Credit Action News Round-up (19 October 2011)

CPI inflation matched its record high in September: The Consumer Prices Index (CPI) measure of annual inflation rose to 5.2% in September from 4.5% in the previous month. CPI was last at this level in September 2008, and has never been higher since its introduction in 1997. The Retail Prices Index (RPI), which includes mortgage interest payments, also rose from 5.2% to 5.6%. This figure represents the highest annual rate of RPI since June 1991. The Office for National Statistics (ONS), which released the data, said that increases in gas and electricity charges were the largest upward pressure on CPI. September’s CPI measure is significantly higher than the Bank of England’s target of 2%. In April 2012 the state pension and Jobseeker’s Allowance will rise with CPI instead of RPI for the first time, meaning they will increase by 5.2% from current levels.

OFT warns debt collectors against pressurising debtors online: After receiving complaints from debtors who were being pressurised online via social networking sites to pay off their loans, the Office of Fair Trading (OFT) is warning debt collectors that it could strip perpetrators of their consumer credit licences to prevent the practice. The regulator has published updated debt collection guidance which sets out standards expected of any business associated with debt recovery. A previous debt collection tactic was to put cards through letterboxes or leave phone messages which could be found by other family members. The OFT is concerned that similar tactics are being practiced through websites such as Twitter and Facebook where messages can be viewed by people other than the recipient. David Fisher, the OFT's Director of Consumer Credit, said: "In the present economic climate, with many people, including those who may be particularly vulnerable, in financial difficulties, it is crucial they are treated fairly by companies recovering their debts."

Pension reforms could create 6m new savers: Pension reforms which see all eligible employees automatically enrolled into a qualifying workplace pension scheme could mean an extra six million people start saving. A report from Standard Life, which was based on a sample of 600 employees who earn between £18,000 and £45,000 a year, showed that 58% of them said they would find it easy to save an extra £50 a month towards their pension, and that retention rates could reach 82% as long as information about the new scheme is presented “clearly and effectively”. However, the study did show that 26% of employees who have never saved into any form of pension scheme would choose to opt out. This confirms the continued need for financial education, said the report. A Department for Work and Pensions spokesman said: "It's vital that people understand these changes, so we are working with industry and consumer organisations on ensuring people know how automatic enrolment can help them save for their retirement."

Millions set to receive tax rebates: HMRC is settling outstanding discrepancies dating from 2001, meaning that around six million people are set to receive tax rebates averaging £400. The discrepancies also highlight where underpayments have been made: around 1.2 million people will receive letters informing that they owe the taxman an average of £600 each. An HMRC spokesman has explained that those affected can either have their tax code adjusted or come to an agreement with the Inland Revenue and make repayments in stages if necessary. It is estimated that the tax rebates will cost the government more than £2bn. The HMRC spokesman said: "Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch. We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.”

Sharp increase in financial product complaints to Ombudsman: The number of complaints to the Financial Ombudsman Service, excluding payment protection insurance (PPI), increased by 24% during the third quarter. According to the latest figures, the most complained about financial products included credit card accounts (11.5%), current accounts (8.5%), mortgages (5.5%) and motor insurance (4%). PPI complaints decreased from 56,025 cases between April and June 2011 to 19,259 in the three months to September, but still accounted for 38% of the total. PPI complaints upheld in favour of the consumer increased to 92% which brings up the total number of cases won by the consumer to 80%. A spokesman for the Ombudsman service said: "Though many factors can drive complaints, it may be that in the current economic climate more consumers are experiencing financial difficulties and are more willing to pursue a complaint where previously they may not have done so."

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