The Financial Ombudsman Service (FOS) has released new figures breaking down the 106,193 complaints it received in the last 6 months of 2011.

With nearly 12,000 complaints during this period, Barclays was the worst performing bank.

From 1st July to 31st December, the FOS handled 11,524 complaints about Barclays. In 84% of cases, the FOS upheld customers’ grievances. 6,975 complaints related to mis-sold PPI, whilst 3,474 related to banking and credit. The rest involved a range of products and services including investments and mortgages.

There were a total of 20,310 complaints during that period regarding the Lloyds Banking Group, which owns Lloyds TSB, Cheltenham & Gloucester, the Bank of Scotland and Halifax.

PPI complaints accounted for 46,700 cases dealt with by the FOS in the second half of 2011. This was down more than 50% on the number of complaints received in the first half of the year, but, at present, the ombudsman is receiving around 1,000 complaints every day, with this figure expected to increase. In 2012/13, the ombudsman anticipates 165,000 complaints about PPI.

Overall, 72% of PPI complaints were upheld in the second half of 2011, compared with 47% in the first half of the year. This is because the vast majority of PPI complaints are being upheld.

Chief ombudsman Natalie Ceeney indicated that whilst some banks had made an effort to resolve PPI complaints quickly and fairly, others had been less proactive, stating “we now hope to see all businesses who were involved in PPI mis-selling resolving their customer’s complaints fairly, properly and quickly.”

The latest Markit Household Finance Index survey shows that consumers are more optimistic about the economy now than at any time since April 2010. The index also shows that household finances are at their highest level since December 2010.

These trends have been attributed to falling inflation and a greater willingness amongst employers to increase wages, but consumer confidence will need to continue improving in order to drive any significant economic recovery.

The Bank of England (BoE) has already predicted that consumer spending will grow in 2012, and, along with increased mortgage lending and rising house prices, the Markit survey adds weight to the BoE’s assessment.

Markit economist Tim Moore said: “These positive developments meant that debt levels stabilised and households’ appetite for major purchases moved back to levels not seen since the VAT (sales tax) rise in January 2011,” but he also warned that “wider job market uncertainty is constraining spending even among those seeing their own situation stabilise.”

Meanwhile, a survey carried out by the Charted Institute of Personnel and Development (CIPD) showed that, in the last quarter, employers were more ready to increase employees’ pay than they have been since April 2009. Nevertheless, many continue to approach the matter with caution.

CIPD rewards advisor Charles Cotton said: “While the predicted increases in pay settlements reflects a cautious optimism among members in the private sector that the worst may now be over, uncertainty about how fast the economy will improve is acting to moderate pay forecasts.”

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The latest data from the Office for National Statistics (ONS) shows that the rate of inflation, as measured by the Consumer Prices Index (CPI), fell from 4.2% in December to 3.6% in January.

The rate of inflation according to the Retail Prices Index (RPI) fell from 4.8% to 3.9% over the same period.

The CPI rate is the lowest for 14 months, but is still considerably higher than the 2% target set by the Bank of England. The Government predicts that the rate will continue falling in 2012.

A statement released by the Treasury read: “Inflation fell significantly in January for the second month in a row, which is good news for family budgets. The Bank of England and other forecasters expect inflation to keep falling through this year, providing additional relief.”

But shadow treasury minister Owen Smith highlighted the fact that price increases from 2011 haven’t been reversed, whilst incomes “haven’t risen at all.”

Prices are actually increasing at nearly twice the rate of wages, and this is causing real difficulties for those on low incomes, and groups such as pensioners.

In a letter to the Treasury, Bank of England Governor Mervyn King wrote:

“Although inflation is now falling broadly as expected, the process of rebalancing still has a long way to go. Growth remains weak and unemployment is high.”

Some experts forecast that the CPI inflation rate will drop below 2% before the year ends, but this will be of little comfort to families, workers and retirees who are struggling at the moment.

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The deadline for filing self-assessment tax returns online is 31st January (extended until midnight on 2nd February this year due to strike action by the public sector union PCS).

If you have any self-employed income, or you have a high income from savings, and you didn’t submit your tax return for the financial year ending in April 2011 in time, you will be fined £100 by HMRC unless you have a reasonable excuse such as bereavement or theft of documents.

Figures show that 1.1 million taxpayers are facing the £100 penalty for missing the deadline. If they don’t pay after 3 months, the fine will increase by £10 a day up to a maximum of £1,600.

This is actually the lowest number of late tax returns since online filing was introduced introduced (last year it was 1.4 million, and the year before it was 1.6 million).

A record 9.45 million forms were submitted on time. Roughly 1.8 million were filed by post by 31st October, and another 7.65 million were filed online before the deadline.

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The Office of Fair Trading (OFT) is undertaking an investigation into gym membership contracts, with a number of unnamed companies set to come under the spotlight.

The watchdog decided to launch an investigation after consumers complained about lengthy contracts and the difficulty of cancelling membership and the High Court ruled that gym company Ashbourne Management had issued unfair contracts lasting as long as 3 years.

In a statement, the OFT said the investigation was still at an early stage, adding that no breaches of consumer protection legislation have yet been identified, and that conclusions on whether the law has been broken won’t be drawn until the investigation has come to an end.

Any companies that have breached these regulations, however, will be forced to modify their contracts, or face fines or legal action.

The Fitness Industry Association (FIA) represents a number of companies operating gyms and fitness clubs. The FIA chief executive, David Stalker, said his organisation was “happy to play an advisory role in this investigation process,” and insisted that FIA members place consumers “at the heart of their offering.”

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The Resolution Foundation, an independent think tank committed to improving the lives of people on low and modest incomes, has published the findings of a new study entitled The Essential Guide to Squeezed Britain.

The study analyses the situation of 10 million adults, not heavily reliant on means-tested benefits, and their 5.2 million children.

The report says that millions of families aren’t likely to see their incomes return to pre-recession levels until 2020 at the earliest, whilst the wealthy will see their earnings continue to rise (by between 4% and 10% by 2020).

Researchers used the Office for Budget Responsibility’s latest forecasts to show that if sluggish growth continues for another 8 years, the average annual disposable income of these low-to-middle earning families would be £20,200 in 2020 (a £1,700 drop from 2007).

In order for the ‘squeezed middle’ to see their incomes return to pre-recession levels by 2020, the economy would need to grow at rates not seen for nearly a decade.

Matthew Whittaker, author of the report, described a “growing inequality of earnings” and warned “it may not be just those on low and middle incomes finding themselves left behind in the next decade, but rather the majority of society.”

Liam Byrne, Labour’s welfare spokesman, will debate the implications of the report with Lib Dem MP David Laws on Monday at the Resolution Foundation offices in London.

LSL Property Services have published the findings of their latest survey into rental prices in England and Wales. The data suggests that the cost of renting fell for 2 consecutive months in November and December, after rising constantly for 10 months before that.

The average monthly rent in December was £711 – a drop of 0.8% compared with the previous month. When compared with December 2010, however, average rents had increased by 4%.

LSL also found that the number of tenants falling behind with rent had gone up as a result of festive spending – 10.7% of all rent was paid late or not paid at all by the end of December, up from 9.3% in November.

Difficulties facing landlords have also been cited by Tim Hyatt, president of the Association of Residential Letting Agents (Arla). He said:

“It is more critical than ever to take references and conduct thorough research before signing a tenancy agreement,” adding “seeking advice from a professional, licensed letting agent is the best way to ensure tenants and landlords’ rights are protected.”

Matt Hutchinson, director at Spareroom.co.uk, said that talk of a peak in rental costs may be premature, instead describing the latest data as a “temporary blip.” He stressed that “demand is still significantly outstripping supply of new rental stock,” adding that “while December was a quieter month for the rental market, January and February are typically two of the busiest months.”

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In an interview with the Daily Telegraph, Labour leader Ed Miliband has talked of a “rip-off consumer culture” that exists in Britain, and urged the Prime Minister to put a stop to ‘predatory’ practices that leave customers with a raw deal.

Miliband reserved particular criticism for companies levying disproportionate surcharges for things like holidays, banking and parking. He also suggested breaking up the big 6 energy firms and making pricing more transparent.

He has proposed that a new consumer watchdog should be setup, with responsibility for limiting fees levied on pensions, air travel and other services.

Miliband said: “In every area, you have to call time on the surcharge culture.

“Making a fair profit is important but it can’t be done in an underhand and predatory way.

“This is about power in relation to private services and how government can be on the consumer’s side. Lots of businesses recognise this. It’s part of how you build a competitive economy in the world.”
He continued: “It’s about the rules that government sets. This is a specific argument about a number of private services to the public…we’re not proposing to go back on taking the railways into private ownership but maybe in transition not enough was done to protect the public.”

Miliband said that we should follow the example of robust consumer legislation that exists in the US, and said that his proposals would actually encourage businesses to be more competitive. He added that, in the current economic climate, it is vital that all possible steps are taken to “relieve the burden” for consumers.

If the rising cost of living has put you in financial difficulties, our debt management specialists may be able to help. Give us a call or fill out our enquiry form and we’ll get back to you.

The Post Office has published its 5th annual Consumer Credit Report, which suggests that more than 12 million people will be using credit cards to pay for essential living costs this month.

This is a 2% increase from the January 2011 figures, and accounts for 36% of all credit card holders. The Post Office also found that 42% of people with credit cards plan to pay for groceries using plastic, whilst 38% expect to spend an extra £200.

10% of people relying on credit cards this month still have debts to pay off from Christmas, and 7% will be forced to pay utility bills using credit cards.

Additionally, 21% accepted they will need take better control of their finances this year if they intend to pay off their credit cards, and 6% expect their debts will leave them seriously overstretched.

Nevertheless, a third of respondents admitted planning to use credit cards to make purchases in the January sales, and nearly 25% will book a holiday on their card in an effort to beat the January blues.

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Since the collapse of Northern Rock in 2007, businesses and individuals have found obtaining credit far more difficult than it was before. After the mess that was created by the sub-prime mortgage crisis in the US, banks have become a lot stricter about who they lend to, making credit less easily available.

This year, the situation may be about to get even worse, according to the Bank of England; lenders are more concerned about the eurozone now than they were about the failure of Lehman Brothers in 2008.

The crisis in the eurozone may force banks into a more cautious position, making it harder for companies and households to borrow money.

Just this week, the European Central Bank had to take steps to support banks that have been reluctant to lend to one another.

The Bank of England has warned that: “Developments in the euro area and their impact on banks’ funding conditions would be a key determinant of credit availability over the coming quarter.”

Lenders have already reported that, in the final months of 2011, demand for loans from SMEs fell sharply. Banks anticipate this trend will continue over the next few months. In the final quarter of 2011, demand for loans amongst bigger companies remained steady, but a drop is expected in 2012 Q1.

One area where credit availability may improve is mortgages, thanks to schemes which allow lenders to offer higher loan-to-value mortgages with support from house builders. If house prices fall or the economic outlook gets worse, however, this will have an impact on mortgages.