regulation.

5. Access to loans

The FCA had predicted that the regulation would exclude some consumers from the short term credit market more so, lower income individuals. This prediction is consistent with industry figures. The SMF report suggests that access has become restricted. An SMF survey shows that consumers are of the notion that it has become harder to obtain loans. 57% of all consumers who have taken loans before and after the regulation changes state that short term loans have become more difficult to access.

The SMF survey, however, shows that only 16% of people who have tried accessing loans before the regulation, not afterwards, have been denied loans. This is against 18% who haven’t bothered to take loans after the new regulation just because they thought they wouldn’t qualify.

Many consumers still find access to loans important for essentials or avoiding other borrowing channels such as borrowing from family members and friends. According to the SMF survey, 27% of consumers risk going without essentials if they don’t get access to short-term loans. The survey also reveals that 37% of consumers are forced to pursue other credit channels such as borrowing from family and friends if they don’t access credit despite this option being the least reliable and suitable for many.

The rest are forced to cut back on spending, misappropriate funds or rely on alternative or mainstream credit which comes at a higher cost. Some customers also resort to borrowing from unlicensed lenders when they fail to secure funding from licensed short-term credit lenders.

Summary

In a nutshell, the new regulation may have reduced the cost of loans and default fees as well as improved consumer perceptions, however, access to credit has shrunk, and the hardest hit borrowers are low-income individuals. Although the regulation stops exploitation by lenders, which was a huge problem especially in the payday loan industry, some borrowers are being forced into the hands of unlicensed lenders. This is contrary to the FCA’s previous conclusion that the new regulation would be a good thing to low-income borrowers.

The price cap appears to have reduced unscrupulous lending practices among licensed lenders, but there is an increasing number of borrowers turning to unlicensed lenders giving rise to worse problems. Unscrupulous (unlicensed) lenders don’t have to work as hard as before to attract borrowers since access to short-term credit has shrunk among the lower income borrowers. Short term credit lenders in the UK have stricter affordability assessments today which have reduced the number of loans being offered to individuals who are deemed high risk.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Making Money on YouTube: Top 7 Tips

Making Money on YouTube: Top 7 Tips

There are infinite ways of earning money online today. Making videos and posting them on YouTube is arguably the most popular and profitable today. It, however, takes a lot of time and effort to make great YouTube videos capable of attracting a wide audience. To be able to make money on YouTube, you must employ concepts of Search Engine Optimization (SEO) otherwise people won’t find your videos. The videos must also be monetized which simply means you must allow Google to place ads on your videos in exchange for a small revenue. In a nutshell, making money on YouTube is all about making entertaining or useful videos that are bound to get many views attracting ad viewers in the process. For more on how you can make money on YouTube, below are some top tips to consider.

1. Set up a YouTube channel:

This is an obvious but crucial step to making money on YouTube. You need a YouTube channel that will host your videos. A YouTube channel also gives you access to many other resources that allow you to make money on YouTube.

2. Purpose to make high-quality engaging and authentic videos:

Since your ability to make money on YouTube depends on the popularity of your videos, you need to make high-quality videos which are engaging and authentic. The videos can be about anything really, but you need to focus on popular topics since your earnings highly depend on the number of views you get per video as well as the number of people watching your videos to the end.

For this reason, having a good video title isn’t enough. Your videos must be engaging for your audience to watch them to the end and even consider sharing it. The videos also need to have clear sound and quality. You also need to be the content creator otherwise you risk being banned. Copying videos and pasting them into your channel won’t earn you any money. YouTube is very strict on authenticity.

3. Don’t forget to monetise your videos:

A YouTube channel and high quality, engaging and authentic videos won’t earn you any money if you don’t monetise. As mentioned above, YouTube videos make money because of the ads that are placed in them. For YouTube to put ads in your videos, you must issue them permission to do so (this is popularly known as monetisation). Monetizing your videos is easy. Just click the monetisation tab and follow the instructions clicking the type of ads you want to appear. You should also add a preferred payment method at this stage among any other preferences.

4. Market your YouTube videos elsewhere:

To increase your chances of making money on YouTube, you should post your videos on many platforms apart from YouTube. For instance, you should market your videos on social media websites such as Facebook, Instagram, and Twitter. Remember, you make more money when your videos have a wider audience so, don’t just post your videos on YouTube and wait. Use your social media profiles, start a blog, request friends to share your videos, etc.

5. Make videos consistently:

You also need to make high quality and engaging videos as many times as possible to increase your earning potential on YouTube. YouTube channels with more videos have a higher probability of getting more views since audiences have more to see when they land on the channel. If you are successful at making good videos, your viewers are bound to watch more than one video. Ideally, you should make one video every week. You should, however, ensure you have quality content. Don’t just create videos for no reason. They have to be meaningful otherwise it won’t matter if you are consistent or not. It’s important to remember that YouTube pays more attention to highly popular videos. If your videos have many views but more dislikes than likes, your probability of earning will automatically go down.

6. Learn the basics of ranking videos on YouTube:

It’s worth noting that there are tips you can use to rank your videos higher on YouTube. First and foremost, you must use video titles with the right keywords. In essence, you should ask yourself what people looking for a video like yours are likely to search for on YouTube. This alone can help you rank your videos higher. Your video description should also have keywords. You can use online keyword tools like Google AdWords to find and choose the best keywords for your videos. Your main objective when choosing keywords is making sure your video titles and descriptions stands out from other competing videos.

Keywords aside you need to add the correct video tags and categories when uploading your video. This tip is important for ensuring your video reaches the right audience. A video that isn’t tagged appropriately won’t reach the intended audience which translates to low views and very little to no earnings.

7. Pay attention to video analytics:

This is another great way of ensuring you earn money consistently on YouTube. When you upload your first few videos, you should track the performance of each video as well as analyse the results. Tracking video analytics is important for identifying what works and what doesn’t with a high degree of accuracy. For instance, two similar videos can get different views simply because one has been optimised better than the other. Popular videos also tend to have titles that compel audiences to watch. Watching the performance of your videos will help you make better videos in the future.

Summary

Viral YouTube videos aren’t made by chance. You need a channel as well as high quality and engaging videos. You also need to monetise your videos and consider marketing them elsewhere. People who make a living off YouTube have also mastered the basics of ranking videos on YouTube. They also pay close attention to the performance of their videos and make videos consistently. You also need to focus on gaining a real audience since this is the only way of guaranteeing an audience for your future videos. There are more YouTube video money making tips to consider. However, the above seven tips are tested and proven.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
New Car Sales Drop in the UK after Vehicle Tax Increases: What You Need To Know

New Car Sales Drop in the UK after Vehicle Tax Increases: What You Need To Know

New car sales fell by 20% in the UK in April 2017. This fall is attributed to the increase in vehicle tax effective on April 1st, 2017. According to the SMMT, the significant decline in new car sales in April was attributed to car buyers bringing forward their purchases ahead to avoid the vehicle tax rate increases effective from April 1st.

Official reports indicate that only 152,076 cars were registered in the UK in April. This represented a 19.8% drop from the April 2016. What’s interesting is the new car sales drop experienced in April 2017 was preceded by a record month. In March 2017, the UK registered over 560,000 new cars.

According to analysts, new car sales are expected to drop further. The car sector should brace for tougher times ahead given the decline was unexpected. What’s more interesting is the decline has affected cars using all types of fuels with diesel cars suffering the sharpest drop of 27.3%.

Under the new VED (Vehicle Excise Duty) rules, new car buyers in the UK pay tax depending on their vehicle’s emissions for the 1st year and then incur a flat charge of £140 for both petrol and diesel vehicles. New car owners who have bought cars worth over £40,000 are expected to incur and an additional surcharge of £310.

The new VED has seen the demand for new cars in the UK fall among businesses, private buyers, and large fleets. The decrease in demand is highest among private buyers. The number of private buyers buying new cars in the UK has fallen by 28.4% to 59,912. In regards to fuel type, the number of new diesel and petrol vehicle registrations dropped by 27.3% and 13.1% respectively. The best selling cars in the UK in April 2017 were the Ford Fiesta and Nissan Qashqai which sold 4,957 and 4,430 units respectively.

According to Mike Hawes, C.E.O. of SMMT, the new VED rules effective on April 1st pushed new vehicle buyers to bring forward their purchases to March 2017 just to avoid additional costs. With that in mind, vehicle purchases were bound to drop in April 2017. According to Hawes, the new car market remains strong despite the decline. He expects the demand to stabilise in the next remaining months of the year.

The HIS Market Chief European & UK economist Howard Archer is however of a different opinion. Archer sees the decline in new car sales as a more long-term problem attributed to the current squeeze being experienced on consumer spending.

The drop in new car sales reinforces the belief that the new car industry will have a difficult time in the future given that private car sales have suffered the biggest drop in April. Private car sales have also dropped consecutively since January 2017. As the purchasing power of UK citizens declines because of high inflation, increasing household debt and stagnant wage growth, Archer believes that the spending power stands to decrease further.

Used car industry players see things differently. According to used car website (AA Cars) Director of Motoring Services, Simon Benson, the current decline in new car sales creates enormous opportunities for used car companies. Benson sees more car buyers in the UK preferring used cars creating a boom in the used car market. Although the decline in new car sales was anticipated in April, the sharp drop-off caught most industry players by surprise.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Maternity Pay in the UK: How Does it Compare Worldwide?

Maternity Pay in the UK: How Does it Compare Worldwide?

The Trades Union Congress (TUC) deems maternity pay decent if it is equal to at least 66.67% of a woman’s earnings before maternity or more than £840 monthly. In this regard, British maternity pay ranks very poorly in Europe and among other developed countries.
A recent TUC report shows that British mothers get just one and a half months worth of decent maternity pay during their maternity leave. This ranks Britain third worst in the entire euro zone in regards to paternal benefits. The most recent TUC report shows that British mothers are only ahead of Ireland and Slovakia in regards to paternal benefits.

Under current UK laws, women can take 12 months of maternity leave. In such a case, one qualifies for 39 weeks of paid leave. For the first six weeks, mothers are entitled to 90% of their current salary. Their entitlement then drops significantly to approximately £140 a week which is way below Britain’s minimum wage according to Trades Union Congress.
The below average maternity pay has forced many UK mothers back to work earlier than is recommended just to make ends meet. This is according to the TUC General Secretary, Frances O’Grady. O’Grady states that Britain is in the ”relegation zone” in regards to reasonably paid maternity leave.

While UK mothers struggle to survive on minuscule maternity pay, go back to work a few weeks after giving birth or consider surviving on short-term debt like payday loans, their counterparts in Croatia enjoy six months of decently-paid maternity leave according to the TUC. Croatia has the best parental benefits. Hungary follows closely with over 5.5 months of decently-paid maternity leave.

The Czech Republic and Poland rank third and fourth in the list of countries with the best maternity pay. Estonia, Italy, and Spain have all tied in the fifth spot with 3.7 months of decently-paid maternity leave each.

What’s more interesting is UK mothers are below their Bulgaria counterparts regardless of the fact that Bulgaria is among the poorest countries in Eastern Europe. Mothers in Bulgaria are entitled to 410 days of paid maternity leave according to statistics from the OECD. It gets better. The pay is approximately 90% of a mother’s gross salary, and there is an option for mothers to take another year off with their pay matching the minimum wage. The maternity leave is also transferable to the father or guardians such as grandparents who are still part of the working population.

Greece is also ahead of the UK in regards to maternity leave with 43 weeks of paid leave equivalent to over 50% of mother’s average earnings. Although the minimum wage in Greece has fallen due to austerity measures imposed in the past, mothers in Greece are still better off.

Mothers in Germany enjoy 14 weeks of fully-paid leave. The same applies to mothers in Austria, France, and Spain. According to OECD statistics, Ireland offers 42 weeks maternity leave, 26 of which are paid (flat rate of 230 Euros per week).

The United States doesn’t warrant paid maternity leave. However, companies which employ more than 50 people must provide three months of unpaid job-protected leave. Some states like New Jersey, California Rhode Island guarantee paid maternity leave. Most medium-sized and large companies in the U.S. also offer paid leave which usually matches the wages of the mother and lasts for three months.

What should be done?

According to the TUC, the UK government needs to increase the statutory maternity pay as well as maternity allowance to match the minimum wage so that UK mothers can enjoy decent paternal benefits. Such a move would also ensure UK mothers go back to work when they are healthy and ready. The TUC has also urged the UK government to boost the shared parental pay as well as paternity pay.

The national trade union believes money shouldn’t be the main factor for UK mothers looking to decide who should look after their newborn. With the current maternity pay way below the minimum wage, UK mothers have no choice but to choose work over their newborns or take up short-term loans to survive maternity.

A recent research study done by comparethemarket.com indicates that UK mothers spend at least £184 per week on their newborns. The research study surveyed 1500 new as well as expectant mothers/parents. According to Jody Coughlan, the Head of life insurance at comparethemarket.com (a price comparison website), the UK government’s statutory maternity pay of £139.58 weekly leaves parents with a deficit of £44.44 a week which translates to £2,310 a year. According to Mr. Coughlan, this figure doesn’t even consider other bills faced by households such as energy bills and monthly mortgage repayments.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
Car Insurance in the UK Could Rise as Much as 1k after Government Changes

Car Insurance in the UK Could Rise as Much as 1k after Government Changes

Many Britons, more so young people could be unable to afford cars in the future after insurers warned of higher annual premiums. The Association of British Insurers (ABI) puts typical cover costs at £462 and projects a yearly increase of 8% due to tax hikes and whiplash claims. This may see annual car insurance premiums in Britain increase to £1,000.
Elderly drivers haven’t been spared either. Drivers aged 65 years and above face an additional £300 charge. The typical comprehensive motor insurance policy premium in Britain also stands to increase by approximately £75 yearly to cater for the changes the UK government has made on personal injury payouts.

Although the changes favour victims of car crashes and medical negligence among other related car insurance incidents, the move puts more pressure on insurers, the National Health Service and other public bodies charged with the responsibility of paying the increased claims. According to Justice Secretary, Liz Truss, the changes have significant implications on both the private and public sector.

According to Mohammad Khan who is the Head of General Insurance at PwC, the changes will increase costs for drivers in the UK. Motor insurance prices are bound to increase. Khan also sees an increase in commercial insurance rates applicable to small businesses. Following the government changes, there is an anticipated increase of £50 to £75 in the cost of comprehensive insurance with the increase for both young and old drivers reaching £1,000 and £300 respectively.

According to Khan, the announcement, as well as the increase in IPT (Insurance Premium Tax), makes any prior savings enjoyed on premiums redundant. The government’s personal injury reforms were anticipated to offer an average savings of £40 for every motor insurance policy. Khan sees significant increases in the price of insurance for young and old drivers despite the fact that the increasing competitiveness in the insurance industry is expected to offer better prices.

Reinsurance prices are also expected to go up for liability and motor reinsurance covers. This will see most companies become over dependent on lower-level reinsurance companies whose cost of doing business is bound to increase after renewing their reinsurance.

Discount rate falls from 2.5% to -0.75% as of 20th March 2017

The discount rate had remained the same since 2001. When victims of serious car injuries accept compensation payments in a lump sum, the actual payment received is adjusted to account for the interest the amount is expected to earn after being invested.
Claimants have to be treated like risk-averse investors who are dependent on the amount they receive for a large part or the entire duration of their life. Compensation awarded using the discount rate is meant to put individuals in similar financial positions had they not suffered an injury, while taking into account their healthcare costs and future earnings.

The discount rate has fallen from 2.5% to -0.75% as of 20th March. Compensation payments have also increased. The effects of this decision will have a significant knock-on consequence on public services like the NHS facing large personal injury liabilities. The NHS saw its clinical negligence costs increase from £1.2 billion in 2015 to £1.5 billion in 2016 in England.

The insurance industry will also be affected significantly by the move. According to the Director General of ABI, Huw Evans, the decision to cut the discount rate from 2.5% to -0.75% is crazy and reckless. Evans sees a drastic increase in claims costs which will, in turn, increase the liability and motor premiums for countless drivers as well as business in the UK. Evans estimates that over 36 million policies will be affected just to compensate a few claimants every year.

While setting the rate, Ms. Truss who is a Justice Secretary and independent Lord Chancellor claimed she was confident she set the only legally acceptable rate. Many are however of the idea that the rate is still unfair. For instance, Liberal Democrat Leader Tim Farron feels the rate is unfair to young people who may very well be unable to afford cars as the cost of insurance rises to £1,000.

Although the UK government promises to fund the NHS Litigation Authority appropriately to cater for the changes to clinical negligence costs in hospitals as well as ensure a closer working relationship between GPs and the Department of Health, insurance costs are still expected to rise drastically. Other measures such as consultations meant to create a better framework for defenders and claimants are also expected to bear little fruit if they are not followed by serious changes.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.
A Quick Guide to Investing in Bonds

A Quick Guide to Investing in Bonds

Definition: Bonds

Bonds are simply signed agreements acknowledging a debt. Bonds are issued by governments and companies to raise capital. People who buy bonds are paid a certain amount of interest plus their capital investment at a specific date in the future. Bonds are attractive investments because they are low-risk and investors usually know how much money they will make from the onset.

Types of bonds

To be able to invest in bonds successfully, you need to understand the different types of bonds available. Bonds are classified according to the institution that issues them. Governments and companies can issue bonds. Government-issued bonds are known as government bonds while those issued by companies are known as corporate bonds.
Government bonds are less risky since the likely hood of a government failing to repay bond investors is very low. Government bonds can either be short-dated or long-dated. Short-dated government bonds tend to have the lowest returns since most people aren’t willing to wait for decades to enjoy investment returns.

Corporate bonds are riskier than government bonds since the chances of a company defaulting on its debt obligations are higher. Nevertheless, corporate bonds attract better returns than government bonds. The chances of shareholders being paid in the event of a default are also higher.

Bond investment risk grading

Before you invest in a bond, it is important for you to assess the riskiness of your investment. Luckily, bonds are graded depending on their credit risks, so it is easy to know if a bond’s credit risk is within your risk appetite. Investment grade bonds are rated from AAA to BB. These types of bonds have a favourable credit risk. Such bonds are issued by governments and big, blue-chip companies. It is important for you to understand the bond credit rating system in-depth for you to be able to choose bonds with a favourable credit risk.

Pricing

Like any other traded securities, the prices of bonds fluctuate. To be able to invest in bonds successfully you should focus on the yield which is simply the money you will make as interest. The yield and bond price are inversely correlated in that the yield goes up when the price goes down, and vice versa. Understanding this correlation will help you choose the most profitable bonds.

Investing in bonds

There are several options to consider when investing in bonds in the UK. One, you can buy bonds through a broker who is a member of the London Stock Exchange. You can also buy directly from the company issuing the bond. It is safer to go through a broker who is a member of the London Stock Exchange. The London Stock Exchange has a platform that allows retail investors to buy and sell government bonds and corporate bonds. The exchange has safeguards in place that protect investors and their investment.

Besides using brokers, you can invest in bonds in the UK via a dedicated bond fund. This option is ideal for first-time bond investors since you get access to a fund manager who will invest in bonds on your behalf while advising you accordingly. It is important to consult a bond manager when investing in bonds for the first time since bond investing can be confusing initially, and timing is a crucial factor when investing in bonds. Your ability to make money is highly dependent on when you buy/sell your bond. Furthermore, bond managers have in-depth knowledge about the bond market.

Seasoned bond investors can consider more sophisticated bond investing options such as investing in fixed income EFTs (Exchange Traded Funds) which track indices composed of different types of bonds.

Precautions

Bond investing is low-risk and very profitable in the long term. You should, however, grasp the basics first and seek the services of a bond manager to get the best out of the market without exposing yourself to unnecessary risks. The above guide covers the basics to investing in bonds in the UK. It is advisable to utilise this guide as a tool for conducting further research.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.