Payment by cheque still proving popular, new research indicates

Over 500 million cheques were written during 2015, new data from Payments UK has revealed.

However, this number was 13% down compared to the year before.

Payments UK indicated that the latest figures showed that paying by cheque is still a valued form of payment.

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The research also suggested that cheques provide a secure method of payment for individuals who choose to use them.

During 2011, measures were put into place by MPs to prevent the Payments Council from abolishing cheques as a form of payment. They had been due to be phased out by 2018.

Adrian Buckle, chief economist at Payments UK, stated: ‘The cheque is still a popular payment mechanism for certain groups of people and in certain situations.

‘Businesses use cheques to pay their trade suppliers and for ad hoc payments to other small businesses. Cheques are also commonly used by older people and in any situation where you know the name of the person you want to pay but not their account number or sort code.

‘Although not as popular as it once was, the indications are that the cheque will be around for a long time to come.’

Number of multi-generational households set to rise as house prices increase

Up to one million more young people may have to live with their parents instead of renting or purchasing their own home, according to new research by insurance company Aviva.

This may be partly due to rising property costs: prices rose by 52% between 2005 and 2015, increasing from an average price of £184,000 to £279,000.

There has also been a 46% increase in the number of multi-generational households during the same period.

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Of this increase, 32% of individuals were aged between 21 and 34.

The report suggests that, based on the rate of growth over the last ten years and assuming that property prices will continue to soar, there could potentially be 2.2 million people residing in multi-generational households, and 3.8 million people aged between 21 and 34 living with their parents by the year 2025.

Furthermore, previously-released figures from the 2011 census revealed that 1.1 million households within England and Wales were officially classed as overcrowded.

Lindsey Rix, managing director of personal lines at Aviva UK, stated: ‘Multi-generational living is often seen as a necessity rather than a choice, particularly when adults are forced to move back in with family to help save for long-term goals like buying their own house’.

Property sales plummet after stamp duty changes, says HMRC

The number of UK properties sold fell by 45% between March and April as stamp duty changes came into effect, according to official figures from HM Revenue & Customs (HMRC).

Since 1 April 2016, those buying an additional property, such as a second home or a buy-to-let, have been required to pay an additional 3% stamp duty surcharge. This led to a rush to bring forward property purchases before the surcharge was introduced, and March saw a record high of 164,400 transactions.

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By contrast, just 94,370 properties in total were sold in April, and the number of residential properties sold – 84,280 – was the lowest for three years. Compared to April last year, the number of transactions was down by 14.5%.

The stamp duty surcharge for second homes was announced as part of Chancellor George Osborne’s 2015 Autumn Statement. It is expected to boost Treasury coffers by some £1 billion by the year 2021, but there have been many critics of the change, who argue that the measure will damage investment in property.

Andy Sommerville, director of Search Acumen, said: ‘A 45% month-on-month drop in transactions is a powerful testament to how Government reform can alter forecasts and sway public attitude.

‘Whilst the spike in March more than makes up for the fall in April, what is worrying is that this dip is not just the consequence of buy-to-let landlords and second homeowners clearing transactions ahead of April. It’s also the result of people trying to find their bearings, preferably even trying to stay away from the market as Brexit speculation grows louder.

‘The Chancellor, in efforts to sway voters to stay, has predicted economic shock and plummeting house prices in the event of the UK leaving the EU, while others believe falling house prices could be a good thing. Either way, the uncertainty is stagnating the market. This is likely to continue well into June, with transactions picking up once there is greater clarity on the UK’s direction.’

Significant rise in number of contactless card payments

Contactless card payments reached a record high of £1.5 billion during March, according to new data from the UK Cards Association. This high comes a mere four months after contactless spending reached £1 billion in November 2015.

Contactless payments now account for one in seven of all card transactions, compared to one in 16 a year ago.

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The data also revealed that monthly contactless spending has more than trebled over the past year. Currently, 86.5 million contactless cards are in circulation in the UK.

Overall, total payment card spending amounted to £51.9 billion during March, with transactions totalling 1.18 billion.

Richard Koch, Head of Policy at the UK Cards Association, stated: ‘The dramatic rise shows that paying with contactless is now second nature for millions of consumers who see it as an alternative to cash.

‘Contactless cards are already being used to pay for travel and to donate to charity and as the technology evolves, we will see even more environments where contactless will enable fast, easy and secure payments.’

Nunn Hayward Broadcast: May Issue

Articles include: New tax measures come into effect. Multinationals to be required to disclose tax affairs. Essential Tax dates for May.  Plus lots more…

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NH Broadcast May 2016

Savers to receive additional retirement scheme protection

Individuals’ retirement savings are set to be better protected under the new Pensions Bill.

Some had expressed concerns that those paying into auto-enrolment pensions could potentially lose their funds in the event of their scheme collapsing.

The Bill, which was recently announced in the Queen’s Speech, will provide extra supervision for ‘master trusts’. These trusts supply employers with occupational pension schemes.

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Pension industry experts have previously warned that nearly a quarter of a million people were at risk of potentially losing their retirement savings, after a BBC investigation discovered that many master trusts were not large enough to survive.

Under the Bill, The Pensions Regulator (TPR) will be granted greater powers to authorise any schemes and take action where appropriate.

Master trusts will also need to demonstrate that they comply with strict new criteria before they can enter the market.

Lesley Titcomb, TPR’s chief executive, stated: ‘We have voiced concerns for some time about the need for stronger legislative standards for master trusts and have worked with government and other regulators to improve levels of protection for members’.

Furthermore, a new guidance body will also be established, amalgamating the Pensions Advisory Service, Pension Wise and the Money Advice Service. This body aims to help those retiring and individuals in debt.

Competition watchdog sets out proposals to reform the banking industry

The Competition and Markets Authority (CMA) has issued proposals for a major reform of the retail banking industry and claimed that, if adopted, its package of measures to improve competition ‘could bring benefits to bank customers to the tune of £1 billion over 5 years’.

bank of england

The provisional conclusions of the CMA’s 18-month study focus on increasing competition between banks in personal current accounts and in banking services for small and medium-sized enterprises (SMEs), and on creating new protections for overdraft users.

Alasdair Smith, Chair of the CMA’s Retail Banking Investigation, said: ‘For too long, banks have been able to sit back and not work hard enough for their personal and small business customers. We believe the strong and innovative package of measures we are proposing will give customers the information and tools they really need to get a better deal out of the banks. They will also protect those who fall into overdraft from being stung with unexpected fees.’

The CMA suggests that banks should be required to set a monthly maximum charge for unarranged overdrafts on personal current accounts, and ensure that customers are automatically signed up for text alerts warning that they are about to go overdrawn, so giving them time to pay money in.

Proposals to increase competition in the industry include:

  • a requirement for banks to prompt customers regularly to check that they are getting good value – for example, if interest rates change
  • introducing a simple app to help customers compare and switch accounts
  • making the price of loans more transparent, to help business customers.

The CMA stopped short of recommending that the largest banks should be broken up, on the grounds that this would not address ‘the fundamental competition problems’ of ‘a lack of transparency on fees and charges’.

Alasdair Smith added: ‘New entrants into a market are an important source of competition and innovation, and we are well aware of the current barriers to challenger banks in UK retail banking.

‘What’s really holding them back is their ability to highlight to customers how new offerings compare with their current deal. Our package of banking reforms will help new competitors get a stronger foothold in a market which is of vital importance to the whole economy.’

The CMA will publish its final report on the retail banking market investigation by 12 August 2016.