The amount of fraud cases has been rising and with digital banking becoming the new norm there are many ways someone can get access to your account. It is important to stay aware of scams so you can protect your accounts.
The Guardian reported that fraud cases in the UK more than doubled in 2023 to £2.3bn.
Bank can help you prevent fraud as well as claim refunds if you are a victim to fraud. Some banks such as, Monzo have a high fraud rate as well as being rated poorly for reimbursing their customers which could be a factor to consider when choosing your bank account, especially if all your savings are there.
If you are a victim of fraud, you can report this and seek help from your bank.
If you are trying to save money and need some extra tips then the 50-30-20 rule could be super helpful to create a budget.
With this rule you will be splitting your income up and assigning each pot of money to a selected category.
This rule will work best if you have a separate savings account so you can keep that away from your spending money and visualise what you have left.
50 - Needs
50% of your income will be spent on your needs and necessities throughout the month.
This includes rent, house bills, car payments, grocery shopping, childcare and anything else that you absolutely need to pay. It would be best to be strict about this section and only put things you couldn’t live without in here, don’t be tempted to pay for any hobbies from this pot.
30 – Wants
30% of you income will be spent on your wants.
This would include any hobbies you have, gym membership or streaming subscriptions. Any days out or social events should also be paid from this pot of money. Also included would be any shopping that is not necessary such as a new dress or watch.
This will help you budget how much you can spend on your wants throughout the month and not be tempted to over spend. This would help you if you have a habit of impulse shopping. You will have a visual of how much you can spend and what will have to wait until next month.
20 – Savings
20% of you income should go into a savings account or an ISA.
Trying to save whilst on a small income or when you have other obligations can be challenging. Using this rule will help you put away a small amount each month and by budgeting like this you will know it can be done.
If you need to change the percentages to fit your situation, say if you have a long list of needs then increase this to 60% and only put 10% in you savings. This still allows you to save whilst not being super low on money at the end of the month.
For example...
If your monthly income is £1,700 and you followed the 50-30-20 rule then you would have,
£850 to spend on your needs list, £510 to spend on your wants and then £340 to put into your savings each month.
The PSR conduct research to discover which banks were subject to the most fraud as well as the rate at which reimbursement was provided to customers.
UK Finance has found that APP fraud in the first half of 2023 came to a total of £239.3m and there was only £152.8m returned to the victims.
APP fraud
This is when a customer is tricked into authorising a payment to an account controlled by a criminal.
APP stands for authorised push payment.
What is being done about bank fraud?
PSR are introducing mandatory reimbursement for victims of APP scams meaning banks will have to abide by these rules to help their customers further. They rules will be introduced later in 2024.
Your bank should help you if you are a victim of fraud, if they don't you have the right to push for it.
If you detect fraud on your account it is important to act as quickly as you can and follow these steps.
Keeping your money safe is a top priority and customers expect their accounts to be secure. This is why when picking your savings account you may want to consider the banks which have a reimbursement policy.
The banks with the highest fraud rates
We have all seen food prices rise sharply over the past two years, but there is evidence to suggest that we have seen the worst of the escalating food costs.
Many factors have caused food prices to spiral upwards since 2022, including issues over the global supply chain since the Covid-19 pandemic, and the Russian invasion of Ukraine that placed huge pressure on energy prices that led to huge knock-on effects for the cost of food.
Labour costs have also increased to cope with sky-high inflation, and the after effects of Brexit via areas such as an increased paperwork load are thought to have created higher costs for food retailers and producers alike.
British Retail Consortium finds March fall in food inflation
Figures complied by the British Retail Consortium (BRC) showed that there is room for optimism for consumers, as food inflation fell to 3.7% in March from 5% during February.
This is also below the three month average of a 4.8% increase in food prices from the BRC‘s own data, and the drop in food prices for March was the tenth successive decline in food prices.
In the BRC’s food category inflation is now the lowest it has been since April 2022, when food bills started to soar.
Falling prices in foods such as chocolate, jam and sugar have helped to slowdown the rises in food prices, according the BRC’s chief executive Helen Dickinson.
This is despite high global cocoa, dairy and sugar prices, as retailers have rallied to give consumers some “cracking deals” Dickinson said.
Supermarket competition has been the driving force behind falling prices consumer research group Nielsen IQ found, as they increased the amount of shoppers at their stores with discount deals and promotional offers for Easter and for Mother’s Day.
Official Figures also revealed food price rise cooling
Data from the Office of National Statistics (ONS) also said that there has been an easing of rising food cost inflation.
The prices of food and non-alcoholic beverages rose by 7% in the year to January, and this was an easing compared to the 8% food inflation that was found in the 12 months to December.
This matched what the BRC found in that it was the lowest food inflation that has been recorded since April two years ago.
Bread and cereals were the main drivers for the fall of annual prices in January, which fell by 1.3% on the month, and this was the biggest drop in prices in this category since May 2021.
These recent figures are far better than the peak of 19.2% food inflation for March last year, this was the highest rate ever seen for over 45 years in what was a shocking development
Yet despite the better news over recent months on food prices, overall the rise of food and non-alcoholic beverages rose by around 25% between January 2022 and January this year, again highlighting just how damaging the rise in food costs have been.
A survey carried out by the ONS in January revealed that 40% of adults across Britain said that they spend more on what they would usually buy when food shopping.
It was also found that four in ten consumers were buying less food than before, as the prices have mounted up.
For those of you who still like to go out to restaurants and cafes, there was a similar pattern and prices rose by 8.2% for the year to January compared to 7.7% in the year to December.
So how will food prices go for this year?
Most analysts expect that inflation overall will continue to fall from its current level of 3.4%, with the Bank of England stating that inflation could fall below its 2% target in spring before rising again.
Tesco have announced that price pressures on grocers have eased which has allowed prices of food to decrease. Their pre-tax profits hit £2.3bn this year with their sales rising by 4.4%, reaching £68.2bn in the year ending February 2024.
Tesco was able to make price drops on more than 4000 products by the end of the year with the average price cut at about 12%.
On the whole it’s a good indication that food price inflation should continue to drop.
One prediction from the Institute of Grocery Distribution (IGD) said that food inflation will average from 1.9% to 3.9% over the course of this year.
While by this Christmas food inflation the IGD said will be around the 0.3% to 2.3% mark, and the organisation has a well earned reputation for being accurate over the direction of food prices.
This means that prices will still be increasing, but at a slower pace than what has been found by the ONS in the years to both January and December.
It’s a welcome trend that will be a relief to many after the ever spiralling rises of the past two years.
Each year in March or April providers will increase their prices which in the past have added a substantial cost to peoples phone bills.
In 2024 the average increase has been around 7.9% on top of customers’ bills.
Why?
The prices always rise according to the Retail Prices Indec (RPI) or the Customer Price Index (CPI) as well as an additional 3.9% to offset the inflation rate and rising business costs for the provider
This year the RPI was 4.9% and the CPI was 4%.
Which Providers increased their prices?
You should have been given a warning 30 days before the prices increased. Providers are also legally allowing to raise prices mid-contract.
EE – 7.9% increase
O2 – 8.8% increase
Sky Mobile – (Out of contract) 3%
Talk Talk – 4% increase
Which Providers have not increased their prices?
Lebara Mobile has not increased any prices. Often the smaller providers will not rise their prices.
Others will keep their prices stable if you are in a contract or deal with them already.
GiffGaff – For those mid-contract prices have remained the same
SkyMobile - For those mid-contract prices have remained the same
Tesco Mobile – If you are signed up to a Clubcard deal will stay the same
What to do if your bills rise?
Unfortunately if you are mid-contract and your bills rise there is little you can do as exit fees are often high. You should review your contract to determine if exiting would be worth it or not. Also check to see when your contract ends to make sure you can shop around before it ends.
Uswitch has estimated this will have people paying £24.23 more on mobile phone bills.
The cost of living crisis continues to affect households with rising prices in various areas of life.
Your mortgage is going to be a significant financial investment and a long-term commitment that will require careful consideration of your budget and financial capacity. Deciding how much you can afford to borrow is a crucial step in this process, and both you and the lender will need to thoroughly evaluate your current financial situation, including any existing debts, to determine what monthly repayments you can comfortably manage.
Before you begin the mortgage application process, it’s essential to understand how much you can realistically expect to borrow and what you’ll need to contribute toward a deposit. You also need to be mindful of other potential costs associated with buying a home, such as legal fees, stamp duty, and home insurance.
Mortgage to Income Ratio
One of the most important factors to consider when taking out a mortgage is your mortgage-to-income ratio, which measures how much of your income will go towards repaying your mortgage. It is wise to keep this ratio as low as possible to ensure you can comfortably make repayments over time. Missing payments can lead to increased interest charges, a negative impact on your credit score, and, in the most severe cases, repossession of your home.
How Much Should You Spend on Your Mortgage?
A common rule of thumb is to spend no more than 30-40% of your post-tax (net) income on mortgage repayments.
This guideline is often used by homeowners and recommended by financial advisors. Sticking to this range helps ensure you have enough money left over each month to cover other essential expenses, such as utilities, groceries, and emergency savings, without feeling financially stretched. For example, if your monthly take-home pay is £3,000, a responsible monthly mortgage payment would be between £900 and £1,200. Spending more than 40% of your income on housing costs could increase your risk of falling behind on payments, especially if unexpected expenses arise or your income changes.
How Lenders Determine Your Mortgage Affordability
In the UK, lenders typically apply a borrowing limit that is 4 to 4.5 times your annual salary. This is known as the loan-to-income (LTI) ratio. However, lenders will also assess your affordability based on your outgoings, debts, and financial commitments. For example, if you have significant student loans, credit card debt, or childcare expenses, your mortgage offer may be lower than the maximum loan-to-income ratio would suggest.
Halifax and Lloyds have updated their policy to lend 5.5 times your income giving many first time buyers a better chance at buying a home.
The Bank of England has set guidelines to prevent excessive borrowing and reduce financial risks. For most borrowers, a mortgage cannot exceed 4.5 times their income, and only 15% of new mortgages can be at this upper limit. This restriction helps protect both homeowners and the economy from excessive debt and prevents a repeat of the housing market crash seen in the late 2000s.
For Example
If you earn £30,000 annually, your maximum mortgage is likely to be in the range of £135,000 to £150,000. At the same interest rate and mortgage term, a £135,000 mortgage could result in monthly payments of around £690. If your post-tax income is £2,000 per month, this equates to approximately 34% of your income.
Impact of Joint Applications
If you are applying for a mortgage with a partner or co-buyer, lenders will consider both incomes, which can increase your borrowing potential. For instance, if you and your partner have a combined annual income of £80,000, the maximum mortgage available could be around £360,000. However, joint applications also mean both parties are responsible for the repayments, so it's important to ensure both incomes are stable and that the overall debt is manageable.
Other Factors to Consider
While income and debt are the primary factors in determining how much you can borrow, lenders will also look at the size of your deposit. The more you can put down as a deposit, the better your chances of securing a mortgage with favourable terms, such as lower interest rates. In the UK, most lenders require a minimum deposit of 5-10% of the property’s value. However, putting down 15-20% or more can give you access to better mortgage deals.
You should also factor in the costs of homeownership beyond the mortgage itself. Home maintenance, insurance, council tax, and utilities can add hundreds of pounds per month to your overall expenses. Planning for these costs is vital to avoid overstretching your finances.
In a bold move aimed at incentivising individuals, particularly healthcare professionals, to extend their working years, the UK government announced the abolition of the Pension Lifetime Allowance (LTA) in the 2023 Autumn Statement. Set to take effect from April 6th, 2024, this decision seeks to encourage more people, especially doctors, to remain active in their professions for longer durations.
Abolishing the LTA
The abolition of the LTA is expected to benefit individuals with substantial retirement savings, as well as public sector workers with sizable final salary schemes. However, amidst the anticipation of this policy change, concerns have been raised within the industry regarding the pace of implementation and its potential implications for customer advice and outcomes.
Industry experts have called for clarity and guidance on the new rules and regulations, urging the government to provide further details to facilitate a smoother transition. Some industry leaders have even advocated for delaying the implementation of the abolition until 2025 to ensure a more seamless adjustment period.
Despite the abolition of the LTA, complexities persist within the pension system, including caps on tax-free lump sums and lump sum death benefits, adding layers of intricacy to navigating the new regulations.
Review of State Pensions
In addition to the abolition of the LTA, the government's 2023 Review of State Pensions shed light on the challenges posed by increasing life expectancy and the fiscal sustainability of the State Pension. As the retirement age is set to rise to 67 between 2026 and 2028, questions arise regarding the government's commitment to intergenerational fairness.
The triple lock mechanism, which guarantees State Pension increases by the highest of inflation, average earnings growth, or 2.5%, continues to be a focal point of discussion. Despite criticisms regarding its cost and fairness, both the Conservative and Labour parties have shown reluctance to reform the triple lock agreement, emphasizing the importance of safeguarding pensioners' financial security.
It remains crucial for individuals to stay informed and proactive in managing their pension plans amidst evolving regulations and policies.
Shampa Roy-Mukerjee is an Associate Professor (Economics) and Director of Innovation and Impact, at RDSBL, UEL.
Why Pensioners have to pay income tax now
The 2024 budget has stated the the triple lock system will be secured which allows the state pension to increase in line with inflation so that pensioners are able to afford the rising cost of living. This rise has now set the state pension to, £11,502 from now.
The tax threshold is remaining steady at £12,570, so those who only receive the state pension will have no changes. Those who receive this as well as an additional private pension of £1,068 or more will be pushed into the tax bracket and have to start paying income tax.
Pensioners worry for their finances
Clarke and Peacock estimate that around 650,000 pensioners will now have to pay income tax.
The financial worries for pensioners now increase with the added tax and being able to afford the cost of living is already difficult on their low incomes.
Many worry about what they will have to do for this new rule. HMRC have stated that there will be no need for self-assessments as this is an automatic payment. However, the likelihood of incorrect tax codes means that claiming back overpayments will make contacting HMRC a necessity. This is a frustrating and worrying time for pensioners as they have to navigate their new finances.
Each year the government reviews the minimum wage and in April each year they are updated.
This year there will be a rise which will increase over 1 million people who are on the minimum wage currently.
The House of Commons Library states that the rates are provided in regulations made by the secretary of State with parliamentary approval and is based on the recommendation of the Low Pay Commission (LPC).
The new Minimum wages
For those who are over 21 the minimum wage will rise to £11.44 which is a £1.02 increase.
For 18-20 year old the new minimum will be set to £8.60 which is a rise of £1.11.
For 16-17 years old their new rate will be £6.40 which is a rise of £1.12.
The rate for apprentices will be £6.40 which is a rise of £1.12.
What is the average living wage needed in the UK?
The UK Government update the minimum wage rates each April to suit the economic situation and inflation at the time. However, does this allow people a liveable wage and is there a gap?
Statista discovered that the average voluntary living wage is £12 across the UK, in London this rises to £13.15.
In 2023 the Joseph Rowntree Foundation found that of the 14.4 million people roughly living in poverty, 8.1 million of these were working adults.
Their date found that for a couple with two children if they were living in poverty they would need an extra of £6,200 a year to reach the poverty line.
Despite the minimum wage increasing there is still a worry as inflation is not slowing quick enough and rental prices are rising faster than the growth of wages.
How does this compare to other countries?
The parliament reports their comparison with 25 other OECD countries and the UK were reported with the 8th highest adult minimum wage in 2022. This takes into account the varied cost of living in each country.
This year the EUROS begin again in June, hosted in Germany and set to increase spending across the UK again.
In 2022 the UK viewers of the Euros reached 17.4m and globally there were over 300 million viewers.
Where do people spend the most money?
Pubs and restaurants are welcome hosts to fans across the country who are more willing to spend around the time of the sporting event.
Lloyds Bank data found that in 2020, the year England were in the finals, spending in pubs and restaurants increased by 52%.
As well as this, spending in supermarkets increased by 26% in the time between June and July that year.
The economic impact
In 2022 during the UEFA Women’s Euro spending was at a high as well with an £81m economic impact for host cities across the Country.
They found that there was £44m in spectator spending around matchdays as well as trips to host cities.
Domestic and international visitors made over 552,000 day and over night trips to these cities.
Sporting events have been proven to lift the spirits of the public and in effect increase their spending which boost business and therefore the economy.
The economic impact is always greater for the host country which is why the bid for this is intense and begins early. England, Northern Ireland, Wales, Scotland, the Republic of Ireland and Turkey are already bidding for the host role for 2028 reported from Sky News.
Is this a short-term boost?
While businesses definitely prosper from large sporting events and increased spending this effect does usually die down. Once the celebrations disappear the spending slows and could even decrease.
If the public have overspent during the event then they may have the next few months of cutting back which leads to inconsistent spending.
The survey
The British Social Survey has been running since 1983 to track the satisfaction of the British public for the health service.
In 2023 only 24% reported satisfaction with the NHS due to waiting times and staff shortages being the biggest concerns.
This is a record low since the poll began and has recently dropped 29% points from 2020 .
Government funding for the NHS
Health care Funding reports that 86% of government funding goes towards the NHS for day-to-day costs including medicines and paying staff.
In 2023/24 the spending amounted to £163bn in cash terms which is expected to increased to £192bn for the year 2024/25.
Many people have called for a shift in focus for spending claiming that the government needs to re-evaluate where the money goes in order to improve the NHS.
The Complaints
Waiting lists are at a high with people waiting months if not years before they receive treatment. GPs making referrals are often delayed as there is no capacity within the required outpatient department.
Waiting times in the hospitals are also creating anger with the public this is partly due to the poor patient flow where patients are not being transferred quickly as the social care lacks the capacity. Patients remaining in hospital means people cannot be seen until the space becomes available.
Staff shortages lead to a wide array of problems that are noticed by the public leading to longer wait times and unsatisfactory care for patients who require that extra supervision.
Can it be fixed?
The government has often relied on the role of the private sector to take on patients to reduce waiting lists and reduce the pressure on hospitals.
However a survey from BMA discovered that with this plan 60% of private practice doctors were then unable to provide care to their patients at the time.
The BMA also states the need for more encouragement in the medical fields for people to pursue careers within it. More options need to be presented including flexible working as often those who enter have to leave due to inflexible options.
Taxes for an improved NHS?
Is having a specific tax which covers only the costs of the NHS a beneficial way for the NHS to improve?
The survey showed that 48% of people would support an increase in taxes to allow for increased spending on the NHS.
42% of people would prefer to maintain the level of taxes and NHS spending.
Only 6% would want reduced taxes to spend less.
Would you be willing to pay a tax to improve the NHS?
Personal Finance Impact of a Labour Government.
It’s highly likely to be election year this year and if the polls are accurate then Labour are in the driving seat to form its first government for 14 years with Sir Keri Starmer as prime minister, which could mean some significant changes for your investments and pensions.
The latest YouGov/Times voting intention poll placed |Labour on 44%, with the Conservatives lagging behind by some distance with just 19% of those asked saying they would vote for them.
This is the same share of the poll they received following the aftermath of Liz Truss’ disastrous mini-budget two years ago.
Labour’s simplifying ISAs plan
Earlier this year Labour released a report Financing Growth: Labour’s plan for financial services, which outlined its plans for how your personal finances would be handled if it won power.
The savings landscape is to be reviewed, and a major part of the plan to reinvigorate the capital markets is to simplify ISAs to make it easier for people to feel the benefits of saving.
This is to be done through the increased utilisation of stocks and shares ISAs.
Although the report does not offer any more details of how this would happen.
It’s a direction that would welcomed by some major players in the financial services market such as AJ Bell, who have long advocated ISA simplification moving away from the multiple products of today’s system to a single ISA vehicle.
Pensions to be reviewed
Labour welcomed auto-enrolment for pensions that was introduced by the coalition government in 2012, and it will re-evaluate the whole pension model to review whether the current framework delivers sustainable retirement incomes.
A future Labour government would work with industry and consumer groups to ensure that savers are getting the best returns.
Also to identify and tackle the barriers to pension schemes investing more into UK productive assets, for example cultural and regulation-induced risk aversion.
All types of pensions will be assessed, including the employer-sponsored defined benefit schemes, where the amount is based on how many years you have been a member of your employer’s scheme, which is more typical in the public sector.
For Local Government Pensions Schemes, Labour will look to gauge the different models for asset pooling in pensions.
This includes in-house fund management at the pool level, with the aim to deliver higher returns for savers and to increase investment into more productive assets.
Also personally subsidised defined contribution schemes are to be reviewed, where Labour will hand The Pensions Regulator (TPR) new powers for consolidation if schemes fall short of offering sufficient value to its members.
The TPR will also be asked to provide guidance on fund and strategy suitability over your pension pots, and the minimum thresholds for scheme performance will be kept under review by a Labour government.
Labour also plan to bring in an opt -in scheme for your defined contribution pensions, where a proportion of its assets can be directed into UK growth assets that can be split to areas such as venture capital, small cap stocks and infrastructure investment.
A committee would be set up comprising of private investors who will draw up a list of venture and small cap funds that are supported by British Patent Capital, which is the largest domestic investor in British venture growth opportunities.
The next stage is that institutional investors will be asked to allocate a small proportion of their funds and your money to the opt-in scheme.
Consumer protection to be strengthened
Labour will empower payment service providers to delay any payments that they believe to be suspicious, this would support the work in this area which is already being carried out by the Financial Conduct Authority (FCA) and the Payment Systems Regulator.
The buy now pay later market (BNPL) is growing doe to the cost of living crises, and Labour aim to increase regulation over BNPL, something which providers have been calling out for.
The report said that Labour has laid out a plan for regulation to shield unprotected consumers, having spoken to influencers in the sector which it said has received broad support, but the details of the plan were not revealed.
The advice gap also needs to be closed and Labour said that it supports the ongoing work in this area of the FCA, such as addressing the advice gap through the Advice Guidance Boundary Review.
A Labour administration will closely monitor the progress in closing the gap, as its report said that only 8% of UK adults have received expert financial advice.
