Two new payment safeguards to protect online consumers unveiled

The Payments Strategy Forum – the body set up to analyse and improve the payments industry – has unveiled two new safeguards designed to protect people who make payments online or via banking apps.

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The first safeguard, known as ‘Confirmation of Payee’, will mean that when a bank account holder makes a payment online, a message will come back from the bank confirming the name of the person they are paying, which they will need to confirm before the payment goes through. This is aimed at preventing people paying the wrong person accidentally or being tricked into doing so by fraudsters.

The second, called ‘Request to Pay’, will mean that when a company wants to take a regular payment from a customer’s account, a message will be sent to the consumer to confirm the payment before it is taken. Examples might be monthly gym membership fees or extra data charges from mobile phone companies.

The Payments Strategy Forum was set up by the Payment Systems Regulator (PSR) in 2015. The Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority are observers on the Forum.

Alex Neill, Managing Director of Home and Legal Services at Which?, stated: ‘This is a welcome first step, but is not a cure and won’t be enough to protect people from bank transfer scams.

‘With scams on the rise and scammers becoming ever more sophisticated, the financial regulators need to go further to ensure banks adequately tackle bank transfer fraud and safeguard us from scams.’

The new safeguards are due to come into force by 2020 at the latest.

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Employment ‘unaffected’ by National Living Wage, regulatory body reveals

The National Living Wage (NLW) has not adversely affected employment, the Low Pay Commission (LPC) has stated.

The LPC, the body that monitors low pay on behalf of the government, revealed that it has found ‘no clear evidence’ of changes in employment or working hours since the NLW was introduced in April of this year.

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It revealed that employment has risen in sectors that have been most affected by the NLW, such as the hospitality, retail and horticulture industries.

The LPC’s findings come in response to a warning issued by the Organisation for Economic Co-operation and Development (OECD), in which the think tank urged the UK to be ‘cautious’ with its plans to raise the NLW rate, given the wage’s potential impact on employment.

The OECD said: ‘The effects on employment need to be carefully assessed before any further increases are adopted, especially as growth slows and labour markets weaken.’

In the 2016 Autumn Statement, Chancellor Philip Hammond announced that, from April 2017, the NLW will rise from £7.20 to £7.50 an hour for workers aged 25 and over.

The government aims to increase the NLW to £9 an hour by 2020.

Significant number of individuals facing ‘retirement income shortfall’

More than half of the 25.5 million individuals in employment in the UK are at risk of not having a satisfactory income in old age, the Pensions and Lifetime Savings Association (PLSA) has suggested.

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A report by the pension industry body defined an ‘adequate retirement income’ as one that reaches the ‘target replacement rate’ – 67% of the amount earned before retirement.

Some 13.6 million workers are at risk of not achieving this rate, according to the PLSA.

The report also revealed that 1.6 million people are at ‘high risk’ of not meeting the minimum income standard of £9,500 set by the Joseph Rowntree Foundation.

However, the analysis suggests that auto-enrolment will leave individuals an estimated £2,500 per year better off in retirement.

Graham Vidler, Director of External Affairs at the PLSA, commented: ‘Automatic enrolment is set to deliver a tangible improvement in the retirement incomes of millions of people, but there is still work to do.

‘It is clear from our analysis that minimum contributions under automatic enrolment need to increase to at least 12%.’

Meanwhile, Frances O’Grady, General Secretary of the Trades Union Congress, stated: ‘Employers must step up and show they’re prepared to put more into workplace pensions alongside their employees. And the government must improve auto-enrolment so it delivers a decent pension for everyone.’

Nearly a third of payments to small businesses are late, FSB report finds

A new report by the Federation of Small Businesses (FSB) claims that existing government policies have had no discernible effect on tackling what it calls the UK’s ‘poor payment culture’, with small businesses reporting that, on average, 30% of payments are typically late, compared with 28% in 2011.

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The report found that 37% of small businesses surveyed have run into cash flow difficulties due to late payments, 30% have been forced to use an overdraft and 20% say late payments have hit profits.

In extreme cases, late payments have caused businesses to fail. The FSB claims that in 2014, if payments had been made on time and as promised, 50,000 business deaths could have been avoided. This would have meant growing the UK economy by an extra £2.5 billion.

Mike Cherry, National Chairman of the FSB, said: ‘Uniquely, the UK now risks having a business culture where it is acceptable not to pay SMEs on time. Based on an imbalance of power between large companies and their small suppliers, this now has a chilling effect right across the economy. It’s distressing to hear from our members that in 2016 the average value of each late payment now stands at £6,142.

‘Small businesses have to run a tight ship with their cash flow, and . . . they struggle with increasing business costs on one hand and an uncertain domestic economy on the other. They should not also have to struggle with the stress, time and money required to chase overdue payments from corporate giants.’

2016 Autumn Statement: Chancellor changes rules governing benefits-in-kind

In his Autumn Statement speech, Chancellor Philip Hammond announced plans to significantly tighten the rules that currently govern benefits-in-kind (BiK) and salary sacrifice.

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Under the government’s plans, frivolous uses of the salary sacrifice loophole will undergo a major crackdown, with the government stating that they will ‘look specifically at how the taxation of BiK and expenses could be made fairer and more coherent’.

The Chancellor revealed that, from April 2017, the tax and employer national insurance advantages associated with salary sacrifice schemes will be removed.

Benefits such as gym memberships, school fees, accommodation fees and mobile phones will be affected under the government’s new rules.

However, BiK arrangements relating to pensions, childcare, ultra-low emission cars and the Cycle to Work scheme will be excluded. Arrangements in place before April 2017 will be protected until April 2018. Specific long-term arrangements will also be protected until 2021.

Commenting on the issue, the Chancellor said: ‘The majority of employees pay tax in a cash salary. But some are able to sacrifice salary and pay much lower tax on BiK.

‘This is unfair, and so from April 2017 employers and employees who use these schemes will pay the same taxes as everyone else.’

Chancellor to present Autumn Statement today

Chancellor Philip Hammond is set to present his first Autumn Statement later today, which will outline his priorities for spending, taxation and the UK economy in the wake of considerable political and economic uncertainty generated by the Brexit vote.

The Statement outlines the government’s fiscal plans, and draws on the latest forecasts from the Office for Budget Responsibility (OBR).

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Marking his first significant fiscal event as Chancellor, Mr Hammond is expected to use his inaugural Autumn Statement to set out plans to significantly increase spending on infrastructure in an effort to boost the UK economy following the vote to leave the EU.

Many expect the Statement to serve as a ‘mini-Budget’, with others anticipating that Mr Hammond will ‘reset’ fiscal policy.

The Chancellor has been urged to overhaul the way in which tax policy is made in the UK, and to establish clear guidelines and priorities for the UK’s tax system.

The Chancellor’s speech will take place at 12:30pm. We’ll be bringing you all of the key headlines from the Autumn Statement, so make sure to keep an eye on our website throughout the afternoon. We’ll also be publishing a full and detailed summary of the Chancellor’s announcements later tonight, ready for you to read tomorrow morning.

Significant rise in long commutes to work, TUC reveals

The number of workers with daily commutes of two hours or more has risen by 31% over the past five years, analysis from the Trades Union Congress (TUC) has revealed.

Based on unpublished Office for National Statistics (ONS) figures, the TUC’s analysis shows that, in 2015, 3.7 million employees commuted to work for two hours or longer. This represented an increase of 900,000 since 2010, when the number of workers commuting for two hours or more was 2.8 million.

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The analysis also suggested that workers in the UK spent an average of ten additional hours commuting in 2015 than they did in 2010.

‘Stagnant wages’ and ‘soaring rents and high house prices’ are leaving workers unable to move closer to their place of work, the TUC suggested. It believes that these factors, combined with a lack of investment in roads and railways, may have led to the increase in travelling times.

Frances O’Grady, General Secretary of the TUC, commented: ‘None of us like spending ages getting to and from work. Long commutes eat into our family time and can be bad for our working lives too.

‘Employers cannot turn a blind eye to this problem. More home and flexible working would allow people to cut their commutes and save money.’