Month: November 2013

Payday loans: New law to cap costs

The government is to introduce a new law to cap the cost of payday loans.

The level of the cap, which has not yet been announced, will be decided by the new industry regulator, the Financial Conduct Authority (FCA).

The Treasury says there is “growing evidence” in support of the move, including the effects of a cap already in place in Australia.

But the industry said the move could restrict credit, and encourage more illegal lending.

The cap will be included in the Banking Reform Bill, which is already going through Parliament.

Speaking to the BBC, the Chancellor, George Osborne, said there would be controls on charges, including arrangement and penalty fees, as well as on interest rates.

“It will not just be an interest rate cap,” he told BBC Radio 4’s Today programme.

“You’ve got to cap the overall cost of credit.”

‘Duty on regulator’

Previously the government had said such a cap was not needed.

But the chancellor denied the government had a made a U-turn on the issue, saying he was not pre-judging the outcome of a Competition Commission inquiry into payday lending.

“These things can go along in parallel,” he said.

Some payday lenders have been criticised for charging more than 5,000% annual interest – though the lenders say these loans are meant to be short-term, so the annual rate can make charges appear worse than they are.

Australia has an interest rate limit of 4% per month, after a maximum up-front fee of 20%.

However, even in Australia, borrowers can still face hefty charges.

Penalties for late payment are allowed to be as much as twice the loan amount.

In the UK, the FCA has already been given the power to cap the costs of payday loans.

But under the new law, the FCA will now have a duty to go ahead and introduce price controls.

“Now the regulator will go away and decide what is the best form of cap,” said Mr Osborne.

The FCA takes over as the industry regulator in April 2014, so no changes are expected before 2015.


The FCA has also proposed a series of measures to clamp down on the industry, including limiting loan roll-overs to just two, and restricting the use of continuous payment authorities (CPAs).

But the Consumer Finance Association (CFA), which represents some of the payday lending firms, was sceptical about whether price controls would work in consumers’ interests.

It said the move could encourage more illegal lending.

“Research from other countries where a cap has been introduced, suggests price controls would lead to a reduction in access to credit, and open up a larger market for illegal lenders,” a spokesman said.

The FCA itself has also expressed reservations about a cap on charges, fearing that some lenders might increase fees to the legal maximum.

Labour leader Ed Miliband has already said his party would cap the cost of payday loans.

Mr Miliband has also pledged to give councils new powers to limit the spread of payday lending shops in town centres.

The shadow minister for competition and consumer affairs, Stella Creasy, told the Today programme that “the devil really is in the detail”.

“This industry’s a bit like an inflated balloon and if you don’t crack down on the whole cost of credit, then wherever they can recoup their costs by expanding the prices at other points, they will.”

[BBC News]

WIN a T6 or T7 Tractor!

Once we heard that Farmers Guardian has once again teamed up with New Holland to give you an opportunity to win the use of an Auto Command™ tractor for one year, well we just had to share this!

As well as this, the winner along with nine lucky runners-up will win a factory tour for up to five people at Basildon, Essex – which is the home of the popular T6 and T7 tractors series.

The T6 range comprises seven models which produce between 119 – 173hp and is the tractor of choice for the mixed farmers, as well as contractors and specialist agribusinesses. The range includes three new Auto Command™ continuously variable transmission models for even greater efficiency and ease of use.

The T7 range models range between 171hp and 274hp. The T7 is perfect for both farmers and contracting operations, offering excellent performance and exceptional fuel efficiency. They are ideally suited to a wide range of farming tasks including field cultivation, high-speed transport and front loader activities thanks to exceptional manoeuvrability and versatility. Nine T7 models also features the Auto Command™ Transmission for maximum efficiency.

Both ranges are built in the award-winning manufacturing facility in Basildon, Essex, which celebrates in 2014 its fiftieth anniversary.

To enter this great competiton visit their website at

Farmer insurance scheme could be an option

A RADICAL new approach to agricultural insurance could provide an alternative to the Single Payment Scheme (SPS) in the UK.

That was the message from George Eustice, Parliamentary Under Secretary for Farming, Food and Marine Environment.

Mr Eustice said the UK could learn from Canada and the USA which have their own successful national agricultural insurance schemes, which are paid for both by farmers and the Government.

“The USA has a flagship agri-insurance scheme,” he said. “If a farmer’s income drops significantly below a certain level, due to crop failure for example, they can call on the insurance fund to top their income up.”

Farmers pay in to the system, explained Mr Eustice, and the American government helps support it by paying some of the administration costs and helping the insurance scheme pay for the gap in farm income.

He said: “Canada also has a similar system, known as agri-stability, whereby if the farmer’s income drops below 70 per cent of their average income for the previous five years, they are eligible for the insurance.

“The Canadian Government has a bigger financial input, contributing between 60 and 80 per cent of the insurance cost, with the industry paying the rest.

“The NFU has previously asked us to consider such a scheme and in 2009 Defra commissioned Prof Berkeley-Hill to look at its potential in the UK.

“He concluded if done correctly a national agri-insurance scheme could provide an alternative exit strategy to the SPS we currently have.

“Prof Berkeley-Hill also said it could be on way of reducing the long-term cost of the CAP.”

However, he also highlighted several big drawbacks to this kind of insurance system.

“Both Canada and the USA do not have a SPS, so the insurance scheme which NFU has previously advocated would have to be in place of a SPS, rather than an addition to it.”

He also said the cost of such schemes, which cost more than the UK currently pays to administer CAP, were also a drawback.


#YorkshireHour is open for business once again this evening 8pm-9pm.

A virtual place – but a real time – to promote your Yorkshire Business. Will you be participating this evening? We certainly will be!

When it gets to 8pm tonight start tweeting about your Yorkshire business and add the hashtag #YorkshireHour – it’s that simple!!

For example:

  • “We’re an independent finance brokers based in Leeds, West Yorkshire #Yorkshirehour”

You can also search for #YorkshireHour on Twitter to see what other Yorkshire folk are promoting. This way you can then follow, say Hi and build connections that might be relevant to you business, or if the tweets are just interesting to yourself. It’s a great tool to use to market your Yorkshire Business are also find other business’ that you could benefit from.

After, don’t forget to check your account for new followers and say thanks – see if you want to follow them back and start up new connections with them as well. You’ll be  amazed and surprised how many new followers you’ll get and business contacts you can make in an hour.

New Tractors for Landini Range in 2014

The all-new Landini Series 4 will have power outputs from 61hp to 101hp channelled through a new Argo Tractors 12×12 transmission with synchro shuttle, power shuttle creep and two-speed powershift options.

Italian agricultural engineering firm Argo Tractors presented its biggest ever collection of new models at the Agritechnica exhibition in Germany as a major investment in product development bears fruit.

High quality materials and design are evident in the new cab built by Argo for the new Landini Series 4 tractors, and it is reckoned to be one of the most spacious in the class.

Previewing more new tractors than any other manufacturer at the event, in preparation for their commercial launch in 2014, Argo’s Landini exhibit included the Series 4 livestock tractor, which features a new-design cab with a more up-market and spacious interior and mechanical controls.

The Landini Series 4 is a new class of stockman’s tractor for the Italian-built range. This all-new range of tractors from 61hp to 101hp that will comprise six models powered by either 2.9-litre or 3.6-litre engines. It has a new Argo Tractors synchro shuttle 12×12 transmission that can be enhanced by creep, power shuttle and hi-lo powershift options.

The new Argo-built cab, with an interior design using materials to automotive standard, is said to be the most spacious low-profile design available in this class.

When it is introduced next year, the new Landini Series 4 range will slot in beneath the newly launched 85-113hp Landini Series 5-H T4i, which is a little larger and heavier, with power outputs up to 113hp:

The Series 4 will be ideally suited to livestock farms and other operations wanting a light, highly manoeuvrable and well-equipped tractor of this size and power.

Barclays to move four bank branches to Asda

Barclays is to close four branches and move staff and banking services to nearby Asda stores.

It said it then wanted to open another four branches in Asda supermarkets by early next year in an attempt to make banking more convenient.

The initial four branches will swap locations to make parking easier, and sees branches with relatively low footfall being moved to the stores.

Asda said that access to banking services was vital for communities.

Bank staff will work at the new supermarket-based branches during normal bank opening hours, with cash and cheque machines accessible during the supermarkets’ opening hours.

The first branch will be opened in an Asda store at Birchwood in Cheshire in February.

Three more will later be opened at Asda stores in Pudsey in West Yorkshire, North Watford in Hertfordshire and Broadstairs in East Kent.

The additional four stores for new branches will be chosen later.

Bank branches in supermarkets are common the US.

Business costs rising 3.5pc ahead of inflation

Business costs continue to rise, with inflated energy prices proving the most burdensome for small firms in 2013, according to research from the Forum of Private Business.

Small businesses are struggling to make ends meet despite positive signs of an economic recovery, the latest Cost of Doing Business report from the Forum of Private Business has found.

According to the 4,000 respondents to the survey, 94% of businesses have seen an overall increase in their business costs. Of these, the cost of gas and electricity are the biggest bugbears with 87% reporting an increase in energy overheads. However, 83% also saw a rise in transport costs, 78% are spending more on marketing and 69pc have experienced a rise in the cost of raw materials/stock.

The cost of petrol, rising transport costs and the spiralling price of energy are proving extremely challenging for small businesses. These, coupled with the continued weakness of sterling, are putting downward pressure on balance sheets. And these firms are unable to simply pass on these costs to customers. Despite evidence of a muted economic recovery, 41pc of small business owners said that they were absorbing the costs themselves. Just 2pc were able to pass on costs in full.

Annual inflation may have fallen from 3pc to 2.7% but this research shows that prices have continued to rise for micro, small and medium-sized employers, increasing by 6%. This is less than the 6.7% figure reported by the Forum last year, however, suggesting that the environment for SMEs is gradually improving. Nevertheless, 83% of those surveyed expect the situation to worsen next year.

Credit restrictions are also an issue, with 26% of businesses reporting less leeway in coping with business costs than they had last year.

The report has found that 81% have experienced a detrimental effect to their business as a result of these rising business costs. 73% have had cash flow issues and 51% of firms have struggled to to invest in new training or plant. 51% also reported that these sky-high overheads have prevented them from employing new staff and 63% feel that it has hampered their growth plans.

More worryingly, the most frequently cited factors exacerbating the problem of rising costs were customers paying late (59%) and competitors offering products below cost price (51%). Excessive administrative demands forced on businesses by the government, banks and customers meant that 35% of businesses have not been able to focus on business activities. Changing payment terms has been a problem for 24% of businesses in dealing with suppliers, and 26% in dealing with customers.

“As well as positive action on late payment we’d like to see further steps to help small firms with business overheads,” said Alexander Jackman, the Forum’s head of policy. “We’d like a freeze on business rates and small business multipliers next year. An extension of small business rates multipliers until the end of the current parliament would also be welcome and we’d like to see the government commit to undertaking independent research into business rates.

“While the Chancellor’s announcement of a fuel duty freeze at the Conservative Party Conference was a welcome move, we feel that further action should be taken to investigate where further savings could be made across government to ensure that fuel duty is not raised again before the end of this parliament.”

The Housing Bubble

The Bank of England must find a way of slowing demand without bringing the economic recovery to a halt.

Of the Ten Commandments of central banking, the most important is to take away the punch bowl before the party gets started. Perhaps inevitably, few manage to obey. Central banks are invariably too slow to cut rates when circumstance demands – the European Central Bank has waited until the eurozone is almost in deflation before taking action – and too slow to raise them when the economy starts to overheat.

So it appears with the Bank of England, which despite a quite pronounced bounce in the economy, and accompanying recovery in the housing market, has committed itself to not raising interest rates for at least three years – subject to inflation and unemployment thresholds.

Margaret Thatcher’s favourite theorist, Friedrich Hayek, was by no means right about everything. But one of his central insights contains a great deal of truth. It is that expansionary policies in a recession will only postpone the necessary adjustment – and that creating more credit makes the eventual return to reality more painful still.

Today, Britain is being cynically frog-marched into a pre-election credit boom, for which there may eventually be a quite heavy price to pay.

Now, it would be wrong to exaggerate the current state of play. Despite the positive news on growth, the economy remains some distance below pre-crisis levels of output. In some parts of the country, it still feels like a depression. It can therefore be reasonably argued that the Bank of England shouldn’t even consider taking its foot off the monetary accelerator, at least until the economy is back to where it was.

But here’s where the debate gets really interesting. Why is it that output here has come bounding back, even as the world economy slows and the eurozone sinks ever further into the doldrums?

Certainly it has got nothing to do with the Government easing back on its austerity programme; to the extent that there ever was austerity, it is continuing at roughly the same pace as before. Nor has it got much to do with our moving towards a more balanced economy, less reliant on consumption and more driven by exports and investment. In fact, consumption today has an even bigger share of GDP. No, the true explanation is that the credit cycle has turned. Consumers are more confident, so they are borrowing more and saving less.

Behind this turnaround lie three key policy initiatives. Help to Buy has provided crucial support for the housing market. Funding for Lending has hosed the banks down with cheap money, giving them the capacity to start lending again. And the Bank of England’s “forward guidance” has offered households and businesses a degree of confidence that they are not about to be hit by a precipitous rise in interest rates.

As engineered, politically driven recoveries go, it’s quite clever. But it won’t be sustainable much beyond the election unless there is a pretty dramatic pick-up in business investment from here on in. So far, there is very little sign of it.

Having largely lost the argument over austerity, Labour has switched tack to the “cost of living crisis”. This may or may not be politically astute, but unfortunately it is a problem that is even less easily magicked away than a flatlining economy.

Certainly it is not going to be solved by Labour’s economically illiterate mix of price controls on energy and tax incentives to create higher wages. This will only succeed in raising unemployment. Similarly, reversing the Coalition’s attack on benefits, which is also depressing overall household income, would have to be paid for – and negated by – higher taxes.

In truth, there are no easy fixes for falling real incomes, since the underlying cause is endemically poor productivity. In recent years, Britain has become substantially less productive. Output has fallen, but employment has risen; ergo, output per worker – which was already quite low even before the crisis – has been badly eroded.

You cannot spend what you don’t earn unless you borrow the difference. Policy-makers have therefore returned to the old palliative of compensating for stagnating incomes by encouraging an expansion of credit.

Both the Bank of England and the Government believe that with a recovering economy will eventually come an improvement in productivity, real wages, and therefore living standards.

Believe it if you will. An alternative view is put by Fathom Consulting’s Danny Gabay, who thinks there is very little spare capacity in the economy. If that’s true, then Britain’s credit-led recovery will soon cause inflation to spike higher again.

So how could the Bank of England remove the punch bowl without bringing the recovery to a screeching halt? Raising interest rates is not the only tool available. The Bank could also act directly to prick the nascent housing bubble via its newly formed Financial Policy Committee. Some of the committee’s members, alarmed by the speed of the recovery in house prices, are already determined to act, by increasing capital requirements on mortgage lending, or recommending the imposition of tougher loan-to-value and/or loan-to-income criteria. Alternatively, they could simply embarrass the Chancellor by recommending that Help to Buy be scrapped.

A rather better solution all round, though one with few immediate political dividends, is the deregulatory and planning shake-up necessary to bring about a genuine improvement in supply and productivity. Unfortunately, such a course requires a rather braver Government than this one.

Alternatives to payday loans

If you’re struggling with your finances, a quick and easy payday loan can seem like a good option. But there are many other far cheaper alternatives.

Payday loans have been heavily in the spotlight this week. First, Wonga went on a PR offensive, premiering a film called 12 Portraits which featured 12 of its customers. Then there was a string of interviews in which the company’s Niall Wass told anyone who would listen the majority of Wonga’s customers were happy with its service.

Then representatives of three of the biggest payday lenders were grilled by a committee of MPs and naturally defended the industry and its practices.

While the industry may have cleaned up its act compared to a year ago, the simple fact remains that payday loans are an extremely bad way to borrow. Several mortgage brokers have also spoken about the detrimental effects using payday loans can have on any future mortgage application, as lenders see them as a sign of desperation and an inability to manage money.

But if money is really tight, what are the alternatives?

First steps

Cut your spending and budget

This should be the first thing you should do.Just looking at your monthly spending habits can make you realise you need to cut some things out completely. And if you’re using payday loans to pay off for nights out and new clothes then you’re already in deep trouble.

A budget can get you back on track so you have enough for both bills and treats.

Why not check out our free, secure Money Track budgeting tool?

Take out a 0% credit card

If you have a good credit rating but your debts are slowly mounting up and you’re only able to make the minimum payment on your credit card or you have a large overdraft, a 0% credit card could give you some valuable breathing space.

If you have card debts you want to transfer, you could get up to 30 months with no interest to pay using a 0% balance transfer credit card. All you have to pay is a fee, which is a small percentage of the debt you’re transferring.

If you have an overdraft, you can take a card that offers a 0% money transfer period. This allows you to transfer money into your current account and it will just cost you a percentage of the amount you’re borrowing (usually 4%). At the moment, you can get a 0% money transfer for 27 months with the MBNA Platinum and Fluid 27-month cards. Compare 0% credit cards

Ask for a pay advance

The best payday loan could come direct from your employer.

Asking for an advance on your wages could mean you meet the shortfall an unexpected bill or car repair causes, without the risk of falling into a pit of debt. Companies with a good cashflow may be willing to pay an advance on your wages and usually take the amount out of your next payslip.

Another way your employer may be able to help is by allowing you to do some overtime to boost your pay.

Turn to friends and family

Turning to your family or even your friends for a loan could prevent you from falling into a spiral of debt. They may even be able to lend you the money interest free.

Just remember to treat paying back a friend or family member as seriously as you would an official lender. After all, you don’t want them to fall into debt because you haven’t lived up to your side of the deal. If you want to make it official and reassure those close to you that you will repay, write down an agreement clearly marking the exchange as a loan not a gift.

Sell some old stuff

From CDs to DVDs, games to gadgets, if you have things you don’t use that could be cashed in then now is a good time to do it.

You could sell them online on sites such as eBay or Amazon or in high street shops such as Cash Convertors or Cash Generator.

Ask your bank for an authorised overdraft

An authorised overdraft with your bank is an alternative form of borrowing that is far more affordable than a payday loan.

Overdrafts that are agreed formally, rather than used accidentally, which are known as unuathorised overdrafts and can cost a small fortune, typically have rates between 12% and 20% AER. However, the Nationwide FlexDirect account offers a fee- and interest-free overdraft for a year, so long as you pay in £1,000 a month to the account.

Next steps

If money is still tight after you’ve exhausted all the options above, then find out if any of these are viable.

See if you’re entitled to benefits

The benefits system in the UK is highly complex, so many of us are unaware of the benefits we may be entitled to.

If you are pregnant, on a low income, caring for someone, have been bereaved, aged 60 or over, ill or disabled or even if you are unemployed then there is a chance that you could be entitled to a range of benefits such as Working Tax Credit, Child Benefit, Income Support, or Jobseeker’s Allowance.

Use this handy benefits checker on the Gov.UK website to double check you are claiming all the benefits you qualify for.

Apply for a credit union loan

Credit unions are not-for-profit, community-based organisations that provide transparent savings accounts and affordable loans to its members. Credit unions have a common community bond, so you could find yours where you live or where you work.

Many of them now offer payday loans at far lower rates than payday lenders. The only catch with credit unions is you often need to be a member before you can borrow.

To search for your nearest, use the Find Your Credit Union website.

Look into a budgeting loan

A budgeting loan is available from the Government to those on income support, income-related employment/support allowance, income-based jobseeker’s allowance and pension credit and is available if you need to pay for a particular range of expenses.

The loans are between £100 and £1,500, are interest free (so you only pay back the amount you borrowed) and you have two years in which to pay them off.

Seek free debt advice

If your finances are out of control and you consistently turn to payday loans, you should seek advice. There are a number of charities that are dedicated to helping those in financial difficulty such as StepChange Debt Charity, National Debtline and the Citizens Advice Bureau.

A Guide to Bridging Loans

Bridging loans are a short-term funding option. They are used to ‘bridge’ a gap between a debt coming due – and we’re talking primarily about property transactions, here – and the main line of credit becoming available. Or they can simply act as a short-term loan in pressing circumstances.

They can be invaluable in facilitating a property purchase that otherwise would not be possible. But as you might expect with a stop-gap measure, they can be significantly more expensive than a ‘normal’ loan.

What are bridging loans and how do they work?

Bridging loans are designed to help people complete the purchase of a property before selling their existing home by offering them short-term access to money at a high-rate of interest.

As well as helping home-movers when there is a gap between the sale and completion dates in a chain, this type of loan can also help someone planning to sell-on quickly after renovating a home, or help someone buying at auction.

As banks and building societies have grown more reluctant to lend in the wake of the financial crisis, there has been an influx of bridging lenders into the market.

Who are bridging loans aimed at?

Generally speaking, bridging loans are aimed at landlords and amateur property developers, including those purchasing at auction where a mortgage is needed quickly.

They may also be offered to wealthy or asset-rich borrowers who want straightforward lending on residential properties.

When should you use bridging loans?

Bridging loans can be used for a variety of reasons, including property investment, buy-to-let and development.

However, more recently, there has been a growing trend among borrowers to use bridging loans because high street and private banks are taking longer to process applications for larger home loans.

Some borrowers are also viewing bridging loans as a simple alternative to mainstream lending.

While a bridging loan may sound tempting, if you’re thinking about taking one out, you need to think carefully about your exit strategy. This might, for example, involve getting a mainstream mortgage or a buy-to-let mortgage, or selling the property altogether.

Crucially, if you’ve not used this type of finance before you need to tread carefully and get all the facts before hand and figure out if it’s the right sort of lending for you.

Put simply, bridging loans should not be viewed as an alternative to mainstream lending.

Where can you get a bridging loan?

Bridging lenders can come in all shapes and sizes, ranging from one-man bands up to professional outfits regulated by City watchdog, the Financial Services Authority (FSA).