Latest news with #mis-selling
The Sun
2 days ago
- Business
- The Sun
Universal Credit households warned claims at RISK over ‘mis-sold' savings accounts
SAVERS are being warned that opening a certain type of savings account could affect their eligibility for Universal Credit. When you apply for the key benefit, the Government will take into account how much you have in savings. 1 One of the factors taken into account is whether you have savings in a Lifetime ISA (LISA). A committee of MPs has just completed a review into Lifetime ISAs - and concluded the accounts may have been improperly sold to people who could be eligible for Universal Credit. The Lifetime ISA lets you save up to £4,000 a year either towards a first home or for retirement. The Government adds a 25% bonus of up to £1,000 a year on top of everything you save annually. Under the current system, any savings held in a LISA can affect your eligibility for Universal Credit or Housing Benefit. That's despite this not being the case for other personal or workplace pension schemes. The report said: "If the Government is unwilling to equalise the treatment of the Lifetime ISA with other Government -subsidised retirement savings products in universal credit assessments, Lifetime ISA products must include warnings that the Lifetime ISA is an inferior product for anyone who might one day be in receipt of Universal Credit. "Such warnings would guard against savers being sold products that are not in their best financial interests, which might well constitute mis-selling." The committee said the inclusion of the Lifetime ISA in the eligibility assessment for these benefits is "inconsistent" with other retirement products and "nonsensical". It comes as Chancellor Rachel Reeves is expected to reform ISA savings. Disability benefit explained - what you can claim ISAs are accounts that let you save away up to £20,000 every tax year without paying any tax on your interest or earnings. However the Government is hoping to push more savers towards investments rather than cash savings. What is a Lifetime ISA? FIRST-time buyers saving into a LISA can stash up to £4,000 into this account each year tax-free. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. For example, if you save £4,000, you'll get a £1,000 bonus. The amount you pay in is linked to your annual ISA allowance (£20,000 for 2023/24) – for example, if you pay £1,000 into your LISA, you can still pay £19,000 into other ISA products. Any bonus you earn doesn't count towards your ISA allowance. You can open a Lifetime ISA with any bank, building society or investment manager that offers the product. You can only open a LISA if you're aged 18–39. You can hold multiple Lifetime ISAs, although you can only pay into one each tax year. You can also transfer your Lifetime ISA to another provider, for example, to get a better interest rate. If you want to use a Lifetime ISA to buy a home, there are a few restrictions you need to keep in mind: Only first-time buyers can use Lifetime ISAs to buy a home, which means you can't own, or have owned, a home in the UK or anywhere in the world. You'll need to be buying a home for no more than £450,000. You must be buying a home you plan to live in – the scheme isn't for buying a home you want to rent out, or a holiday home. If you don't use it to buy your first home, you can continue paying into a LISA until you're 50. You can then make full or partial withdrawal from your LISA, without paying a fee, when you turn 60. Savers might be making 'poorer decisions' The review also found that Lifetime ISAs could be contributing to people making poorer financial decisions. Many use the accounts to boost their deposit savings for their first home. But experts have argued that restrictions placed on LISA customers have led to thousands missing out. You can only use a LISA to purchase a home worth up to £450,000, which in many parts of the country is feasible but in the South East and London this is increasingly pricing people out. The £450,000 limit has not changed since the LISA was first introduced in 2017. On top of this, people withdrawing money from a LISA for any reason other than retirement or buying a first home face a 25% withdrawal charge. At face value this looks like just losing the bonus offered by the Government, but in reality you end up losing 6.25% of your own savings too. In the 2023-24 financial year, 99,650 people were charged the penalty. That's nearly double the number of people who used their LISA to buy a home (56,900). The Treasury Committee, which released the report, said this was a possible indication the LISA is not working as intended. The report said: "Many people have lost a portion of their savings due to a lack of understanding of the withdrawal charge or because of unforeseen changes in their circumstances, such as buying a first home at a price greater than the cap. "However, the case for reducing the charge must be balanced against the impact on Government spending. "The Lifetime ISA must include a deterrent to discourage savers from withdrawing funds from long-term saving." The Office for Budget Responsibility predicts spending on bonuses paid to account holders will cost the Treasury around £3billion over the five years to 2029-30. Treasury Committee chairwoman Dame Meg Hillier said: "The committee is firmly behind the objectives of the Lifetime ISA, which are to help those who need it onto the property ladder and to help people save for retirement from an early age. "The question is whether the Lifetime Isa is the best way to spend billions of pounds over several years to achieve those goals. "We know that the Government is looking at ISA reform imminently, which means this is the perfect time to assess if this is the best way to help the people who need it." Brian Byrnes, head of personal finance at Lifetime ISA provider Moneybox, said the accounts have "proven particularly valuable for first-time buyers on lower to middle incomes, with 80% of Moneybox Lisa savers earning £40,000 or less". "We firmly believe that by future-proofing the house price cap and amending the withdrawal penalty, the LISA would continue to serve as a highly effective product, helping young people build and embed positive saving behaviours early in life, get more people onto the property ladder, and prepare for a more secure retirement," he said.
The Sun
09-05-2025
- Automotive
- The Sun
Car finance mis-selling case: Everything you need to know
THE car finance mis-selling scandal is everywhere, with motorists queuing up to claim a share of what could be billions of pounds in compensation. It's claimed that dodgy car dealers were pocketing extra cash from high-interest car loans, leaving drivers worse off. 2 Check if you could claim for mis-sold car finance below My Claim Group There's an upcoming court case that will put this to the test. If successful, anyone with a car finance agreement signed between 2007 and 28 January 2021 could make a claim. Could you be in line for some car loan compensation cash? In this in-depth article, Sun Motors experts will explain what the car finance misselling scandal is and why it matters to you. We'll also show you how you can register a claim through trusted provider My Claim Group. What is the car finance mis-selling case about? The majority of cars sold in the UK are bought with finance agreements. These loans enable drivers to pay a deposit and then spread the cost of a new vehicle over several years. It was discovered that car dealers, acting as loan brokers, earned a commission based on the interest rate charged to the buyer for Personal Contract Purchase (PCP) and Hire Purchase agreements. These cover about 40% of all car finance agreements. The higher the interest rate charged to the consumer, the more commission the dealer made. Basically, car dealers were incentivised to make loan agreements with higher interest rates. The practice, known as discretionary commission arrangements (DCAs), has left many drivers paying hundreds and even thousands of pounds more for their vehicles. The practice was banned by the UK's money regulator, the Financial Conduct Authority (FCA) in 2021. The FCA is also exploring where mis-selling took place on non-discretionary finance agreements, where car dealers didn't set the interest rates. It's less likely (but not out of the question) that these loans will also be part of this mis-selling scandal. My Claim Group Car finance mis-selling - the timeline Here's a basic timeline of the current car finance misselling legal situation. Problem found (2019): The FCA found some car dealers were making more money by charging people higher interest rates for loans. New rules (2020): The FCA officially banned Discretionary Commission Arrangement (DCA), where dealers chose the interest rate to get more commission. Changes start (2021): The ban came into force, which could save drivers money – around £165 million a year. More rules (2023): A new rule called Consumer Duty came in, making sure companies put customers first. By the end of the year, over 10,000 people had complained about how commission was handled when they bought a car. Pause and review (2024): The FCA paused complaint handling so it could properly look into how car finance was sold, and whether people deserve money back. Court cases begin: Some companies challenged decisions in an attempt to block compensation. Court of Appeal ruling (Oct 2024): The Court of Appeal made a judgment in the Test Cases, finding that it was unlawful for car dealers to receive a commission from loan agreements unless customers were made aware of this. This opens the door for compensation claims from millions of motorists. What's next?: The FCA says it might bring in a refund scheme (called the Car Finance Redress Scheme). A final decision will come six weeks after the Supreme Court rules on the case. How do I know if I've been affected? If you're wondering if all this applies to you, here's how to find out. If you bought a car on finance between 2007-2021, you could have a claim. The easiest and quickest way to check if you're eligible to apply for compensation is to join one of the group claims against lenders. My Claim Group is one of the leading legal firms representing thousands of drivers on a no-win, no-fee basis. If you're confident of doing things yourself, you can use this MoneySavingExpert car finance misselling guide to make a free claim. Which firms are involved? The initial mis-selling scandal emerged after the FCA began investigating Barclays, says Which?. Some of the companies caught up in the finance scandal include high-street giants Lloyds, Santander and Barclays as well as Close Brothers. Don't worry if you don't know or can't remember who provides your car loan, My Claim Group can do all this for you. What is the average payout for a mis-sold car finance refund? The finance sector is taking this very seriously, with estimates for the total cost of compensation an eye-watering £16bn, says Which?. The massive figures represent the fact that DCAs were in place for almost 15 years, and could cover millions of loans. The situation is changing and there are several possible outcomes. If the Supreme Court sides with borrowers, the average compensation should be around £1,000. However, the precise amount depends on the amount of money borrowed and interest rates, so some could expect much higher payouts. Compensation could be paid on any loan agreement that has been mis-sold. This means you may be able to make multiple claims if you have owned cars and paid loans during this period. My Claim Group When will the Supreme Court make a decision? The Supreme Court is expected to make a decision on the car finance mis-selling scandal at some point in 2025. We can't be more precise than that at the moment. Don't worry, you won't miss the announcement. This is likely to be big news for the public (and potentially bad news for the banks) Is it worth putting in a complaint now? Yes, it's important that you register your claim as soon as possible. The sooner you get your claim in, the quicker you could get any compensation that you are due. The good news is that registering your claim is simple and takes a few minutes. How do I complain? If you think you've been mis-sold car finance, the first step is to contact the company that gave you the finance. If you're not happy with their final reply, you can take your complaint to the Financial Ombudsman Service (FOS). But be aware: you might have to wait a while for that reply. Because of the sheer number of claims, the FCA says companies no longer need to respond within eight weeks. Now, finance companies don't have to reply to complaints about commission until 4 December 2025. If you're unhappy with the response, or you don't receive one, you'll also get more time to take your complaint to the FOS. Normally, you'd have six months after getting a final response. For these complaints, you'll now have 15 months, or until 29 July 2026, whichever is later. As we've explained above, you can do this all yourself if you've got the time and the My Claim Group
