Tuesday, 3 March 2015


If you have been sent a letter from AI Scheme Limited with a heading 'you may be entitled to compensation for your card security product' do not assume it is junk mail. It could be worth hundreds of pounds.

The letter is about compensation for insurance which was supposed to protect you from financial loss if your credit or debit card was stolen or misused. It promised to reimburse you for any money spent on the card after it was lost. But it was a waste of money. The banks selling the insurance knew perfectly well that they would bear any loss incurred after you told them you had lost your card. And they also knew they would reimburse all but £50 of any money stolen before they were notified – and usually they reimbursed all that money too. So this insurance was useless and should never have been sold. Selling it amounted to fraud - it was misleading you to make money. Don't expect any prosecutions. But you can expect compensation.

Firms and brands
The insurance was marketed by a firm called Affinion International through almost all the major High Street banks. The firms in the scheme are 

Allied Irish Bank
Bank of Scotland
Capital One (Europe)
Cooperative Bank
Danske Bank
First Trust Bank
Northern Bank
Royal Bank of Scotland
Tesco Personal Finance
Yorkshire Bank

These firms have all agreed to reimburse customers for the premiums they should never have paid. The premiums cost around £25 per card per year and the mis-selling went on for more than eight years. With 8% interest on the amounts the total compensation could be hundreds of pounds.

The brands covered are 
Card Protection 
Sentinel Gold 
Sentinel Protection 
Sentinel Excel 
Safe and Secure Plus.

For legal reasons the process ahead is complicated and in several stages. 

First, the compensation scheme has to be agreed by the people affected. A voting pack will be sent to you in April or May and you will be invited to vote on it by 23 June 2015. If a majority of those voting say ‘yes’ then before 22 July 2015 the scheme will be taken to the High Court for approval. 

Make the claim
After that a further letter will be sent to you with a claim form. You must complete and return that form by a deadline in order to get the compensation. Don't worry if you cannot remember the dates or details of when you started or ended the product. The AI Scheme will have that information.

If you return the form the insurance you have will be cancelled. Some people like the product and may decide to keep it and not make a claim. You must choose between keeping the product and making a claim. My advice? Make the claim. If you want the protection offered you can always find a similar product on the market. But generally these products are very expensive and offer very poor value for money.

Your claim will be determined within eight weeks. It is just about certain that everyone making a claim will get compensation. There will be more details here about how to claim and what to say on the claim once those forms have been sent out

At some point after that you will be sent a cheque for the premiums you paid, less any money paid out on the product, plus simple interest at 8% a year on the amounts you paid from the time you paid them to a date in September 2015.

Next steps
If you have had this first letter keep it in a safe place as a reminder. But if you have thrown it away don't worry - you don't need this first letter. If your address changes after you receive it let the scheme know so that the important voting letter and claim form can be sent to you. 

If you bought or renewed this insurance from a bank, credit card provider, or Affinion International between 14 January 2005 and 31 August 2013 and have not received a letter about compensation by the end of February, contact the scheme. 

A similar scheme for a similar mis-sold product by another insurer called CPP resulted in barely a third of the people involved ever being paid. So if you get a letter headed AI Scheme Limited about compensation keep it safe and wait for the next letter in April or May. If you don’t get one but think you should have then find out why by calling the scheme helpline on 0800 678 1930 or 0208 475 3103.

You can get more information from AI Scheme and from the Financial Conduct Authority.

If you have one of these products that was sold as part of a current account you paid a monthly fee for it is NOT covered by the scheme. You should complain about it to the bank you bought it from using the information about mis-selling in the second paragraph of this blogpost. If you are refused go to the Financial Ombudsman Service.

If you have one of these products sold to you by a bank or firm not in the list above you should complain about it to the firm  you bought it from using the information about mis-selling in the second paragraph of this blogpost. If you are refused go to the Financial Ombudsman Service

4 March 2015
vs. 1.03

Tuesday, 10 February 2015


Did you miss Bonfire Day? And I mean Day, not Night. Not 5th November but 1st February. It is the day when eleven million people who do self-assessment can celebrate getting their form in by the 31 January deadline. Because the day after that they can burn some of their older financial records.

If you are in business, self-employed or you rent out property, then you must keep records for five years after your self-assessment form was due in. The return for 2008/09 was due in on 31 January 2010 and five years from then was 31 January this year. So the next day you could destroy all records which relate to the tax year 2008/09.

If your annual accounts are made up to 5 April then you can destroy documents dated between 6 April 2008 and 5 April 2009. But if your accounting year begins on 1 May, as many do, then you must keep almost another year’s documents. So 1 February 2015 you could destroy records dated 1 May 2007 to 30 April 2008. The rule is that you must keep financial records used in a tax return which are all those for your accounting year which ends in that tax year. So as documents for 2008/09 return could be destroyed, on 1 February 2015 you can now destroy documents relating to your accounting year which ends in 2008/09.

If you are VAT registered then you must keep documents for six years after the most recent item mentioned on them. So on 1 February that would be those dated up to 31 January 2009. So some documents may have to be kept a little longer than 1 February, depending when your year end is. 
And there is a different VAT rule if you sell digital goods to other EU countries - the VAT MOSS scheme. Then you must keep records of those sales until 31 December after their tenth anniversary. So sales in February 2015 need to be kept until 31 December 2025! See VAT Record Keeping

If you do self-assessment but are not in business then on 1 February 2015 you can destroy records for the 2012/13 tax year – 6 April 2012 to 5 April 2013. However, it is cautious to keep records for a bit longer as overpaid tax claims can go back four previous tax years. At the moment that means back to 2010/11. But on 6 April this year you can have another bonfire to get rid of records from 2010/11 as it will then be too late to make a claim for that year. The ultra-cautious may note that some legal claims can go back up to six calendar years and mis-selling claims such as PPI have gone back much further.

NB If your tax return was sent in late – after 31 January – then you should keep records for fifteen months after it was sent and if there is a live tax enquiry into your affairs you must retain records that relate to the year of the enquiry until it is settled.

Gov.UK: Keeping your pay and tax records
Gov.uk: Business records if you're self-employed

If you do not fill in a self-assessment form you do not have to keep records for any particular time. Four previous tax years or even longer is cautious - see above.

Of course never destroy documents about loans, mortgages, investments, or other financial contracts that are current. And if you do the probate on someone's estate you should keep the probate records for 20 years.

And a cross-cut shredder might be safer and more secure than a bonfire.
Version 1.1 10 February 2015

Sunday, 4 January 2015


Rail fares frozen in real terms. That was the boast of the Chancellor George Osborne in September announcing that the rise in regulated rail fares such as season tickets and day returns would be no more than inflation in 2015. He used the Sun on Sunday for this announcement telling the paper 

"I can announce that no regulated rail fares will rise by more than inflation in 2015, which together with last year's freeze will save season ticket holders around £75 over 2014 and 2015."

In the past governments have allowed rail fares to rise by a percentage point or two above inflation. Hence George’s boast that in real terms they would be frozen as they were in 2014 and passengers would save money compared with what they would have spent.

The result is that on 2 January 2015 regulated rail fares in England rose by 2.5% - the rate of inflation measured by the Retail Prices Index in July 2014. Similar rises in some fares will be allowed in Scotland and Wales too, though they are frozen in Northern Ireland.

But hang on a minute, the Retail Prices Index was scrapped as an official measure of inflation by the UK Statistics Authority in March 2013 because it did not conform to international standards. And much of the Government has replaced RPI with the Consumer Prices Index or CPI which is generally almost one percentage point less. The latest figures, for example, show RPI at an annual rate of 2.0% but CPI at 1.0%. And in July last year 
  the month used to fix rail fares – RPI was 2.5% but CPI was 1.6%. Using CPI would have saved passengers £19 million. CPI is compiled according to acceptable international standards. 

Analysis of the items which are linked to RPI shows it is still used to index link items where changing to CPI would cost the Government money. So duties on fuel, alcohol, and vehicles, as well as the interest on some student loan repayments, are linked to the higher RPI. The only items which remain with RPI and cost the Government money are index-linked bonds and gilts which rise each year in line with the RPI or a fixed amount above it. But it would be very difficult to change those as they have RPI written into the contract. 

Triple Lock picked
The areas where the lower CPI is used are the ones that save the Government money such as tax allowances and social security benefits. The state pension is another victim of the change to CPI. It is protected by what the Government calls the 'triple lock'. Each April it rises in line with earnings, prices, or 2.5% whichever is highest. The change is measured in the September before the April rise. Earnings have risen less than prices and prices have risen more than 2.5% so for the years 2011, 2012, 2013, and 2014 the basic state pension has risen in line with prices. And in the last three of those years the increase has been the CPI not the RPI. The result is that the basic state pension is now £1.05 a week - £54.60 a year - less than it would have been if RPI had been retained. From April 2015 the basic state pension will rise to £115.95 a week. If RPI had been the measure of prices rather than CPI the basic pension would be £117. 

ReviewSo why is the discredited RPI used by the Department of Transport to fix rail fare rises? When I asked the Department for Transport why rail fares were in the RPI list rather than the CPI list I was told the Department was waiting for a review by the UK Statistics Authority on the use of price indices across government. At least part of that is due out on 8 January. I wonder if it will include whether the Chancellor should claim rail fares would not rise by 'more than inflation' when in fact they have just risen by two and a half times the current rate of inflation as measured by an index which conforms to international standards.

Friday, 5 December 2014


A million low income pensioners will get a rise in their state pension benefits of just 87p a week in April 2015. That is less than a third of the £2.85 a week increase in the basic state pension. Six hundred thousand pensioners who are married or live as a couple will do even worse, typically with an increase of just 60p each.

The increase for these poorer pensioners in their state pension benefits is 0.68%. Lower than the 2.5% increase in the basic state pension. Lower than the 1.2% increase in most disability benefits. And lower than the 1% rise in working age benefits and child benefit.

So they will be getting the lowest percentage rise and one of the lowest cash rises of any of the benefit changes which begin in the week of 6 April 2015.

Who gets the 87p rise?
The 1.6 million pensioners who will get the very small rise in their pensions have a low income. They get that topped up by a benefit called pension credit. That comes in two parts. The guarantee credit which tops up income to £148.35 a week for a single person. And a savings credit which adds a bit more this year for any single person aged 65 or more who has an income between £120.35 and £190.35. It is that middle group on savings credit who will get this low rise usually of 87p. For couples the income figures are higher – £192 and £278.25 – and the typical rise is £1.20 between them, 60p each.

The arithmetic
Mary is 68. She worked all her life and gets a full state pension of £113.10. She also gets another £40 a week from an annuity she bought with a small pension pot she paid into. So this year her income is £153.10. That is topped up by £14.90 pension credit savings credit making a total of £168.00 a week.

From April her basic state pension will rise by £2.85 to £115.95. Her annuity will remain at £40. And her savings credit will be cut by £1.98 to just £12.82. So her total income will be £168.87. An increase of 87p and a rise in her total income of just 0.52%.

In summary, this group will get a rise in the basic state pension of £2.85 but their pension credit will be cut by £1.98, leaving them with a net rise of just 87p, an increase of around 0.5% in their income.

The 87p rise will apply to everyone with a full basic state pension and a fixed income on top of it from £10.55 to £72.30. In other words those with incomes before pension credit of between £126.50 and £188.25. Others with incomes slightly lower and slightly higher than that will get a bit more. And those with an income below £123.20 and above £190.35 will get the full £2.85 rise. So the very poorest and those who are better off – including the very well off – will get the full £2.85 rise in their state pension. It is just the 1.6 million in this band of income who will get the restricted rise as the left hand of the DWP pays them another £2.85 and the right hand takes away £1.98. Leaving the small change of 87p. They are poor but not the poorest.

Why is it happening?
It is happening because the Government is cutting savings credit. It will not be paid at all to anyone who reaches state pension age from 6 April 2016. And for those currently getting it the amount they are paid is being squeezed down year by year. This year the maximum savings credit that can be paid is £16.80. From April that maximum will be cut to £14.82. It was £20.52 in April 2010. Since then the basic state pension has risen 19% from £97.65 to £115.95 while the maximum savings credit has fallen by 28%.

What about the triple lock?
The Government is committed to the so-called ‘triple lock’ for rises in the basic state pension. This means it will rise each year in line with earnings, prices, or 2.5% whichever is the highest. Earnings are rising by less than 1%, prices by 1.2%, so the 2.5% rise is applied raising the basic state pension of £113.10 a week to £115.95 from April. But this triple lock only applies to the basic pension. It does not apply to other parts of the state pension which will rise with prices by 1.2%. And it does not apply to pension credit at all. Both the Conservatives and the Liberal Democrats have promised to keep the triple lock for the next Parliament if they are in power.

Didn’t Labour get into trouble over a small pension rise?
In April 2000 the basic state pension went up by just 75p – from £66.75 to £67.50. That rise was announced in November 1999 and made bad headlines across the press. The pension increase was in line with the rules, rising by 1.1% which was the inflation rate in September 1999. However, the political damage was so great that an early version of the triple lock was put in place by Gordon Brown, guaranteeing that the state pension would rise by at least 2.5% even if prices rose by less than that.

Government defends
The Government justifies this shift as protecting the poorest by ensuring they get the full £2.85 a week rise in the guarantee credit which other wealthier pensioners get. But to pay for that policy the nearly poorest band pensioners are being squeezed. This year the squeeze is particularly hard because under the standard formula for pension credit the guarantee credit would only rise in line with earnings by 0.6% or 89p. In order to raise it by £2.85 the savings credit is being cut by £1.98.

When presenting the pension rise in the House of Commons on 4 December 2014, Pension Minister Steve Webb glossed over the change in these words. 

"resources needed to pay the above-earnings increase to the standard minimum guarantee will be found by increasing the savings credit threshold, meaning that those with higher levels of income may see less of an increase than they would otherwise have done."

Nowhere does he mention the 87p rise. But in a hostage to fortune he does say 

"we will not repeat the mistakes of the past such as the 75p rise in 2000."

Departmental comment
The Department for Work and Pensions responded to this story by saying “Your analysis is correct” and then gave this statement

“In order to protect the poorest pensioners, the Government has again taken the decision to raise the standard minimum guarantee for Pension Credit in line with the cash rise in the basic State Pension.

“The cost of this measure is being offset by an increase in the Savings Credit threshold. In the current economic climate the Government believes it is right to target resources to protect the income of our poorest pensioners.”

Because all circumstances are different the rise for any particular pensioner or couple will be individually worked out and may be different from the amounts quoted here. They are typical amounts and will apply to most of those affected.

version 1.01
19 December 2014

Tuesday, 25 November 2014


If you pay for goods or services by credit or debit card or by a prepaid card you have clear rights to get your money back if anything goes wrong. So it is always safer to pay by plastic and you should always do so if you can. With a credit card you have two separate rights.

Legal right
If you pay by credit card for an item which costs more than £100 and up to £30,000 then the credit card provider has a joint legal liability with the retailer for the goods or services you buy. If the product or service goes wrong you can claim the full cost back from the credit card provider. 

For example, you pay for a holiday or flight and the firm goes bust. Or you buy clothes online and they do not arrive. Or you purchase an electronic device which stops working after a week. Or you pay for an online service which is a fraud. In all those cases you can use your legal right to get your money back from your credit card provider. 

The legal right covers purchases made anywhere in the world – whether you are buying in person abroad, or you pay online or by phone. Note the price limit applies to each item not the total amount of the bill. So two items of £80 each bought at the same time are not covered but one item of £160 is.

It is called your ‘section 75’ (or s.75) right because it comes from that section of the Consumer Credit Act 1974.

Of course, it is usually best to go first to the retailer or supplier to get your money back. But if they refuse or have disappeared or gone bust then the credit card provider must refund the whole cost.

Even if you just pay for part of the purchase on a credit card and the rest in some other way s.75 covers you for the whole purchase price if that falls within the limits. So if you buy a £750 sofa and pay a 10% deposit of £75 on a credit card and then you pay the balance in cash, you can claim a refund of the whole amount from your credit card provider if the sofa doesn’t arrive or is faulty.

There is no time limit on making a s.75 claim but it is always best to make a claim as soon as possible. If the purchase was more than six years ago you may find it more difficult as that is the normal limit on legal claims.

Section 75 rights apply to every credit card – Visa, MasterCard, or American Express (credit cards but not its charge cards).

Contract right
If you pay by debit card, credit card, or prepaid card you have a separate right to get your money back called chargeback. It is part of the contract between Visa, MasterCard, or American Express and the bank or firm that provides the card. Chargeback generally has no upper or lower limits, but MasterCard won’t consider claims for items that cost less than £10. Chargeback is most useful for plastic card purchases not covered by s.75. It does not apply to American Express charge cards but American Express credit cards are covered by it (and, of course, they are covered by s.75).

Chargeback covers the same problems as s.75 – goods that are defective, do not arrive, are fraudulent, or where the firm goes bust.

There are time limits for claiming which are quite complex. Normally you have to claim within 120 days – about four months – of realising something has gone wrong. But there is also an absolute time limit of 540 days which is about 18 months. So claim as soon as you know something has gone wrong.

The chargeback procedure involves your bank going to the bank of the supplier and trying to recover money from them. But even if the supplier’s bank refuses that does not affect your right to be repaid by your bank or card provider. Some guides suggest it depends on the firm you paid agreeing to refund the bank or card provider. That is not true. Although it is not a right under a legal provision, it is an absolute right guaranteed by Visa, MasterCard, or American Express and their contracts with the card providers.

Many banks and card providers misunderstand chargeback and frontline staff may well say that you cannot recover your money or they must wait for the provider to refund them. If the product has failed or not arrived they are wrong.

How to claim
Write to your bank or card provider setting out the details of what has happened and say you are claiming a full refund under s.75 of the Consumer Credit Act or under the chargeback procedure. In your initial letter always say that if you do not get a satisfactory response within eight weeks you will take the claim to the Financial Ombudsman Service. That tends to concentrate the mind. If the claim is refused or not resolved within eight weeks then do take it to the FinancialOmbudsman Service. Normally a claim to the Ombudsman costs the financial firm £550. It is free to you. The Ombudsman upholds most of the claims that reach it. You must go to the Ombudsman within six months after receiving a final refusal from the card provider.

Not covered
Section 75 and chargeback apply when the item you purchased is faulty, goes wrong, doesn’t turn up, or was fraudulent. They do not apply if you change your mind. However, if you buy online or over the phone you have an absolute right to reject the item as long as you tell the supplier within 14 days.

This blog is a longer version of my column in Radio Times which covers a new financial issue every week in 400 words.

Sunday, 23 November 2014


More than 3000 charities distribute £288 million pounds in grants to individuals in financial hardship every year. And yet these grants are little known and hard to find.

Some give money nationally, others just to people in particular parts of the country. Some concentrate on those in a particular job - or retired from it - others to those with a particular medical need.

The charity Elizabeth Finn Care has held a database of them for some years and this week launched its improved Turn2us Grants Search to help people find the right charity to apply to.

For example a 45 year old woman with a Glasgow postcode can access 88 separate charities which will help with living costs, electricity or gas bills, career training, meeting an emergency, education costs and many other needs.

A 70 year old man living in Somerset can access grants from 73 different charities. And if he had worked in insurance another five pop up. Adding conditions such as occupation, health, religion, or family situation brings up more charities as many operate nationally to cover particular categories of people.

A whole range of disability and illnesses are catered for as well as twenty religions and family circumstances such as adopted, estranged, orphaned or pregnant.

Just about every occupation is covered in the national database, from accountants to writers, farmers to teachers, pawnbrokers to librarians. Among the 3000 charities there is a possibility for anyone in financial hardship to apply.

Turn2us says that people who have used the search have gained £2400 a year in income or more than £550 in one off grants. It also said that two out of three of those visiting Turn2us had not known about charitable help before and a third had been struggling financial for more than a year before finding help.

Apart from the grant search Turn2us also offers information about state benefits and a calculator to work out entitlement. And there are other resources to help people in need and those who work with them on the Turn2us website.

Wednesday, 19 November 2014


A payment of £200 appeared in my bank account this morning. I'm a freelance journalist so in itself that is not so unusual. But this payment wasn't a fee for work. Nor was it a payment for something I'd sold. Nor a gift from a kind friend. Unless you count Iain Duncan Smith as a friend. Because Iain's Department for Work and Pensions sent me £200 tax free this week just because I was born before 6 July 1952.

The Winter Fuel Payment was introduced by Gordon Brown in 1997. It was £20 then and put up in successive years by Gordon and then Alistair Darling to reach £250 in winter 2008. The final £50 – technically an addition to the £200 payment – was taken away for winter 2011 by the Coalition. That was one of its first austerity measures and one of the very few that have affected pensioners. Since then the Winter Fuel Payment has been (ahem) frozen at £200 per household and £300 if one person in the home is at least 80 (technically born before 22 September 1934). Its purpose is to help old folk with the cost of keeping warm in the winter.

Although free money is always nice, I don't need it. I haven't been worried, as many people are, about the cost of heating my home when it gets cold. And because it is tax free and I earn enough to pay higher rate tax it is worth the same to me as earning £333.33. So thank you Gordon for inventing it and Iain for continuing to pay it.

I am not sending it back. Nor am I giving it to Age UK or any other charity which helps people over a certain age cope with their heating bills. I prefer to concentrate what charitable giving I do on young homeless people. By gift-aiding this tax free payment it will be worth £250 - another £50 from George Osborne - when it reaches the charity. And if I give £267 the charity will get £334 and, when I settle my self-assessment tax bill, it will have cost me just 25p.

So thank you Iain and George for giving me a bit more money to help the growing number of young people left destitute by your sanctions (taking their benefit away if they fail to jump through all the JobCentre hoops). Left unhoused by councils whose government grants you have cut. And left with nothing by employers who want them to turn up as and when there is a bit of minimum wage work and go away unpaid if there is none, because your Government has not legislated to end zero hours contracts.

Happy Christmas.