Credit Action News Round-up (23 September 2011)

Market turmoil hits pensions and Isas: The effect of falling share prices and annuity rates have meant that the pension income bought from retirement savings has fallen by 14% compared with the start of the year, experts say. A 65-year-old’s £100,000 pension pot would buy a retirement income that was £926 lower. Individual Savings Accounts have also been hit. According to financial information service Moneyfacts, an average shares Isa of £10,000 at the start of the year would now be worth £8,778. This represents a 12.2% fall in value.

Super-complaint filed over currency exchange fees: Watchdog Consumer Focus has issued a super-complaint to the Office of Fair Trading (OFT), arguing that UK holidaymakers are charged too much for foreign currency due to complex charges and misleading information. The complaint follows Consumer Focus research which found that customers were charged about £1bn a year for currency exchange. According to the watchdog it can cost anywhere between £10 and £30 when converting £500 into euros. The complaint highlighted complex card charges, charges for buying currency in the UK and hidden mark-ups as areas of concern. It is estimated that, collectively, UK holidaymakers take £10bn in cash abroad every year. The OFT has 90 days to respond to the super-complaint, and has said it will do so by 20 December.

BBA figures show consumers are cautious on debt: According to the British Bankers’ Association, repayments on unsecured lending outstripped new borrowing by around £100m in August. BBA statistics director David Dooks said that the figures showed that consumers were paying off existing debts rather than building new debts. However, the numbers did show a lift in lending in home loans. In August, the number of mortgages approved for house purchases increased from 75,314 in July to 78,288. This figure is up 14% from the previous year. Compared with historical levels however, lending remains subdued.

TalkTalk most complained about provider: TalkTalk has come top in a list of most complained about broadband and phone providers. According to the telecoms regulator Ofcom, this is the second quarter running that TalkTalk has topped the list as the most complained about provider. Its landline service had 0.8 complaints for every 1,000 customers and its broadband service had 0.58 complaints for every 1,000 customers. This figure does however represent a fall in the number of complaints to TalkTalk over the past year. Virgin was the least complained about provider for both phone and broadband services, receiving 0.15 complaints for every 1,000 customers in both cases.

Charges can cut 25% of a pension fund’s value: New figures from the latest Money Management Pension survey show that charges are deducting thousands of pounds from people’s private pension funds. Money Management reported that the worst case related to the Skandia plan that has a 6.3% adviser fee and a 0.5% trail commission paid to the adviser each year. With a fee-free plan, someone investing £200 a month over 25 years could expect a pension worth £157,494. With the Skandia plan it would be worth £120,050. This survey came after Legal & General’s recent notification to more than 100,000 personal pension plan investors that management charges will rise from next year.

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