There's been wild talk today about the price oil leaping to $150 a barrel as a result of the terrible events in Libya and problems elsewhere.
That still looks far off, but what is the connection between the price of crude oil and the the cost of filling up with petrol or diesel in the UK?
Unleaded is at a record 128.97p and diesel at a record 134.34p and they're rising.
As a ready reckoner, assuming that exchange rates remain stable, some observers would pencil in a one penny rise in the price of fuel for each $2 rise in the price of crude.
So the current price of $110 for a barrel of Brent crude could already presage a rise in the price of petrol of several pence.
At the same time the Petrol Retailers' Association warns that duty increases in the Budget, in March, could add another 5p.
What happens in the Budget is a moot point at the moment, but that could take us close to 140p for a litre of petrol.
And if crude oil puts on another $30 or more, then 150p a litre comes in sight.
As I say, this scenario still seems far off, but it's scary and there seems little doubt that our fuel prices will rise higher even if the price of crude stays where it is.
Wednesday, 23 February 2011
Clampdown on costly executors
I've heard a number of cautionary tales from distressed viewers who discovered that a family member's estate was being horribly depleted, after a bank appointee filled the job of executor.
Now, there will be less danger of inheritances being squandered on expensive executors, after four of the biggest banks said they would change they way they helped customers with their wills.
Barclays Bank, HSBC, Lloyds Banking Group and RBS Group have all voluntarily agreed to review and improve the way they sell will-writing and executor services following discussions with the Office of Fair Trading.
Costs for a professional executor to administer an estate can be high and vary considerably. For an average estate, consumers can pay between £3,000 and £9,000. Failing to shop around for executor services could be costing UK consumers around £40 million a year, according to the OFT.
The four banks have agreed that consumers making a will should not be led to believe that appointing a professional executor is essential or the norm. Also, they should not be encouraged to appoint a professional executor unless it is clearly in their best interests.
Consumers appoint executors in their wills, to administer their estates after they die. They can appoint lay executors, such as friends or family members, if they want.
Now, there will be less danger of inheritances being squandered on expensive executors, after four of the biggest banks said they would change they way they helped customers with their wills.
Barclays Bank, HSBC, Lloyds Banking Group and RBS Group have all voluntarily agreed to review and improve the way they sell will-writing and executor services following discussions with the Office of Fair Trading.
Costs for a professional executor to administer an estate can be high and vary considerably. For an average estate, consumers can pay between £3,000 and £9,000. Failing to shop around for executor services could be costing UK consumers around £40 million a year, according to the OFT.
The four banks have agreed that consumers making a will should not be led to believe that appointing a professional executor is essential or the norm. Also, they should not be encouraged to appoint a professional executor unless it is clearly in their best interests.
Consumers appoint executors in their wills, to administer their estates after they die. They can appoint lay executors, such as friends or family members, if they want.
Mortgages are shrinking
DROP IN AVERAGE MORTGAGE
The value of the average new mortgage has dropped backed to its lowest level for nearly two years, as the housing market continues to stagnate. The drop reflects falling house prices and buyers having to save up for a larger deposit.
The British Bankers Association reports that the average mortgage was £135,200 in January, down from £143,300 the month before and sharply lower than the high of over £150,000 reached over the summer.
Lenders have already said that the average house deposit for first time buyers has risen to 23% in recent months. Lenders are demanding higher downpayments and buyers are saving for longer in order to qualify for better deals.
The value of the average new mortgage has dropped backed to its lowest level for nearly two years, as the housing market continues to stagnate. The drop reflects falling house prices and buyers having to save up for a larger deposit.
The British Bankers Association reports that the average mortgage was £135,200 in January, down from £143,300 the month before and sharply lower than the high of over £150,000 reached over the summer.
Lenders have already said that the average house deposit for first time buyers has risen to 23% in recent months. Lenders are demanding higher downpayments and buyers are saving for longer in order to qualify for better deals.
Tuesday, 22 February 2011
Planning slump
Sorry, that house you were hoping to move into - it won't be built.
We haven't even applied for planning permission.
That is the worrying message from the Home Builders Federation, whose members put up eight out of ten new homes.
The latest report from the HBF says that across Britain just 33,000 homes were approved for construction in the last three months of 2010.
33,000 was 9% fewer than the previous quarter and 22% fewer than the year before.
Social housing was hardest hit with only 5,500 approvals, a new low, and a small figure considering that 5 million people are languishing on council waiting lists for homes.
It is the third successive quarterly fall. Planning permissions are being granted at less than half the rate of four years ago.
What will cause most concern is that after permission is given, typically it takes up to three years to build the home.
So, sorry you don't have a place to rest your head. You won't get one for quite some time.
We haven't even applied for planning permission.
That is the worrying message from the Home Builders Federation, whose members put up eight out of ten new homes.
The latest report from the HBF says that across Britain just 33,000 homes were approved for construction in the last three months of 2010.
33,000 was 9% fewer than the previous quarter and 22% fewer than the year before.
Social housing was hardest hit with only 5,500 approvals, a new low, and a small figure considering that 5 million people are languishing on council waiting lists for homes.
It is the third successive quarterly fall. Planning permissions are being granted at less than half the rate of four years ago.
What will cause most concern is that after permission is given, typically it takes up to three years to build the home.
So, sorry you don't have a place to rest your head. You won't get one for quite some time.
Monday, 21 February 2011
Halifax payout for 300,000 mortgage customers
Lloyds Banking Group has revealed that its Halifax subsidiary will make goodwill payments to 300,000 customers who received mortgage offers between September, 2004 and September, 2007.
It has set aside £500m for the payments, which suggests an average of nearly £1,700 per customer. Some will receive a flat rate payment of £250, others a variable payment which could run into thousands, depending on the size of the mortgage.
The payments arise from potential confusion over a guarantee that its Standard Variable Rate for mortgages rates would not rise higher than 2% above Bank of England Base Rate. Halifax later changed this mortgage cap to 3% above base rate but now admits that the wording in its documents "had the potential to cause confusion".
Halifax will be writing to 600,000 customers to establish which of them is due the money. It says they do not need to take any action.
It has set aside £500m for the payments, which suggests an average of nearly £1,700 per customer. Some will receive a flat rate payment of £250, others a variable payment which could run into thousands, depending on the size of the mortgage.
The payments arise from potential confusion over a guarantee that its Standard Variable Rate for mortgages rates would not rise higher than 2% above Bank of England Base Rate. Halifax later changed this mortgage cap to 3% above base rate but now admits that the wording in its documents "had the potential to cause confusion".
Halifax will be writing to 600,000 customers to establish which of them is due the money. It says they do not need to take any action.
Friday, 18 February 2011
Inflation figures were wrong, says Bank of England
The Bank of England has calculated that inflation was 0.3% higher per year than the figures reported by the Office for National Statistics.
The under-reporting arose during the 12 years between 1997 and 2009, according to the Bank's statisticians, implying that prices ended the period nearly 4% higher than recorded in official figures.
Higher inflation could have resulted in bigger increases in benefits, salary-linked pensions and some investments.
However, the Department for Work and Pensions has told the BBC that it would not be recalculating any payments, even if people felt they had lost out.
"Had the inflation calculation been done correctly, many final salary scheme members would now find themselves entitled to a pension around 4% higher than their actual entitlement," said John Broome Saunders, a pension expert at BDO Investment Management.
It is rare for the Office for National Statistics to come under attack from the Bank of England.
The inaccurate figures arose from measurements of clothing prices during the period, according to the Bank. Price fluctuations can be hard to track as styles change, stocks are exhausted and the shelves are refilled.
The Office for National Statistics (ONS) "picked up seasonal falls in prices during the winter and summer sales, but did not fully capture the recovery in prices after sales had finished", states the Bank's latest Inflation Report.
The study looked at clothing prices in Euro-area countries and estimated the impact on the UK's Consumer Prices Index (CPI) if more accurate clothing prices had been included.
The discrepancy was "equivalent to adding 0.3 percentage points to aggregate annual CPI inflation". The Inflation Report suggested that there would have been an even larger impact on the other headline inflation index, the RPI.
The ONS improved its methods for monitoring clothing prices last year. It increased the number of clothing lines it followed and changed the times of year that prices were checked.
"But this certainly does not mean that there were measurement errors or misreporting in the past," an ONS spokesman told the BBC.
He added that improvements were often made and the weight given to different items of shopping in the RPI or CPI were reassessed every year.
"Certain improvements will increase inflation whilst others will reduce it," he said.
It is unlikely that members of the public could reclaim any lost money or ask for an increase in pension or benefit income.
The National Association of Pension Funds pointed out that pension increases are dependent on published inflation rates, which remain as they were.
"It's a theoretical argument," explained Ros Altmann, the Director General of the Saga Group, "You would have to prove that this is the only element of inflation that needed to be changed."
The policy of the Department for Work and Pensions is that it will only change benefit rates if the official inflation figure is recalculated and republished.
A spokesperson for the DWP said: "Inflation figures are determined by the ONS who regularly do work to improve their methods of calculation. Any changes in methodology do not mean that previous inflation rates were incorrect."
How British Gas nudges you into paying more
Are we too trusting, too gullible or too stupid?
Like many businesses, British Gas doesn't much care which word describes us best. It's just keen to take advantage.
Hence the message the company is sending out to customers who were on its Websaver tariff, which is guaranteed to be 6% lower than its Standard tariff:
"We would just like to remind you that your WebSaver 5 energy tariff is coming to an end on 28 February 2011. As a result, you will be automatically transferred on to our standard gas and electricity tariff so you don’t need to do anything."
Granted, they include a link which explains how much the average Standard bill will be, though not comparing it to yours. And, later in the note, there is a link which guides you to a comparison of all their tariffs.
But why not provide the comparison up front and show that your charges will rise to fill that 6% gap?
The point is that customers really do need to do something, and fast. The obvious move would be to renew the Websaver tariff or they could shop around.
Plenty of them will put in some research to discover the best deal but, inevitably, a number of customers will not. They will end up paying more for their gas and electricity for months or even years.
And British Gas's profit margin will get a little bit fatter.
Like many businesses, British Gas doesn't much care which word describes us best. It's just keen to take advantage.
Hence the message the company is sending out to customers who were on its Websaver tariff, which is guaranteed to be 6% lower than its Standard tariff:
"We would just like to remind you that your WebSaver 5 energy tariff is coming to an end on 28 February 2011. As a result, you will be automatically transferred on to our standard gas and electricity tariff so you don’t need to do anything."
Granted, they include a link which explains how much the average Standard bill will be, though not comparing it to yours. And, later in the note, there is a link which guides you to a comparison of all their tariffs.
But why not provide the comparison up front and show that your charges will rise to fill that 6% gap?
The point is that customers really do need to do something, and fast. The obvious move would be to renew the Websaver tariff or they could shop around.
Plenty of them will put in some research to discover the best deal but, inevitably, a number of customers will not. They will end up paying more for their gas and electricity for months or even years.
And British Gas's profit margin will get a little bit fatter.
Tuesday, 15 February 2011
5% deposits for first time buyers
Grant Shapps, the housing minister, is demanding more help for first time buyers from lenders and housebuilding. Here are some of the ideas which the government likes.
Taylor Wimpey Take5
5% deposit from buyers.
Wimpey pays for insurance to reduce risk of default.
Restricted to houses only in East Midlands, East Anglia, East London.
Lowest rate 5.49% fixed for 2 years.
Lend a Hand from Lloyds
5% deposit from the buyers.
20% from parents or friends who want to help. They put up their savings as additional security but they earn 4% interest.
Same mortgage rate as people with 25% deposit
Barratt Developments unsecured loan
5% deposit from buyers.
The parents or guardians can borrow up to £50,000 from Hitachi finance at 5.4% interest paid for 12 years.
The extra money is used to top up the deposit to 20%.
The buyers qualify for a lower mortgage rate.
Taylor Wimpey Take5
5% deposit from buyers.
Wimpey pays for insurance to reduce risk of default.
Restricted to houses only in East Midlands, East Anglia, East London.
Lowest rate 5.49% fixed for 2 years.
Lend a Hand from Lloyds
5% deposit from the buyers.
20% from parents or friends who want to help. They put up their savings as additional security but they earn 4% interest.
Same mortgage rate as people with 25% deposit
Barratt Developments unsecured loan
5% deposit from buyers.
The parents or guardians can borrow up to £50,000 from Hitachi finance at 5.4% interest paid for 12 years.
The extra money is used to top up the deposit to 20%.
The buyers qualify for a lower mortgage rate.
Monday, 14 February 2011
How can a gold dealer raise its offer by 50%?
The Office of Fair Trading is clamping down on companies which offer cash for your gold. Here's an example.
Mark Turner was tempted by an advert from Postal Gold, in which the firm promised to send him money in exchange for his unwanted gold jewellery.
To check the prices he had been given, we took him to a London jeweller who looked back at gold values when Mark struck his deal more than a year ago.
His haul added up to 32g, for which he was offered £106. The jeweller said he would have paid £224.
In fact, Mark hadn't been satisfied with the initial quote. He complained and Postal Gold reacted by upping its offer to £160.
"It was astounding," he said. If they could increase the price by so much, what were they doing with the first quote?
His girlfriend's spare gold weighed in at 36g, for which they were offered £71. Our jeweller said his price would have been £252.
A year ago, when he phoned to ask for more, the price rose to £109, another 50% jump. Postal Gold told him they had "reduced their fee" to improve the prices.
Mark Turner's opinion now is that a fee of that size is "unacceptable". But all those months ago, he needed the money so he agreed to sell.
He rues the day.
"Be incredibly careful," he warns. And, if possible, get a second opinion.
Mark Turner was tempted by an advert from Postal Gold, in which the firm promised to send him money in exchange for his unwanted gold jewellery.
To check the prices he had been given, we took him to a London jeweller who looked back at gold values when Mark struck his deal more than a year ago.
His haul added up to 32g, for which he was offered £106. The jeweller said he would have paid £224.
In fact, Mark hadn't been satisfied with the initial quote. He complained and Postal Gold reacted by upping its offer to £160.
"It was astounding," he said. If they could increase the price by so much, what were they doing with the first quote?
His girlfriend's spare gold weighed in at 36g, for which they were offered £71. Our jeweller said his price would have been £252.
A year ago, when he phoned to ask for more, the price rose to £109, another 50% jump. Postal Gold told him they had "reduced their fee" to improve the prices.
Mark Turner's opinion now is that a fee of that size is "unacceptable". But all those months ago, he needed the money so he agreed to sell.
He rues the day.
"Be incredibly careful," he warns. And, if possible, get a second opinion.
Saturday, 12 February 2011
What is a U-turn?
The Treasury is adamant that it has not executed a U-turn in deciding to extend support for 500 specialist debt advisers.
This comes after the decision to axe the Financial Inclusion Fund which paid for the advisers across England and Wales, followed by an announcement this morning that £27m had, after all, been found to keep the service going for another year.
The Treasury told me last night: "The reason we haven't made an announcement until now about the funding we were always going to provide is because it was important to get it right". (See my report.)
What happened was that the Financial Secretary, Mark Hoban, said on 19th January this year in a written answer in parliament:
"The Financial Inclusion Fund will close at the end of March this year. The Government will work closely with industry and other stakeholders to ensure that tackling financial inclusion remains a high priority".
Ministers allowed a situation to arise in which the debt advisers were sent their redundancy letters, then stopped taking on new cases, as I reported at the beginning of this month.
There was a spate of campaigning by charities and MPs, pointing out that cutting debt advice when debt problems were expected to increase was a questionable policy. And there was a Westminster Hall debate.
So the advisers were preparing for life on the dole, the service was disrupted and winding down, and frantic lobbying was taking place.
During these weeks there were plenty of opportunities for ministers to give the reassurance that they were "always going to provide" the funding. But it wasn't given privately, as far as I know, and certainly not publicly.
In fact, the people managing the advice service were on a roller coaster ride, thinking first that there would be zero support, then perhaps 50%, before they got wind of today's announcement.
Of course, the Financial Inclusion Fund is still being closed. The £27m has been found from a contingency fund and an underspend (whatever that means amidst the current cuts) at the Department for Business and is for one year only. So it is true to say that the original funding has not been renewed.
But some will take the view that this reprieve for debt advisers comes after ministers listened to the warnings they were being given and changed their minds.
This comes after the decision to axe the Financial Inclusion Fund which paid for the advisers across England and Wales, followed by an announcement this morning that £27m had, after all, been found to keep the service going for another year.
The Treasury told me last night: "The reason we haven't made an announcement until now about the funding we were always going to provide is because it was important to get it right". (See my report.)
What happened was that the Financial Secretary, Mark Hoban, said on 19th January this year in a written answer in parliament:
"The Financial Inclusion Fund will close at the end of March this year. The Government will work closely with industry and other stakeholders to ensure that tackling financial inclusion remains a high priority".
Ministers allowed a situation to arise in which the debt advisers were sent their redundancy letters, then stopped taking on new cases, as I reported at the beginning of this month.
There was a spate of campaigning by charities and MPs, pointing out that cutting debt advice when debt problems were expected to increase was a questionable policy. And there was a Westminster Hall debate.
So the advisers were preparing for life on the dole, the service was disrupted and winding down, and frantic lobbying was taking place.
During these weeks there were plenty of opportunities for ministers to give the reassurance that they were "always going to provide" the funding. But it wasn't given privately, as far as I know, and certainly not publicly.
In fact, the people managing the advice service were on a roller coaster ride, thinking first that there would be zero support, then perhaps 50%, before they got wind of today's announcement.
Of course, the Financial Inclusion Fund is still being closed. The £27m has been found from a contingency fund and an underspend (whatever that means amidst the current cuts) at the Department for Business and is for one year only. So it is true to say that the original funding has not been renewed.
But some will take the view that this reprieve for debt advisers comes after ministers listened to the warnings they were being given and changed their minds.
Friday, 11 February 2011
First Time Buyer numbers plummet in December
Anyone looking at the latest mortgage lending figures from the big banks and building societies will be shocked to see a 42% drop to 14,500, year-on-year, in the number of first time buyers being granted a mortgage in December.
First time buyers are seen as crucial to any housing revival.
There is an easy explanation for this sharp fall. December 2009 saw the end of a stamp duty holiday designed to rescue the housing market. So there was a rush of buyers trying to take advantage.
The stamp duty concession meant no stamp duty had to be paid on properties under £175,000. The threshold went back to £125,000 at the end of 2009.
However, first time buyer numbers are still on a downward trend. The total fell by 3% between November and December 2010, according to the Council for Mortgage Lenders. And it was lower for the year as a whole.
The trend will focus attention on next week's First Time Buyer Summit called by the housing minister, Grant Shapps. He has summoned housing and lending bodies to suggest better ways of bringing young buyers into the market.
Another factor which they are bound to look at is the rise in deposits which first time buyers are having to to pay.
The typical deposit has risen again, to 23% from 21%. Of course, this is for buyers who succeed in getting mortgage. Many others don't succeed or don't try because of the high level of deposits required by lenders.
First time buyers are seen as crucial to any housing revival.
There is an easy explanation for this sharp fall. December 2009 saw the end of a stamp duty holiday designed to rescue the housing market. So there was a rush of buyers trying to take advantage.
The stamp duty concession meant no stamp duty had to be paid on properties under £175,000. The threshold went back to £125,000 at the end of 2009.
However, first time buyer numbers are still on a downward trend. The total fell by 3% between November and December 2010, according to the Council for Mortgage Lenders. And it was lower for the year as a whole.
The trend will focus attention on next week's First Time Buyer Summit called by the housing minister, Grant Shapps. He has summoned housing and lending bodies to suggest better ways of bringing young buyers into the market.
Another factor which they are bound to look at is the rise in deposits which first time buyers are having to to pay.
The typical deposit has risen again, to 23% from 21%. Of course, this is for buyers who succeed in getting mortgage. Many others don't succeed or don't try because of the high level of deposits required by lenders.
Thursday, 10 February 2011
How to raise £627,000 for charity
64 year-old jeweller, Nicholas Mullings, has managed this amazing feat by sifting through packets of discarded trinkets in search of gold.
For 17 years, he has given up his Saturdays to sort out packets for the Alzheimer's Society. In an average year he will sort through 10,000 of them.
I met this remarkable man while filming in his shop near Westminster, where he has served Prime Minsters and film stars since 1965.
It's called the Old Jewellery Appeal. The idea came from the charity itself, but Nicholas gave it a vital twist.
"They wanted to ask for the good stuff," he tells me, "But I told them to ask for the plonk."
He shows me bags of unwanted bits and bobs, ready to be sorted.
There are a few interesting trophies. Nicholas hands me a little grey ball which is inscribed with "Kimberley Siege 1899-1900".
"It's probably a Boer bullet," he says.
Often, Nicholas clocks up 12 hours of work on a Saturday, hunting for gold to be melted down and sold. And sometimes he puts in a Sunday as well.
How does he manage it? Well, he makes plenty of spare time for himself - by being economical with sleep.
"I get up at 3.30am every day," he reveals, "And I'm in work before six during the week."
Pinned to the wall in the shop is a cheque from Mrs Thatcher. It's a funny one because the bank got its printing wrong, calling her Maragaret Lady Thatcher.
She's another one who never seemed to need any shut-eye.
Anyway, Nicholas's painstaking work has raised £627,610, so far. It's a wonderful achievement.
For 17 years, he has given up his Saturdays to sort out packets for the Alzheimer's Society. In an average year he will sort through 10,000 of them.
I met this remarkable man while filming in his shop near Westminster, where he has served Prime Minsters and film stars since 1965.
It's called the Old Jewellery Appeal. The idea came from the charity itself, but Nicholas gave it a vital twist.
"They wanted to ask for the good stuff," he tells me, "But I told them to ask for the plonk."
He shows me bags of unwanted bits and bobs, ready to be sorted.
There are a few interesting trophies. Nicholas hands me a little grey ball which is inscribed with "Kimberley Siege 1899-1900".
"It's probably a Boer bullet," he says.
Often, Nicholas clocks up 12 hours of work on a Saturday, hunting for gold to be melted down and sold. And sometimes he puts in a Sunday as well.
How does he manage it? Well, he makes plenty of spare time for himself - by being economical with sleep.
"I get up at 3.30am every day," he reveals, "And I'm in work before six during the week."
Pinned to the wall in the shop is a cheque from Mrs Thatcher. It's a funny one because the bank got its printing wrong, calling her Maragaret Lady Thatcher.
She's another one who never seemed to need any shut-eye.
Anyway, Nicholas's painstaking work has raised £627,610, so far. It's a wonderful achievement.
Wednesday, 9 February 2011
Parents feel the pressure to help with tuition fees
Now there are indications from Oxford that it could raise tuition fees to the maximum of £9,000 next year, matching Cambridge. At the same time there is evidence that parents are being frightened into saving more to help cover their children's fees.
Here are two parents' stories...
SARAH MARTEN is a mother of two children, aged 15 and 13, so university fees are only three years away.
She's been saving to help with some of their costs, but can't put aside any more to cover the hike in fees to a potential £9,000 a year.
"We put in plans to save up enough money to cover the fees for 3 years of a degree for each of our 2 children and now it's looking like that money we'd saved will only cover one year of a degree, so obviously there's a massive shortfall and we're not sure what we're going to do.
We will try and save a little bit more but we've only go 3 or 4 years to save up many thousands of pounds and it's simply not going to be possible to save that sum of money in so short a time.
It feels absolutely impossible. I mean we don't have that much surplus income. Interest rates are really low as well. And when you put those things together and you look at how much you can save it's going to be a really small amount.
We feel very angry about what's happened. We feel very disappointed. The thing that we want to avoid at all costs is for our children to start their adult working lives saddled with these huge debts. That's really important to us and we're not going to be able to do anything about it. That 's going to happen.
We've always encouraged them to be sensible. We want them to take a gap year and work during that time and save some money. We'll still be trying to help them find ways to fund their university without taking on a huge amount of debt."
MANDY SHARP has been prompted to save more after hearing about the rise in tuition fees. She has a 5 year-old daughter, who has just started school.
Mandy is salting away £100 a month in a tax free ISA and she plans to add lump sums when she has spare cash.
"I felt very nervous. It's a lot of money. I don't know what I'll be doing with my life at that stage. So it's spurred me to increase my savings for her to make it that bit easier.
It's hugely daunting. It's huge amounts and I don't want her to have those big debts when she comes out of university. I never had those fees when I went to university. It's a lot to come away with in terms of debt. That worries me.
It's not an ideal way to start your early years in a career. You won't be earning a large salary. You'll need rent, you may be looking for a flat and there are all those other living expenses. It could be a huge burden.
I'd like to be able to help her. I've been saving since she was a baby. I feel education is important I want her to have the best. I'm not saying I'll be able to cover the whole cost but if I can help her as much as I can, then I'd like to do that."
Here are two parents' stories...
SARAH MARTEN is a mother of two children, aged 15 and 13, so university fees are only three years away.
She's been saving to help with some of their costs, but can't put aside any more to cover the hike in fees to a potential £9,000 a year.
"We put in plans to save up enough money to cover the fees for 3 years of a degree for each of our 2 children and now it's looking like that money we'd saved will only cover one year of a degree, so obviously there's a massive shortfall and we're not sure what we're going to do.
We will try and save a little bit more but we've only go 3 or 4 years to save up many thousands of pounds and it's simply not going to be possible to save that sum of money in so short a time.
It feels absolutely impossible. I mean we don't have that much surplus income. Interest rates are really low as well. And when you put those things together and you look at how much you can save it's going to be a really small amount.
We feel very angry about what's happened. We feel very disappointed. The thing that we want to avoid at all costs is for our children to start their adult working lives saddled with these huge debts. That's really important to us and we're not going to be able to do anything about it. That 's going to happen.
We've always encouraged them to be sensible. We want them to take a gap year and work during that time and save some money. We'll still be trying to help them find ways to fund their university without taking on a huge amount of debt."
MANDY SHARP has been prompted to save more after hearing about the rise in tuition fees. She has a 5 year-old daughter, who has just started school.
Mandy is salting away £100 a month in a tax free ISA and she plans to add lump sums when she has spare cash.
"I felt very nervous. It's a lot of money. I don't know what I'll be doing with my life at that stage. So it's spurred me to increase my savings for her to make it that bit easier.
It's hugely daunting. It's huge amounts and I don't want her to have those big debts when she comes out of university. I never had those fees when I went to university. It's a lot to come away with in terms of debt. That worries me.
It's not an ideal way to start your early years in a career. You won't be earning a large salary. You'll need rent, you may be looking for a flat and there are all those other living expenses. It could be a huge burden.
I'd like to be able to help her. I've been saving since she was a baby. I feel education is important I want her to have the best. I'm not saying I'll be able to cover the whole cost but if I can help her as much as I can, then I'd like to do that."
Tuesday, 8 February 2011
Any good news hidden in these diabolical insolvency figures?
A record 135,000 insolvencies in one year.
And the climate is getting even more hellish: the average household owes £57,000, prices are rising, incomes are being squeezed.
So insolvencies could be even worse this year.
This is the grim analysis which you have seen all over the papers. And yet, there may be something positive hiding in the figures.
Remember first why we have insolvency procedures. There is the debtor who can't afford the repayments and the creditor who isn't getting the debt serviced or returned. It's a dead end: no one can go anywhere.
So we have a set of tools to clear the way. They range from informal negotiations, right through to bankruptcy, which has to be sanctioned in court.
The debtor can start again, after meeting strict conditions over a set period. The creditor may retrieve some of the borrowings, or possibly nothing at all. But the financial position is crystallised.
The newest tool is the Debt Relief Order. It is a mild form of bankruptcy, designed for people with virtually no assets and debts of less than £15,000.
A DRO is simpler, doesn't involve going to court and it's cheap. Surprisingly enough, some people simply can't afford to go properly bankrupt because of the fees involved.
A closer look at the latest insolvency figures shows a revealing trend. There was a sharp drop in bankruptcies in the last three months of 2010 compared to the year before, accompanied by a rise in DROs.
It could be a positive development: more people finding an easier way to make a fresh start.
The number of bankruptcies was still very high. In three months, 12,000 individuals were marooned on a financial desert island. They had to endure shame and heartache. Some of their creditors may have been brought down by the shock as well.
Insolvencies are running at more than twice the level of five years ago and we could see more horrific totals. But, of course, they are doing the job they were designed for. They are clearing a way.
When I spoke to a friend who went to court last week to have his bankruptcy rubber stamped, he explained how much of a relief it was to complete the process. He can get on with working and earning.
It's hard to find a bank which will open him an account, but soon he will be able to borrow again and start to rebuild his financial reputation. In 6 years his credit reference will be clear.
His own personal recovery is underway.
Maybe we are seeing the beginnings of a more general recovery. Maybe you can spot it in these insolvency figures and the agonising method the economy uses to turn itself over, trying to find a more comfortable position in which it can carry on.
And the climate is getting even more hellish: the average household owes £57,000, prices are rising, incomes are being squeezed.
So insolvencies could be even worse this year.
This is the grim analysis which you have seen all over the papers. And yet, there may be something positive hiding in the figures.
Remember first why we have insolvency procedures. There is the debtor who can't afford the repayments and the creditor who isn't getting the debt serviced or returned. It's a dead end: no one can go anywhere.
So we have a set of tools to clear the way. They range from informal negotiations, right through to bankruptcy, which has to be sanctioned in court.
The debtor can start again, after meeting strict conditions over a set period. The creditor may retrieve some of the borrowings, or possibly nothing at all. But the financial position is crystallised.
The newest tool is the Debt Relief Order. It is a mild form of bankruptcy, designed for people with virtually no assets and debts of less than £15,000.
A DRO is simpler, doesn't involve going to court and it's cheap. Surprisingly enough, some people simply can't afford to go properly bankrupt because of the fees involved.
A closer look at the latest insolvency figures shows a revealing trend. There was a sharp drop in bankruptcies in the last three months of 2010 compared to the year before, accompanied by a rise in DROs.
It could be a positive development: more people finding an easier way to make a fresh start.
The number of bankruptcies was still very high. In three months, 12,000 individuals were marooned on a financial desert island. They had to endure shame and heartache. Some of their creditors may have been brought down by the shock as well.
Insolvencies are running at more than twice the level of five years ago and we could see more horrific totals. But, of course, they are doing the job they were designed for. They are clearing a way.
When I spoke to a friend who went to court last week to have his bankruptcy rubber stamped, he explained how much of a relief it was to complete the process. He can get on with working and earning.
It's hard to find a bank which will open him an account, but soon he will be able to borrow again and start to rebuild his financial reputation. In 6 years his credit reference will be clear.
His own personal recovery is underway.
Maybe we are seeing the beginnings of a more general recovery. Maybe you can spot it in these insolvency figures and the agonising method the economy uses to turn itself over, trying to find a more comfortable position in which it can carry on.
Friday, 4 February 2011
What if you had to repay student loans while still studying?
Part-time students might have to start repaying loans while still studying! That's after their new student loan scheme starts in 2012-13.
Part-time students will have to start repaying their student loans three years after they start a course, the government confirmed today. This means that in theory a part-time student might have to start repayments while still studying. However, that would only occur if the student's earnings had reached £21,000.
BIS has published full details this afternoon of the new loan scheme for part-time students, much of which had already been revealed.
Part-time students will have to start repaying their student loans three years after they start a course, the government confirmed today. This means that in theory a part-time student might have to start repayments while still studying. However, that would only occur if the student's earnings had reached £21,000.
BIS has published full details this afternoon of the new loan scheme for part-time students, much of which had already been revealed.
Money Mule - one woman's narrow escape.
Money mules use their private bank accounts to launder dodgy money for fraudsters. The funds often come from phishing scams, where criminals based overseas send fake emails to online bank customers. They trick the customers into parting with their account details.
For the scam to succeed, the fraudster needs a UK-based mule to receive money into his or her bank account, then withdraw it and send it overseas using a commercial money transfer service.
The banks have put out a fraud alert in the London Borough of Newham (see my BBC report), where they are monitoring over 1,500 suspicious bank accounts. They could belong to money mules.
23 year-old Barbara Gyami from Newham told me how she had a lucky escape...
"I am currently unemployed and I registered with jobsites and agencies. I received junk email. Six or seven were from a particular address. They said they had a particular job and that I would have to give them my bank account details.
I would only be working for 5 to 6 hours a week and I'd be paid between £1,500 and £2,000 a week. It sounded too good to be true. They had said that I would have to handle £6,000 a week in my account.
I emailed them back and they replied with a contract attached. Then I contacted my job adviser. She said I should be very vigilant.
I phoned their number and no one answered. I thought: how come you haven't got any offices or anyone to answer the phone?
I didn't know what they might have done with my account. They're still sending me emails.
Then Newham Council called me. They were doing a survey about these people. They told me it was illegal."
For the scam to succeed, the fraudster needs a UK-based mule to receive money into his or her bank account, then withdraw it and send it overseas using a commercial money transfer service.
The banks have put out a fraud alert in the London Borough of Newham (see my BBC report), where they are monitoring over 1,500 suspicious bank accounts. They could belong to money mules.
23 year-old Barbara Gyami from Newham told me how she had a lucky escape...
"I am currently unemployed and I registered with jobsites and agencies. I received junk email. Six or seven were from a particular address. They said they had a particular job and that I would have to give them my bank account details.
I would only be working for 5 to 6 hours a week and I'd be paid between £1,500 and £2,000 a week. It sounded too good to be true. They had said that I would have to handle £6,000 a week in my account.
I emailed them back and they replied with a contract attached. Then I contacted my job adviser. She said I should be very vigilant.
I phoned their number and no one answered. I thought: how come you haven't got any offices or anyone to answer the phone?
I didn't know what they might have done with my account. They're still sending me emails.
Then Newham Council called me. They were doing a survey about these people. They told me it was illegal."
Why have bankruptcies fallen so sharply?
There were just over 12,000 bankruptcies in the last three months of 2010. While this is a large number, it is nearly 2,000 fewer than the previous quarter and 5,000 fewer than in the same period one year before.
Why the drop in the run-up to Christmas and year-end 2010? Several reasons are being suggested to me.
1. The cold weather. People couldn't get to court and courts were closed. People couldn't even travel to Citizens Advice offices to talk about bankruptcy, Individual Voluntary Arrangements, Debt Relief Orders or less formal repayment schemes.
2. The shift to the new Debt Relief Orders from bankruptcy. DROs cost less and are suitable for people with debts of up to £15,000 and hardly any assets. They too were down on the quarter but they were well up on 2009.
3. Some lenders are being more lenient, realising that in the current climate they stand to gain very little when a client goes bankrupt. So they are negotiating less formal repayment schemes. It might seem more sympathetic but it perpetuates the debt problem.
4. This winter, more than ever before, people have been putting off dealing with their debt problems until the New Year.
The downside of all these explanations is that none of them points to unmanageable debt becoming much less of a problem. Insolvencies could even bounce back in the current three months. It would be brave to bet against them staying at or near record levels throughout 2011.
Why the drop in the run-up to Christmas and year-end 2010? Several reasons are being suggested to me.
1. The cold weather. People couldn't get to court and courts were closed. People couldn't even travel to Citizens Advice offices to talk about bankruptcy, Individual Voluntary Arrangements, Debt Relief Orders or less formal repayment schemes.
2. The shift to the new Debt Relief Orders from bankruptcy. DROs cost less and are suitable for people with debts of up to £15,000 and hardly any assets. They too were down on the quarter but they were well up on 2009.
3. Some lenders are being more lenient, realising that in the current climate they stand to gain very little when a client goes bankrupt. So they are negotiating less formal repayment schemes. It might seem more sympathetic but it perpetuates the debt problem.
4. This winter, more than ever before, people have been putting off dealing with their debt problems until the New Year.
The downside of all these explanations is that none of them points to unmanageable debt becoming much less of a problem. Insolvencies could even bounce back in the current three months. It would be brave to bet against them staying at or near record levels throughout 2011.
Thursday, 3 February 2011
Ever wondered how to calculate an APR?
where
- X is the APR;
- m is the number of the last drawdown;
- k is the number of a drawdown, thus l ≤ k ≤ m;
- Ck is the amount of drawdown k;
- tk is the interval, expressed in years and fractions of a year, between the date of the first drawdown and the date of each subsequent drawdown, thus tl = 0;
- m’ is the number of the last repayment or payment of charges;
- l is the number of a repayment or payment of charges;
- Dl is the amount of a repayment or payment of charges;
- Sl is the interval, expressed in years and fractions of a year, between the date of the first drawdown and the date of each repayment or payment of charges.
Booking through an airline website could still be risky
The Department for Transport is stretching the ATOL scheme to cover travel agents and websites which book flights and accommodation separately - up until now they have managed to sneak around the rules.
But airlines still aren't covered, unless they've actually set up a tour company. Why?
Way back in the distant past when the ATOL bonding system was created, the world of air travel was a much simpler place. We're in the early 1970s when most airlines were state-owned symbols of national prestige.
What that meant was that there was virtually no chance that the scheduled airline you were travelling on would go bust. So there was no need for a bonding scheme to provide you with protection.
Of course, the situation was quite different with tour operators and charters. They had expanded massively thanks to the boom in package holidays and were seen as the cowboy end of the business.
There really was a danger that your holiday company could fail and you would be left stranded with no means of getting back, unless you paid a lot of money.
That was how ATOL started out. Tour operators have to be ATOL bonded, which usually means depositing at least £40,000 with the scheme. £2.50 has to be paid in for each booking as well.
Forty years on, airlines have changed. There's less value put on national carriers. There are more no-frills airlines. And, most importantly, airlines can very definitely go bust.
In this situation, tour operators are complaining that today's expansion of ATOL doesn't go far enough, because the changes announced by the Department of Transport don't cover airlines in a couple of crucial respects.
The first is an old chestnut. If a holiday company was to book you on a scheduled airline, you would be protected. But if you booked direct and the airline folded, you would be in danger of being stranded without any help.
The second concerns the service airlines offer on their own websites for you to book accommodation and other holiday extras. You "click through" and book something for which the airline earns a commission. This is a hugely important additional stream of income for carriers and it's growing.
But click throughs from airline websites won't be covered by the expanded ATOL scheme. Tour operators say that's unfair and a danger to consumers.
Because airlines were not included in the original ATOL scheme all those years ago, new legislation would be needed to bring them in and that would take time, possibly years.
Incidentally, the European Commission is looking at the question of whether there should be a protection scheme for travellers who book themselves directly on scheduled airlines, as part of its review of the Package Travel Directive.
However, Brussels could spend a couple of years on this -- and the UK government might be inclined to wait and see what happens.
But airlines still aren't covered, unless they've actually set up a tour company. Why?
Way back in the distant past when the ATOL bonding system was created, the world of air travel was a much simpler place. We're in the early 1970s when most airlines were state-owned symbols of national prestige.
What that meant was that there was virtually no chance that the scheduled airline you were travelling on would go bust. So there was no need for a bonding scheme to provide you with protection.
Of course, the situation was quite different with tour operators and charters. They had expanded massively thanks to the boom in package holidays and were seen as the cowboy end of the business.
There really was a danger that your holiday company could fail and you would be left stranded with no means of getting back, unless you paid a lot of money.
That was how ATOL started out. Tour operators have to be ATOL bonded, which usually means depositing at least £40,000 with the scheme. £2.50 has to be paid in for each booking as well.
Forty years on, airlines have changed. There's less value put on national carriers. There are more no-frills airlines. And, most importantly, airlines can very definitely go bust.
In this situation, tour operators are complaining that today's expansion of ATOL doesn't go far enough, because the changes announced by the Department of Transport don't cover airlines in a couple of crucial respects.
The first is an old chestnut. If a holiday company was to book you on a scheduled airline, you would be protected. But if you booked direct and the airline folded, you would be in danger of being stranded without any help.
The second concerns the service airlines offer on their own websites for you to book accommodation and other holiday extras. You "click through" and book something for which the airline earns a commission. This is a hugely important additional stream of income for carriers and it's growing.
But click throughs from airline websites won't be covered by the expanded ATOL scheme. Tour operators say that's unfair and a danger to consumers.
Because airlines were not included in the original ATOL scheme all those years ago, new legislation would be needed to bring them in and that would take time, possibly years.
Incidentally, the European Commission is looking at the question of whether there should be a protection scheme for travellers who book themselves directly on scheduled airlines, as part of its review of the Package Travel Directive.
However, Brussels could spend a couple of years on this -- and the UK government might be inclined to wait and see what happens.
Motion to cap PayDay loans
Stella Creasy's motion in the House of Commons today to put caps on the cost of payday lending:
"That this House notes with alarm recent evidence showing a fourfold increase in the use of payday lending since the beginning of the recession and that high cost credit lenders advanced approximately £7.5 billion to low and middle income consumers in 2008 alone; recognises the problems of financial exclusion, lack of financial and debt management education, lack of price competitiveness in the unsecured lending market and the near monopoly positions of many large lenders which contribute to the high costs of borrowing; considers that without action these factors could worsen family debt, poverty and financial difficulties to the detriment of the economic recovery; therefore calls upon the Government to introduce *measures to increase access to affordable credit; urges regulators to consider putting* in place a range of caps on prices in areas of the market in unsecured lending which are non price-competitive, likely to cause detriment to consumers or where there is evidence of irresponsible practice; and believes that such caps should take account of the desirability of maintaining access to affordable and responsible credit, the likely impact on the supply of credit and the cost of enforcement, that they should be regularly reviewed and that they should use the total cost of credit, calculated on a yearly basis, to ensure that lender avoidance and distortions in price are prevented."
**amended text between the stars
What happens if the motion is passed? The Department for Business (BIS) tells me debate will be treated the same as any other debate. So, according to them, if the vote passes, it is up to Stella Creasy to lead it through the house.
"That this House notes with alarm recent evidence showing a fourfold increase in the use of payday lending since the beginning of the recession and that high cost credit lenders advanced approximately £7.5 billion to low and middle income consumers in 2008 alone; recognises the problems of financial exclusion, lack of financial and debt management education, lack of price competitiveness in the unsecured lending market and the near monopoly positions of many large lenders which contribute to the high costs of borrowing; considers that without action these factors could worsen family debt, poverty and financial difficulties to the detriment of the economic recovery; therefore calls upon the Government to introduce *measures to increase access to affordable credit; urges regulators to consider putting* in place a range of caps on prices in areas of the market in unsecured lending which are non price-competitive, likely to cause detriment to consumers or where there is evidence of irresponsible practice; and believes that such caps should take account of the desirability of maintaining access to affordable and responsible credit, the likely impact on the supply of credit and the cost of enforcement, that they should be regularly reviewed and that they should use the total cost of credit, calculated on a yearly basis, to ensure that lender avoidance and distortions in price are prevented."
**amended text between the stars
What happens if the motion is passed? The Department for Business (BIS) tells me debate will be treated the same as any other debate. So, according to them, if the vote passes, it is up to Stella Creasy to lead it through the house.
Wednesday, 2 February 2011
Court rules prize draw promotions are against the law
A High Court judge has ruled that certain promotions using prize draws are in breach of the law. Five companies have been told that they face enforcement orders.
The judge, Mr Justice Briggs, found that the infringements had occurred on a large scale and very large numbers of consumers had been sent the promotions.
Around 11.5 million promotions were sent out in one year. 200,000 consumers responded, mainly through premium rate phone calls or premium rate text messages
In one example from 2008, letters were sent to nearly 1.5 million consumers telling them they had won one of a list of prizes, including £25,000 in cash. But 99.92% of recipients were allocated cheap electrical goods. They were encouraged to phone a premium rate line to claim the prize. Then they had to pay £8.50 for insurance and delivery.
In another one, 9 million strips of scratchcards were inserted in newspapers, offering Top Treats or a big jackpot as prizes. 99.9% of the winners won £10, a Greek cruise voucher, worth 59p or as the judge said "of dubious value".
The winners were encouraged to spend at least £8.43 on a premium rate call to learn about the prizes.
The case was brought by the Office of Fair Trading after it tried unsuccessfully to secure a voluntary agreement from the companies to stop distributing the promotions.
The judge, Mr Justice Briggs, found that the infringements had occurred on a large scale and very large numbers of consumers had been sent the promotions.
Around 11.5 million promotions were sent out in one year. 200,000 consumers responded, mainly through premium rate phone calls or premium rate text messages
Typically, 'winners' would have to pay out costs amounting to more than the value of the prize. The price of calls and administration might be around £15. The prize, an MP3 player for instance, would only have cost the promoter £9.
In one example from 2008, letters were sent to nearly 1.5 million consumers telling them they had won one of a list of prizes, including £25,000 in cash. But 99.92% of recipients were allocated cheap electrical goods. They were encouraged to phone a premium rate line to claim the prize. Then they had to pay £8.50 for insurance and delivery.
In another one, 9 million strips of scratchcards were inserted in newspapers, offering Top Treats or a big jackpot as prizes. 99.9% of the winners won £10, a Greek cruise voucher, worth 59p or as the judge said "of dubious value".
The winners were encouraged to spend at least £8.43 on a premium rate call to learn about the prizes.
The case was brought by the Office of Fair Trading after it tried unsuccessfully to secure a voluntary agreement from the companies to stop distributing the promotions.
Britons are working longer before retiring - official
New figures from the Office for National Statistics throw into stark relief the growing tendency for men and women to work longer and retire later.
Over five years, the average retirement age for men has risen to 64.5 years from 63.8, while women carry on working until 62, up from an average of 61.2.
They are the clearest official data on a trend which could begin to accelerate, now that the state pension age is being raised and many pensioner households face higher costs and shrinking incomes.
The figures apply to 2009, which is the latest year in which statisticians can marry up the different surveys needed for the calculation.
There is proof, as well, that men can expect a shorter retirement than women.
At every age between 51 and 75, men's life expectancy once they stop working is lower than women's.
For instance, a 58 year-old man can expect to work 2 years longer than a woman of the same age. But from the date that they both stop working, the man's retirement is likely to be 5 years shorter.
Over five years, the average retirement age for men has risen to 64.5 years from 63.8, while women carry on working until 62, up from an average of 61.2.
They are the clearest official data on a trend which could begin to accelerate, now that the state pension age is being raised and many pensioner households face higher costs and shrinking incomes.
The figures apply to 2009, which is the latest year in which statisticians can marry up the different surveys needed for the calculation.
There is proof, as well, that men can expect a shorter retirement than women.
At every age between 51 and 75, men's life expectancy once they stop working is lower than women's.
For instance, a 58 year-old man can expect to work 2 years longer than a woman of the same age. But from the date that they both stop working, the man's retirement is likely to be 5 years shorter.
Tuesday, 1 February 2011
New Consumer Credit Directive starting today
The new provisions from the Consumer Credit Directive include:
- a duty on the lender to provide standardised explanations about the credit on offer to the consumer;
- an obligation on the lender to check creditworthiness before offering or increasing credit;
- further requirements concerning information from credit reference databases if they form part of a lender’s refusal for credit;
- a right for consumers to withdraw from a credit agreement within 14 days, without giving any reason;
- requirements to inform consumers when debts under a consumer credit agreement are sold on;
- requirements on credit intermediaries to disclose fees and links to creditors; and
- a right to make partial early repayments of loans
Additional information from the Office of Fair Trading:
The new right to withdraw, unlike previous rights of cancellation, applies to all credit agreements with only some limited exceptions (for example mortgages).
Previously there was a limited right to cancel a credit agreement under Section 67 (Consumer Credit Act) - but only where the agreement was signed off trade premises following oral representations in the consumer's presence. For example, a home credit loan which was negotiated and signed in the borrower's home. It did not apply where the agreement was signed on trade premises.
From an OFT perspective, we expand on some relevant issues in our recent Irresponsible Lending Guidance. In particular, Chapter Three of the Guidance sets out our position on the need to provide an adequate explanation of key features of the credit agreement - please see this link.
Who needs specialist - and free - debt advice?
Kim does.
He ran his own hairdressing shop in London. Then he fell ill.
He was in hospital for three months. Now he has to pop in and out regularly.
He still gets tired and has to lie down in the day. He's trying to get better.
Kim had a mortgage, loans, credit cards and bills for heat and light to pay. But no income.
He was being pursued by creditors. He told me that they even rang him in hospital.
Kim had no prospect of making any payments. That made him useless to profit-making debt management companies, because they take their cut from repayments.
Luckily, in the hospital, someone came and recommended that he find free help from the Mary Ward Centre near Queen Square, central London.
It's a long haul.
But Kim has a big smile and he's using it, even though he's still sick.
One reason is that the financial pressure from creditors has been taken away, with the help of the Mary Ward's debt advisers.
I told Kim that ten advisers from the centre were losing their jobs.
They are casualties of the cuts. The Treasury is axing the Financial Inclusion Fund which pays their wages.
Nearly 500 specialist debt advisers around England and Wales have received redundancy notices.
When I asked Kim what the impact would be, he said:
"They've helped me a hell of a lot. I fear for other people who can't get the the help or wouldn't get the help. I think they probably would be devastated. I wouldn't like to be in their shoes."
And what if he had had to seek paid-for advice?
"I'd be stuck. In my situation I've got no income so I couldn't afford it. I don't think there'd be anyone out there to take my case on. I think they'd shut the door in my face."
I've written up the full story of the debt advice cuts here .
He ran his own hairdressing shop in London. Then he fell ill.
He was in hospital for three months. Now he has to pop in and out regularly.
He still gets tired and has to lie down in the day. He's trying to get better.
Kim had a mortgage, loans, credit cards and bills for heat and light to pay. But no income.
He was being pursued by creditors. He told me that they even rang him in hospital.
Kim had no prospect of making any payments. That made him useless to profit-making debt management companies, because they take their cut from repayments.
Luckily, in the hospital, someone came and recommended that he find free help from the Mary Ward Centre near Queen Square, central London.
It's a long haul.
But Kim has a big smile and he's using it, even though he's still sick.
One reason is that the financial pressure from creditors has been taken away, with the help of the Mary Ward's debt advisers.
I told Kim that ten advisers from the centre were losing their jobs.
They are casualties of the cuts. The Treasury is axing the Financial Inclusion Fund which pays their wages.
Nearly 500 specialist debt advisers around England and Wales have received redundancy notices.
When I asked Kim what the impact would be, he said:
"They've helped me a hell of a lot. I fear for other people who can't get the the help or wouldn't get the help. I think they probably would be devastated. I wouldn't like to be in their shoes."
And what if he had had to seek paid-for advice?
"I'd be stuck. In my situation I've got no income so I couldn't afford it. I don't think there'd be anyone out there to take my case on. I think they'd shut the door in my face."
I've written up the full story of the debt advice cuts here .
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