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Cheques – still in the post !

Unless you are a serial delayer in paying in business (in which case ultimately, what goes around comes around and you will get a reputation for being a bad payer), most businesses would prefer for cheques to be completely phased out. This was the Government’s plan but now, due to a rethink based on lobbying, the plan to abolish cheques has been reversed, and now the focus is on improving the cheque system, with consultation ongoing at the moment.

Such a rethink is long overdue. For anyone in business, the lack of certainty that a cheque will clear, coupled with the delay in being credited, causes real problems, only benefits the banks generally and is anachronistic.

Many businesses no longer use cheques, but the numbers of cheques written, albeit hugely reduced is still sizeable :-

• 1.1 billion cheques were issued in 2010
• This represent a 70% decrease since 1990

What do you think ?

Current austerity measures may only be the start

The Office for Budget Responsibility (OBR), an influential independent think tank, have advised that Britain’s austerity measures currently starting to kick in may not be enough at around £120 billion and that at least another billion of savings may be needed to safeguard against a Greece style situation, with more cuts needed well into the future.

It further advises that known future liabilities for the UK, such as pension and healthcare exceed £2 trillion, which is an incomprehensible number, but is put into context by saying that this equates to roughly £80,000.00 per household, which is a scary figure.

The OBR advises that the problem is not so much the credit crisis although this certainly does not help, but on an ongoing basis it is more to do with our ageing population.

Overall, Britain’s debt is at 60% of national income or currently around £35,000.00 per household.

Are you living in a debt hotspot ?

The Consumer Credit Counselling Service (CCCS which provides  free guidance on cosumer debt has produced an interesting map of Britain in terms of the average levels of consumer debt. The variation is not that great, with the level of debt being historically high in all regions, with an average of in the region of £20,000.00 of unsecured debt per household.

Whilst salary levels are generally higher in and around London, so are living costs and the average debt per household in the South east, in and around London, is the highest in the country.

The report can be accessed by clicking this link.

Benefits of a legal review in a  downturn

In an economic downturn business should not overlook less immediately obvious ways of improving it’s position. This should include not only focusing inwards but also outwards, for example minimising the risks of being severely damaged by the financial difficulties of business partners. As the saying goes, in 21^st century commerce, “we’re all connected”.

A good example of non-obvious ways to reduce risk, save money and possibly even spot opportunities is by reviewing your commercial agreements. The short list of possible matters to consider is just a starting point and a thorough legal audit can often be obtained rapidly and at very reasonable cost.

The review should include supply and purchase terms with key customers and suppliers. In addition, arrangements and business contracts across back-office functions, such as purchasing and outsourcing arrangements, facilities management, logistics, IT support and maintenance contracts should all be scrutinised.

How can savings be made ?

Legal methods possibly for saving money can often include :-

• Making use of forgotten clauses in existing contracts.
• Attempting to renegotiate terms, such as the price or the scope of the goods or services.
• Checking opportunities, implications, risks and rewards of possibly terminating existing contractual relationships.

Making cost savings is the aim of the exercise; it should not jeopardise or damage what may otherwise be a sound commercial relationship or lead to litigation.

More gloom … this time inflation

The battle continues to get inflation under control without raising interest rates, which in turn could have disastrous consequences for family finances and the housing market  … it seems clear that the Government is very aware of this and trying hard to keep interest rates low, but inflation continues to rise, also bad news for consumers, and for savers. It looks inevitable that rates will have to rise this year, as the latest figures show that

• The consumer price index is 4.5% higher than a year ago
• Transport costs are rising fast at 2.8% in just a single month and a whopping 9.8% in the last year.
• Month on month inflation is rising more rapidly than since records were started

Any good economists or miracle workers out there ?

Credit card interest rates highest  for 13 years.

Common sense and easier said than done, but avoid paying interest on credit cards at all costs, particularly as the latest research shows that whilst interest rates are at historic lows, interest rates on credit cards are up to 38 times higher than the base rate ! The average rate of interest on a credit card is now 19.1 %, 1.4% higher than 2 years ago.

According to Moneyfacts, who commissioned the survey, some of the highest rates charged on credit cards are the banks bailed out by taxpayers, including Royal Bank of Scotland and Halifax. Typical !

Section 75 of Consumer Credit Act – not used enough  by consumers

Many consumers are still unaware of a very valuable right under the Consumer Credit Act to hold the credit card company equally as responsible as the retailer or manufacturer for faulty goods bought for a value between £100.00 and £30,000.00 using the credit card.

This right can be particularly useful when seeking a refund and due to the fact that retailers and manufacturers often play a game of “pass the buck “ between them leading to severe frustration on the part of the consumer. A cynic might say that this is done in the knowledge that most consumers will have experienced this aggravation in the past and many will simply give up and/or not bother demanding a refund having had this experience previously.

The student complained to the FOS which has ruled in her favour with a decision that will give hope to other shoppers who face the same shoddy treatment from stores.

Sometimes the easier way to proceed for a consumer is to pursue the matter with the credit card company, obtain a refund from them by using the right under s75 of the Consumer credit Act and then leave the credit card company to fight it out with the supplier, who can then in turn fight it out with the manufacturer. Clearly, the higher the value of the item, the greater the chance that perhaps the credit card company will argue that a product can be repaired or replaced  and that there has not been a fundamental breach of contract giving the right to reject the goods entirely and no refund is required but on smaller items, they are less likely to argue the case.

Peter Shears, the Professor of Consumer Law and Policy at the University of Plymouth, said shoppers should take advantage of their rights under the Consumer Credit Act.

‘If you are buying something for over £100 and you have a credit card in one hand and cash in the other, use the card to make the purchase and then pay off the debt with the money. The fact is that you do have extra protection when using a card”.

The UK is virtually unique in offering this type of protection on credit cards because of the way the 1974 Consumer Credit Act is phrased.

Do builders have an unfair poor reputation .. or is it justified ?

Generalisation is always a bad idea. In every walk of life, every profession, there are good and bad, and there is ample advice and warnings available to enable lay people, in the digital world, to find out what they should do to sort out the wheat from the chaff. However, a survey on small building projects by consumer information group Which does little to help the reputation of builders.

Some of the more interesting findings of the survey were :-

• Many consumers don’t obtain several quotes and consequently pay over the odds
• Which found regional differences in prices in the UK, for no obvious reasons
• 2/3 of the builder quotes did not include VAT. This could be because some of them are not VAT registered but a more cynical view would be that this is a deliberate ploy to come in cheap and then add VAT at the end.

What should consumers do to protect themselves ?

• get at least 3 quotes.
• always ask for references and check them properly.
• Ask for a quote to be properly set out, with detail, in writing including expectations and timing.
• Raise the issue of VAT
• Do not pay over cash at the beginning and insist on only paying at appropriate milestones and based on satisfactory work to that point.
• insist on receipts for everything.