Talk Money

High Street banks will be allowed to discriminate in their provision of credit, dependent on age.  Currently older people find it more difficult to obtain credit due to doubts that they will live long enough to pay off the loan.
Former Bank of England executive Mike Young reviewed the Banking Code in early 2007 and recommended an end to credit companies discriminating on the basis of age.  He said:
“The guidance should be amended to ban credit rejection simply on the grounds of reaching a certain age.”
However, The British Banking Association (BBA) decided not to take this recommendation on board. Director of Retail Banking at the BBA, Eric Leenders said:
“The banks feel they should be able to make commercial decisions and take account of factors they might feel are relevant – and one of the factors could be age.”
Young’s review recommended more transparency on loans and saving products, along with more diligence from banks when selling products to people who represent a credit risk.  Consumer groups criticised the review for not taking stronger measures against matters such as bank charges.

The Bank of England’s Monetary Policy Committee is under pressure to cut interest rates today. Interest rates rose five times since August 2006, but have been unchanged since July. However, analysts expect the cost of borrowing to drop to 5.5% from 5.75%. Global Insights Howard Archer said:
“[the December 2007 rate decision] is one of the tightest calls ever”.
A key factor in a rate cut is the growth in the Libor rate, the rate at which banks lend to one another. This has led to the “credit crunch” that consumers and banks alike have suffered in the second half of 2007.

The British Bankers Association (BBA) announced new standards for Individual Voluntary Arrangements (IVAs) to help indebted people through their financial problems.
Credit providers worked together to agree industry standards for the marketing, advice and documentation associated with IVAS. The standards will be put in place by February 2008 and will make the IVA process more “streamlined”. Angela Knight, BBA Chief Executive said:
“People in debt and their creditors need to know that when an IVA is proposed it is the most appropriate solution. The standards will give [people in debt] the reassurances they need in order to make the right choice for their financial futures”.
According to Government statistics, 26,659 people were declared insolvent in England and Wales during the second quarter of 2007.

High interest rates, rising prices and slowing wage growth will make this January’s debt hangover particularly difficult.
January is the most common time for Citizens Advice to receive enquiries for loan arrears, debt arrears, credit card bills and overdrafts.  Citizens Advice is now recommending Britons to plan their spending as it prepares for a surge in post-Christmas debt enquires. With Barclaycard, Citizens Advice has set out a guide to avoid debt problems in the New Year.
Teresa Perchard, Director of Policy at Citizens Advice said:
“With a little forward planning, Christmas panic buying can be avoided.  We hope these top tips will help people take control of their money as Christmas approaches so they do not start the New Year with a debt hangover.”
Below are the top tips outlined by Citizens Advice and Barclaycard to avoid a post- Christmas debt hangover:
•    Plan early for Christmas. Be realistic and budget.
•    Do not forget everyday bills.  Remember rent, mortgage and utility bills. The consequence of missing these bills can be severe.
•    Do not bank on an overdraft. Talk to your bank first, unauthorised overdrafts are expensive.
•    Avoid shop credit offers. Stay away from buy now; pay later unless it really does work out cheaper.  Interest free credit sounds attractive, but can be hard to budget for and expensive if you miss a payment.
•    Shop around.  Find the best deal. Price comparison websites make it easy.