Category Archives: Money

Tips on Household Budget Planning

Tips on Household Budget Planning

Maintaining a household budget is very important. However, it takes more than a budget to manage your finances accordingly. Let’s face it! Most budgets don’t work. The reason behind this is simple. Most budgets concentrate on typical monthly spending ignoring other small but significant expenditures like daily coffee, weekly shopping, annual holiday, etc.

Here’s a great budgeting guide to help you manage every single penny, but first things first.

Why should you budget?

The main reason for budgeting is to ensure you don’t spend more than you earn. You need to determine the amount of money you can afford to spend every month to be able to move ahead financially. Budgeting also helps you find out where your money has been going which is the first step to adjusting your spending habits/priorities.

Typical budgets fail because they underestimate the real expenditure missing costs that have a significant effect. Using broad categories when preparing a budget makes it easy to miss those small expenditures that can add up to large amounts of money every year. For instance, most people usually indicate fuel and service costs when preparing car budget sections. Very few people remember to include insurance, breakdown, and new tyre costs.

Effective household budget planning

Step 1: Gather your latest payslips and find out how much you earn

To create a manageable household budget, you need to know how much you make first. Most people earn less than they think (after tax and other deductions) which creates avenues for overspending. To avoid this, take your payslips for the last three months and establish how much money is deposited into your bank account after all applicable deductions.

Step 2: Gather all your credit card and bank statements

Before you draw up your household budget, it’s also important to get your bank/credit card statements for the last three months. This statements list all direct debits, standing orders and many other expenditures giving you an accurate picture of your spending habits. This step will help you find out how much you spend on every category such as food. Don’t forget to consider every possible expense. You can follow the paper trail to find out your actual expenditure.

Step 3: Determine your income/expenditure patterns

Once you determine how much you make and how much you spend, it’s easy to determine the correct status of your finances. At this stage, it’s extremely important, to be honest with yourself. If you spend more than you earn, you need to take drastic measures to avoid getting into a debt spiral if you are not in one already.

Step 4: Start saving painlessly

If you are spending more than you earn, you need to start cutting back on unnecessary expenses to build your savings account. This should be done painlessly otherwise it won’t work. It’s not advisable to make drastic lifestyle changes. You can start by looking at possible savings on energy bills and credit cards and then move to other saving avenues like childcare. In simple terms, don’t focus on the obvious. There are many ways to save painlessly if you look carefully.

Step 5: Draft a new budget incorporating expected savings

The reason why most initial household budgets don’t serve people well is because they don’t highlight the real income and expenses. After going through step 1 to 3, this should no longer be a problem. Incorporate the new income, expenses and expected savings.

Cutting back

If you need to cut back on your spending, focus on starting small. You can also do less every month and consider selling things you don’t really need until you start living within your means. You should also focus on cutting back on things like magazines, chocolate, cigarettes, alcohol, movies, etc. that aren’t needs.

Important household budgeting facts/tips

1. Self-discipline is key: You can prepare the best budget in the world, however, if you don’t stick to it, you won’t get far.

2. Focus on affordability: To get back on track with your finances, you must focus on the most affordable way of doing something as opposed to the cheapest way. A cheap item can still be too expensive for you, so it’s important to focus on how much you have and then plan your spending around that.

3. Set up different accounts: To budget effectively, it’s important to categorise expenses. Ideally, you need different accounts for different expenses, i.e., a mortgage account, big purchases account, holiday account and a savings/emergency account to avoid missing expenses. Your main bank account should be separate from your bills account. However, pay attention to the charges and open accounts with minimal to no charges.

4. Set up standing orders: To make your budgeting process seamless, it’s important to have standing orders to feed your different accounts. Most people overspend when they see they have a lot of money in their main account when this isn’t the case in reality.

Household budget planning is easy when you have an accurate picture of your income and expenses. Some discipline is also important as well as a seamless/painless process. Luckily, you have all the information you need now to budget successfully going forward. Don’t forget to use budgeting tools/technology to your advantage.

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.
Smart Meters - Are They Worth the Hassle?

Smart Meters – Are They Worth the Hassle?

What is a smart meter?

Smart meters are electronic devices which track as well as record electricity consumption in customer’s homes. Electric utility companies in the UK have been replacing old meters (analog meters) which require manual reading with new high-tech smart meters. The meters capture electricity consumption information automatically and then transmit this information back to electric companies. Some of their most notable benefits of smart meters are; speed and accuracy. Smart meters eliminate the need to estimate monthly electricity bills. Furthermore, there is no need for the power company to send staff to conduct home visits to take meter readings. Smart meters are expected to save homeowners money as well as reduce carbon emissions. The UK government plans to roll out smart meters this year in a 4-million pilot project. But is it worth it?

Is it worth fitting a smart meter?

According to a Public Accounts Committee report on smart meters published recently, the £11.7 billion smart meter scheme will cost every household at least £350 to install yet the same report projects a household savings of £23 per year in reduced fuel costs. What’s more interesting is the savings is dependent on a number of factors such as changed behaviour since the meters are expected to offer useful information on reducing energy costs. Households which don’t use this information prudently may not enjoy any savings.

On the other hand, energy companies have guaranteed savings of approximately £9 billion per year from getting accurate meter readings. Consumer savings aren’t guaranteed by any means. According to many industry experts such as consumer policy expert, Zoe McLeod, UK households which have already taken steps to reduce energy consumption, i.e., households which have switched to energy efficient appliances won’t enjoy significant benefits.

It’s worth noting that similar poorly executed smart meter schemes introduced in countries like Australia and the Netherlands have been rejected because they proved to be a waste of money. In Australia for instance, the Australian Energy Regulator findings showing that Australian households would endure a £61 to £149 increase in their yearly bill between years 2011 and 2015 to cater for smart meter costs sparked public outrage.

A survey carried out by British Gas also paints a negative picture. Out of 700 customers who already have smart meters, 25% expressed concerns about effectiveness after using the meters for a year. Consumer groups have also expressed concerns about the smart meter scheme with some of them (consumer group like, ”WHICH”) calling for the scheme to be stopped.

Other concerns include privacy. The DECC (Department of Energy & Climate Change) can’t guarantee the privacy of UK households which install the meters. Under current plans, UK household energy data is pulsed electronically to utility companies on an hourly basis. There are privacy concerns if third parties have access to this information which highlights daily habits, shows when there is no one in a household, etc.

There are concerns that UK households may start receiving energy offers like those received in Japan after the implementation of a similar scheme. Will UK households be receiving offers from utility companies making use of their commercial data? such as offers to get more energy efficient appliances. What are the regulations regarding the use or sale of energy consumption data?

Also, will it be easy to switch suppliers? According to WHICH energy campaigner, Jenny Driscoll, there is evidence that households may find it difficult to switch energy suppliers after installing smart meters. This information has been acquired from the early smart meter roll-out phase. If such concerns have a basis, it will obviously be unacceptable to many.

Also, there is no mechanism currently for capping energy bills if the cost of the scheme spirals out of control. There should be protections in place according to the Public Accounts Committee to protect consumers since they are expected to shoulder the £11.7 billion smart meter installation cost. There is also need to make smart meter complaints public. Currently, all the public knows is that complaints are registered with Ofgem. No complaints data has been published yet.

Verdict

Although smart meters are set to offer advantages to electricity companies in the UK, electricity users and the environment, there are obvious shortfalls like cost. UK electricity consumers must make an expensive long-term commitment under the smart meter scheme. Public perception is also an issue. There are issues around privacy and restrictions. UK households with smart meters have already expressed issues on flexibility. Smart meter issues have also been kept a secret. Before all the current smart meter concerns are addressed, including policy issues and smart meter reading verification, it may not be a good idea to fit a smart meter in your home.

 

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.
5 Important Tips to Keep You Safe From Fraud

5 Important Tips to Keep You Safe From Fraud

Cybercrime incidences have increased drastically over the past decade. According to the Financial Fraud Action UK, online fraud incidences have increased by 53% over the past year alone. The latest statics show that someone is scammed online, in the UK, every 15 seconds. Most of these cases are affecting credit and debit card users who divulge their personal/bank details online making it easier for scammers to use this information in cases of data breaches. Short term loan borrowers like payday loan borrowers have also been victims of online fraud in the UK since such loans are acquired online.

There are a few quick steps you can take to avoid being part of this shocking statistic. One, you must trust your gut feeling when selecting offers or submitting personal information online. If an offer seems dodgy or too good to be true, it probably is. Two, you should never open unsolicited emails. Lastly, keep your pin/s and passwords secret/safe. Never divulge pin/password information online. Here’s a more in-depth discussion avoiding fraudsters.

Create ”perfect” passwords

You can’t afford to use regular words or obvious number combinations as passwords today. Hackers can ”break” such passwords. You should never use obvious words as passwords, i.e. your middle name, children’s names, etc. as name passwords are the easiest to crack. The ”perfect” password today consists of; random words that are unrelated to your life. The password should also have many digits preferably six or more that are random but easy for you to remember. Stay away from birth dates. Your ”perfect” password should also include symbols such as $, #, %, etc. Ideally, the symbols should be inserted randomly between the numbers and letters/words that make up your password. Lastly, use both capital and small letters. A great example of a perfect password would be You1r7Kin9gSh88ip05$$!! You can use password testing tools to analyse the strength of your password.

Maintain unmatched social media safety/privacy

Social media has made it easy to acquire a person’s personal information without their consent. If you don’t set the appropriate security/privacy setting on all your social media accounts, you don’t have control over who views your personal information such as; your real names, date of birth, personal address, etc. which can be used to hack your online accounts. Don’t add people you don’t know to your social media profiles or disclose too much personal information on social media. Disclosing your pet’s name for instance can make your online accounts vulnerable if you have used your pet’s name as a security question.

Maintain unmatched email safety

Anyone can send you an email provided they know your email address. Considering emails are used to send viruses/malicious software, you should never open unsolicited emails as well as unknown attachments or click on links whose source can’t be verified. You should also be wary of emails sent from sources you assume to know, i.e., your bank. Many people have fallen for spear phishing in the UK where fraudsters send automated emails appearing to originate from people/institutions you know such as your bank/credit card company. If you open and click on links on such emails by mistake, change applicable passwords immediately. You should also pay attention to the email safety information your bank sends to you as well as familiarise yourself with the official email address of your bank/credit card company.

Invest in a good anti-virus software

You can save yourself from all the trouble of keeping up-to-date with the latest online scams by investing in the best anti-virus software you can get. A good anti-virus will offer you all kinds of protection online giving you a stress-free experience. Never use free anti-virus software if you use your computer to do online banking transactions among other online transactions involving sensitive personal information. Free anti-virus software offers basic protection which isn’t enough to detect and deal with threats effectively.

Don’t forget to protect your phone

You should also invest in a good Smartphone anti-virus. Smartphones have substituted personal computers and laptops. Many people make payments and submit sensitive personal information over their phones. To avoid exposing yourself to fraudsters, make sure you Smartphone has an anti-virus. You should also restrict the data/information you share with websites. It’s also advisable to disable features such as autofill and unsolicited notifications. You should also avoid performing sensitive transactions over your Smartphone. Lastly, make sure your phone has a strong password/passcode. Your personal information should not be at risk if you lose your phone.

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 Do Calendar Events Affect Our Spending

Our new infographic is here, and reveals some major home truths about the country’s spending! Do you ever feel pressure to overspend on big calendar events such as Mother’s/Father’s Day, Easter or Christmas? You might not be alone, with over half of Brits going over their intended budget! #OccasionalSpending

How Do Calendar Events Affect Our Spending
How Do Calendar Events Affect Our Spending
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.