Why things could get a whole lot worse for London’s first time buyers

 

By Iona Bain

 

Where We Live A4 print - LIMITED EDITION in blue | Amy Blackwell

PIC from http://www.pinterest.com/TiffGrantRiley/

If you thought London’s house prices were already out of reach for first time buyers, things could get a whole lot worse.

The Building Societies Association reckons that new lending caps brought in by the Bank of England will “seriously affect first time buyers in London and the South East” – and not in a good way.

In a stark warning published today, the chief executive of the BSA, Robin Fieth, argued that a recently-introduced restriction on high loan-to-income lending will mean younger buyers will have to wait much longer to get a mortgage in the country’s housing hotspots.

He said the level of high-to-income lending (whereby a building society or bank gives you a loan that is worth 4.5 per cent or more than your earnings) is “low” at present. However, he still advocates that smaller lenders should be allowed to judge when to stop this lending, which many fear is risky and could sow the seeds for another housing crisis, based on a fixed number of loans rather than a flat percentage. (The BOE, or rather its Financial Policy Committee, has brought in a flat rate of 15 per cent).

It also urging the FPC to introduce measures that would allow it to take a raincheck on this controversial policy in another 18 months, withdrawing it if “market conditions” improve.

Mr Fieth said: “This is the first time that macro-prudential tools have been used to control the housing market and the actual effects are an unknown quantity. Of course, affordability is crucial and banks and building societies should only lend what a customer can reasonably repay. However, our concern is the effect these measures will have on first time buyers in and around the capital.”

Get the lowdown on the intractable problems facing first time buyers all over the country, particularly below the M25, as well as possible solutions for helping young people to save up for a deposit.

Also, why it’s the housing crisis, not immigration, that’s holding back young workers

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Is financial education receiving enough government support north of the border?

IONA BAIN

FEO at work in school

Pic: Stewart Ivory Foundation

A flagship financial education scheme in Scotland that was under threat of closure this summer has received a much-needed lifeline after government funding failed to materialise.

The Stewart Ivory Foundation, which delivers workshops on financial management to 15,000 young Scots, was due to run out of money in July 2014 but the Chartered Institute for Securities and Investments has stepped in, providing a cash injection worth £45,000 as part of a three year sponsorship deal.

I reported on the lack of government support for Stewart Ivory and other pioneering financial education schemes back in February 2013 for the Herald.

It’s a relief that the CISI has intervened on this occasion, making it possible for schools to open their doors to Stewart Ivory’s team of volunteers.

But it’s also disappointing that the Scottish government did not put its money where its money was and pledge the necessary funds to keep these schemes going.

Financial education has supposedly been a lynchpin of the Scottish curriculum since 2008, but a little known study conducted by the Financial Education Partnership found that lessons flounder unless schools put a designated teacher or even department in charge of this subject.

It found 40 per cent of schools had nobody overseeing financial education when it ran a pilot of workshops in 2012, with the majority of volunteers – 71 per cent – experiencing problems when they visited students. Nearly one-third of schools didn’t have the right equipment to host the sessions.

To find out more, click here.

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The Bank of Nan and Grandad steps up to the plate as term time looms


NEWSFLASH – IONA BAIN

Pic: American National Association of Broadcasters

The Bank of Nan and Grandad is fast becoming an essential port of call for cash-strapped young people who would otherwise struggle to pay for their university experience.

Research from Saga, the nation’s champion of pensioners, found that the UK’s elders are contributing a collective £16bn towards their grandchildren’s higher education – far more than five years ago.

Grandparents typically earmarked £1000 for this milestone back in 2009 but this has now gone up to an average of £6,777.

More than a third of nannas and grandpas are happy to fund university education in this country, with Saga suggesting that older Brits were happy to let their wealth “cascade down the generations” if it ensured that the younger generation can afford tuition fees and the rising cost of living on campus.

Andrew Strong, chief executive of Saga Personal Finance, said: “The billions that Britain’s grandparents put aside for grandchildren shows both how hard they have worked and saved all their lives and also how lucky teenagers are now to have such generous relatives.

“These days, it pays for the over 50s to be savvy savers and intelligent investors, if they are to continue this generous support. Allowing wealth to cascade down the generations, seeing how their money supports their kith and kin, is the very heart of what it means to be a modern grandparent.”

For more on the financial ties between the generations, click here

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Another victim of intergenerational warfare speaks out; inspiring words for the downtrodden young

On Thursday 14th August, newspaper readers found themselves wondering whether 20 somethings represent the “complacent generation”, thanks to an article which criticised the fantastical mentality of young bloggers.

It was yet another futile missive in the phoney intergenerational war, which I have long criticised, but I felt immensely sorry for Hannah Vickers, the unwitting subject of this newest tirade against the yoof of today. She is far from complacent, entitled or lazy – she is an shining example of how young people are overcoming the financial adversity imposed upon them with panache. Rather than mount a defence in her honour, here she is in her own words, explaining some of the challenges facing our generation and why it is wrongheaded to criticise our earnest optimism. This is reproduced with permission from her charming blog Away With The Fairies.

HANNAH VICKERS

I’m not sure if you’ve heard, but today an article went live on the Daily Mail (both online and in print), featuring yours truly. Yes, you heard right, for some bizarre reason a week ago I agreed to be interviewed (and photographed) for the Daily Fail, as the majority of the internet-dwelling population like to call it. Why? Predominantly for the blog exposure, if I’m honest, but also because I wanted to expel some myths about twenty-somethings ‘having it all’. Why I thought the Daily Mail was the right place to do that, I’ll never know.
The article is about people my age expecting more out of life by now, simply put. After writing
this post a few weeks ago I felt it the perfect opportunity to paint a wider picture for people – to let everyone know how our generation is feeling. I’m an honest person, and I always write honestly on this blog – that’s why I deem it successful. I wrote that blog post, as I write every blog post, so that my readers can relate and perhaps find solace in the fact they might not be alone in feeling as I did when I wrote the post – like a work in progress.

Of course, the lovely people (can you sense my sarcasm?) at the Daily Mail took it upon themselves to turn my words into something all the more sinister – as they do the majority of their articles – deeming me a self-entitled brat with a head full of fantasies, who expects the world handed to her on a plate. A girl who wants the get-famous-quick lifestyle of the reality stars which the Daily Mail so often promotes (or rips to shreds), but doesn’t want to work for it. Although I like to think the majority of my readers know me well enough to recognise that this is, quite frankly, a whole load of rubbish, I still felt the need to address a few things, and write a response of sorts. Not because I feel I have something to prove, but because I am most definitely not the type of person to sit in silence when I’m bad-mouthed, by anyone – including hideous tabloids like the Mail.

First of all – I’ve wanted to be a writer for as long as I can remember, and as such I have worked damn hard to get me on that path. After completing my GCSEs and A-levels, I went on to study for three years to get myself a degree in English, that I’m actually incredibly proud of. Whilst studying at uni I worked in a shop part-time to pay my way whilst gaining experience in the beauty industry – the industry I wanted to write about. I also spent months of my life interning at newspapers and magazines, staying late every night and all the time working for zilch – nada. I saved money so that I could move down to London whilst interning, and whilst doing all of this I also wrote my blog.

Now, readers of the Daily Mail might think my blog is a silly, insignificant place on the internet where I drone on about blushes and mascaras, but to me it’s something I’ve built up over years of hard work, that has given me a considerable amount of recognition and has actually been extremely worthwhile in terms of giving me internships, and, would you believe it, even jobs. It has given me the opportunity to work with dozens upon dozens of incredible brands, which has given me further exposure. More than anything, it’s been a platform for my writing – which you can think what you like about – but unlike the Daily Mail, every single word I’ve ever written on this blog has been the truth. I don’t spin lies to get a good story – I write honestly and I know for a fact that is what makes my blog appealing to my readers – they trust me, which is something tabloids like the Mail will never be able to achieve.

Blogs might not be the be-all and end-all, but anyone who thinks that they are not worthwhile is most definitely misinformed. Blogging has changed the landscape of publishing – and maybe that’s why journalists at the Mail are quaking in their boots – they know that bloggers do have power. Whilst some people might think we spend our days flouncing around doing nothing, a whole lot of hard work goes into running a blog. Whilst scrolling through the comments on the article I noticed a couple of people stating that blogging is never going to be a full-time job – well how wrong you are. I know dozens of bloggers who do it full-time, and make a great deal more than you’d think. They get to go on press trips, as would journalists, and get to try new products before anyone else. They work with huge brands on national campaigns and this wasn’t all handed on a plate to them – it’s down to years of hard work. Blogging takes time – it’s not just a case of sitting down and tap-tapping at a keyboard. It takes research, trialling products, hours of photography and editing, proof-reading, promotion through social media… It isn’t easy, and it definitely isn’t for the lazy.
I don’t expect the world handed to me on a plate. Whilst I do dream about having a certain lifestyle, I also recognise that not everything I want may be achievable. I also know fine well that nobody on this earth gets anywhere without putting in hard work. I’m a big believer that you can be the brightest spark on the planet, but if you don’t put work in, you won’t get anywhere. I don’t think the Daily Mail wanted to paint that picture of me, though. It wasn’t a good enough story.


I started my blog because I wanted to pursue a career as a writer and I was told (by magazines, tutors and the like) that writing a blog would be a huge starting point. With the death of print looming around the corner, I think we all need to recognise that online media is taking over, and thus blogs will always be at the forefront of that. That doesn’t mean bloggers are better than anyone else – but it most definitely does not make us lazy.

Whilst the readers of the Daily Mail might not understand the concept that people actually pursue careers in social media and blogging, I hope that my readers do. I also hope you all understand that I am not a self-entitled schmuck who expects the world without putting any effort in – I’m just a hard-working girl who likes to dream, but also understands that my dreams might be somewhat unreachable at times. I don’t think anyone has the right to dampen a person’s dreams however – and luckily, the Daily Mail hasn’t dampened mine.

ALL PICTURES AND WORDS COURTESY OF HANNAH VICKERS AT http://www.awaywiththefairiesblog.com/

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The problem with moneysaving apps

While some moneysaving apps can be genuinely handy, others might encourage you to spend unnecessarily or change your shopping habits. I examine the pitfalls of these downloads and point you towards (in my humble opinion) genuinely helpful apps.

By Iona Bain

Are you one of Britain’s 36 million app downloaders? If so, chances are you may be a devotee of the moneysaving app, helping you to spot bargains, compare products, collect loyalty points and generally become an all-round tip top consumer.  

In theory, nobody could fault it. Handy, ingenious, right there in your pocket to help you save money at the flick of a button (or rather the swipe of a screen). 

Moreover, most of these apps are free, so surely they are worth a download when nearly everything has a price these days?

Perhaps so. Any tools in the moneysaving armoury should generally be welcomed. My gripe is that many of these apps look far better than they actually are. Some don’t actually save you that much money or time while some could be subtly changing your consumer habits – and not for the better.

Pic from www.myfamilyclub.co.uk

Take the Orange Wednesdays app. Regularly lauded as one of the best ‘money saving’ apps on the market, you have to step back and realise that only Orange customers could, in fact, take advantage of ‘2for1’ cinema tickets on Wednesdays. This app doesn’t offer much beyond the basic texting tool available to all Orange customers before the smartphone came along, besides interesting reviews for cinephiles. Besides, you shouldn’t plump for an Orange contract just to take advantage of this deal. It isn’t unique on the market (Vodaphone and O2 offer similar reward schemes for their customers for days out and pop concerts) and contracts have to offer all-round good value, depending on how much you use your phone and what you need in terms of minutes, texts and data usage.

Another pitfall of moneysaving apps is that you may splash out unnecessarily or only use certain shops just to take advantage of discounts/cashback. Rather than saving your money, you could end up committing a sin of consumerism – being perpetually swayed by discounts rather than getting underlying value in the long-term.

Splashing out rather than saving

Two of the most popular apps around are Vouchercloud and Quidco. Vouchercloud points you in the direction of retail partners who offer exclusive discounts and deals in your local area. Just request the voucher from your smartphone and it’s delivered to your screen.

I’d be lying if I said that Vouchercloud hasn’t been a godsend in the past when I’ve been on a night out with friends and decided to get 15 per cent off or 2 for 1 at at your standard restaurant chain. For those occasions, it’s got to be worth a download.

http://retaildesignblog.net/wp-content/uploads/2012/11/Nandos-restaurant-by-BuckleyGrayYeoman-Dundee.jpg

Pic from retaildesignblog.net

Quidco works in a similar way but it also gives you cashback – 25p at most – when you shop in certain stores. When you first discover discount vouchers and cashback, you feel like you’re genuinely saving a few quid. But if you hadn’t been alerted to 10% off at a certain restaurant, or 20% off at a local beauty salon, would you honestly have intended to spend money on meals or manicures? Let’s face it, it would never normally cross my mind to have a seven course dinner, with portions that wouldn’t feed a gerbil on a diet, at a pricey restaurant that desperately needs my custom, or to have ravenous fish nibble away at my flaky tootsies in a harshly lit basement somewhere.

I exaggerate for comedic effect, dear reader, but we’ve all been there, haven’t we! The internet is awash with horror stories about misunderstandings and shoddy service on the back of these deals. Beware the false bargain!

The way to avoid this pitfall is to use the app (or website) ONLY when you’re making a purchase anyway, just to see if you could shave a few pounds off the total cost. 

When it comes to Quidco, there is no harm in checking the app when you’re using high street stores as a matter of course. Just ask yourself how many times you’re going to frequent B & Q, Homebase, Carphone Warehouse and the other partners it has signed up before you put too much time or expectation by it. It only works if you’re shopping regularly in these stores anyway, since the cashback of 25p per shop (at most!) is not reason enough to shop at these retailers instead of their competitors. This is especially the case when talking about big-ticket purchases – your mobile contract and DIY items – at these stores. What’s more, Quidco retain the first £5 of your cashback earned anyway, so you’d have to do this an awful lot to make it cost-effective!

By all means, have these apps on standby (like I do) for must-have purchases but be wary of splashing out for the sake of a meagre saving. See my previous blog on how certain websites in this field have provided links to payday loan companies.

When loyalty doesn’t pay

Two apps that are also overrated are the Nectar and Tesco Clubcard apps. You scan your phone at the supermarket till to get Nectar or Clubcard points. The former applies to shopping in Sainsburys, Homebase and BP, the latter only works for Tesco – and only the main tills at the main supermarkets, not the Express stores, Tesco petrol stations or at self-service and basket tills. So you’ll have to carry the physical Clubcard anyway if you’re using the scheme already.

Embedded image permalink

Pic from @JulieMcCaffrey on Twitter

Another advantage of the Clubcard is that it offers ‘exclusive discounts’ with partner retailers – but these are much the same as the deals offered by Vouchercloud, which doesn’t require the same loyalty that Tesco’s app does.

Of course, these are handy for those who are already signed up to the Nectar or Clubcard schemes. But don’t let this sway you into shopping at one store only. Don’t forget that Aldi and Lidl have their own apps, and while they do not offer an exclusive discounts for App users, its worth browsing their special offers in any event.

Any savvy consumer will only really save money by shopping around and NOT letting discount schemes sway their decision. 

And now for the good news

CookIt (available on Apple and Android handsets) can save you time, food AND money. The app will find recipes based on food you have in your cupboard – simply enter the ingredients you have and the app will suggest a tasty meal you could make. 

Another handy download is Onavo. It saves on your smartphone data usage –up to 80% – by rerouting your online activities through its server and sending it back in a compressed form. Considering the high charges you face if you go over your monthly data limit, smartphone users who surf the web will find this essential – it may even allow them to go on a cheaper contract with lower usage.

Finally, Red Laser allows you to compare prices on the shop floor – just scan barcodes or QR codes using your camera phone (or enter them manually) and the app will search thousands of local and online retailers for the best prices and check that products are in stock.

Let me know what your favourite moneysaving app is below or email ionabain[at]hotmail.com

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Filed under Bargain hunting, Consumer Affairs, Mobiles, Shopping, Technology

Kicking off the Young Money Book Club with a competition

To help Young Money readers brush up on their financial know-how, I’m bringing you an infrequent column on suggested reading material on all things financial…to kick off the Young Money Book Club, here are the details for a competition for the under 35s with big ideas to share

Iona bain

Not everybody has got the relentless drive to become a world famous investment guru like Warren Buffett but I’m a firm believer in self improvement when it comes to finances. Anybody can get wise to the importance of money management.

I gave a speech at the national final of the Money for Life challenge in the O2 Indigo a couple of months ago. It was the culmination of a novel initiative that challenged all kinds of young people, regardless of their background or skills, to devise innovative schemes within their communities that fostered financial savviness. The results were beyond heartening. Many, if not all of the entrants, overcame one form of adversity or another to plough all their energies into these schemes, which ranged from budget cookery clubs to anti payday loan groups. Those I saw during the judging process at the English grand final came from modest backgrounds where financial acumen was not necessarily held up as an essential life skill worth having and promoting.

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The entrants tangibly demonstrated how much their efforts had made a difference in their local area and in their own lives. Moreover, their impact was not restricted to higher levels of financial literacy. They had multiple benefits that I hadn’t even considered as part and parcel of better financial management – some schemes espoused the health benefits and economies of giving up smoking while others encouraged recycling, higher community involvement and greater care for the environment.

In my speech, I said the following: “None of us are born with an innate sense of money management . People may think they are “useless” with money but it isn’t a personality trait. Okay, some people have a mathematical brain or have always had good willpower. Others may be better organised or more cautious than others. Good for them. All these characteristics do help, but I’m personally not lucky enough to have been born with all of them…and it doesn’t mean those of us may struggle with these things should give up and go home.”

One way that young minds can sharpen up their financial acumen is to read books on the subject. Yet there appears to be a dearth of economic and financial tomes written by young people, for young people.

A competition launched by the FT recently could help to change that. If you have a big idea that could help us all change the way we view the economy or financial sector, read on:

The Financial Times and McKinsey & Company, organisers of the Business Book of the Year Award, want to encourage young authors to tackle emerging business themes. They hope to unearth new talent and encourage writers to research ideas that could fill future business books of the year. A prize of £15,000 will be given for the best book proposal.

The Bracken Bower Prize is named after Brendan Bracken who was chairman of the FT from 1945 to 1958 and Marvin Bower, managing director of McKinsey from 1950 to 1967, who were instrumental in laying the foundations for the present day success of the two institutions. This prize honours their legacy but also opens a new chapter by encouraging young writers and researchers to identify and analyse the business trends of the future.

The inaugural prize will be awarded to the best proposal for a book about the challenges and opportunities of growth. The main theme of the proposed work should be forward-looking. In the spirit of the Business Book of the Year, the proposed book should aim to provide a compelling and enjoyable insight into future trends in business, economics, finance or management. The judges will favour authors who write with knowledge, creativity, originality and style and whose proposed books promise to break new ground, or examine pressing business challenges in original ways.

Only writers who are under 35 on November 11 2014 (the day the prize will be awarded) are eligible. They can be a published author, but the proposal itself must be original and must not have been previously submitted to a publisher.

The judging panel for 2014 comprises:

Vindi Banga, partner, Clayton Dubilier & Rice

Lynda Gratton, professor, London Business School

Jorma Ollila, chairman, Royal Dutch Shell and Outokumpu

Dame Gail Rebuck, chair, Penguin Random House, UK

The proposal should be no longer than 5,000 words – an essay or an article that conveys the argument, scope and style of the proposed book – and must include a description of how the finished work would be structured, for example, a list of chapter headings and a short bullet-point description of each chapter. In addition entrants should submit a biography, emphasising why they are qualified to write a book on this topic. The best proposals will be published on FT.com.

The organisers cannot guarantee publication of any book by the winners or runners-up. The finalists will be invited to the November 11 dinner where the Bracken Bower Prize will be awarded alongside the Business Book of the Year Award, in front of an audience of publishers, agents, authors and business figures. Once the finalists’ entries appear on FT.com, authors will be free to solicit or accept offers from publishers. The closing date for entries is 5pm (BST) on September 30th 2014.

Full rules for The Bracken Bower prize are available at http://membership.ft.com/PR/brackenbower/

If you prefer to read rather than write, keep checking youngmoneyblog.co.uk for my picks on interesting, intriguing and downright brilliant financial

PLUS, EMAIL OR LEAVE A COMMENT WITH YOUR PERSONAL FAVOURITES OR A BOOK YOU’D LIKE ME TO REVIEW! ionabain[at]hotmail.com

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How can we expect young people to take financial responsibility when…

My column for Financial Adviser

“Iona Bain, a voice not unfamiliar to FA readers, is one of the most perceptive and intelligent in the retail financial space…”

A powerful perception has taken root in the British psyche, and it will take a lot for it to die any time soon. When things go wrong in financial services, the guilty do not get punished..

They may get fined, slapped on the wrists, even forced out of their jobs. But most stay where they are or ride off into the sunset having been rescued by the state, none the wiser, a bit richer and with plenty of opportunities to keep climbing the greasy pole.

Having recently finished Ian Fraser’s book, Shredded: Inside RBS, the Bank that Broke Britain, I don’t think I have ever read such a perfect morality tale for our times. Praised by the FT as “monumental”, it is bound to infuriate those who crave payback following our crippling fin­ancial crash. Fred Goodwin played a huge role in bringing an historic institution to its knees, only to walk off with a £324,500 pension, a £5m tax-free lump sum and past bon­uses. He was not the only one.

According to Mr Fraser, chief executive of RBS subsidiary Citizens Financial, Larry Fish, broke UK records with a pension worth £16.88m, while Gordon Pell, RBS’s ex-chairman of retail markets, got £9.83m.

How can this perverse outcome occur within a Darwinian economic model, which dictates that Goodwin et al should now either be behind bars or frequenting food banks?

READ THE REST AT FTADVISER.COM http://www.ftadviser.com/2014/08/07/opinion/blogs/setting-a-bad-example-qh0tXQlNhOjvgHMB0d7eML/article.html

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Filed under Economy, Pensions & Retirement, Politics, Savings Accounts

Dating on a budget? My top free picnic spots chosen for Match.com

Iona Bain, author of ‘Young Money Blog’ – a personal finance blog for young people – shares her favourite UK spots for a cheap, romantic picnic date.

If you’re going on a hot date this summer, make it even hotter by suggesting a summer picnic. After all, why swelter in a restaurant or blow your wages on a lavish night out when you could be soaking up the rays, sharing delicious food and keeping some money in your pocket for a rainy day?
The beauty about romantic picnics is that they are an easy and cheap way to show you’re thoughtful, intrepid and enjoy the finer things in life. There is no better way to woo on a budget without your newest admirer ever suspecting. The most extravagant date in the world can’t beat a blissful afternoon in beautiful surroundings, really getting to know that special someone. If you need some inspiration, here is my pick of the UK’s most romantic picnic spots…

READ THE REST AT http://advice.uk.match.com/free-dating/best-uk-spots-cheap-romantic-picnic

PICTURE COURTESY OF THE BFI

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Does the financial sector REALLY care about young people?

Is the financial sector prepared to embark on a charm offensive to win over customers under 30 and, just as importantly, their families? Experts now believe such a move could not only lead to a more useful industry for hard-pressed youngsters but also help to put strained institutions back on track

by iona bain

Ian Fraser, whose latest book brilliantly charts the rise and fall of Royal Bank of Scotland, has been one of the first to make this bold proposal. Writing in “Shredded”, Mr Fraser suggests that RBS chief executive Ross McEwan, who has the unenviable task of restoring the bank to profitability, should tap into technology to ensure that cost-cutting does not fatally undermine customer relationships. He wrote: “The only way in which McEwan can improve customer service while cutting costs is if the bank can develop state-of-the-art mobile apps and online transactional platforms, on a par with the sort of things already available from the likes of Amazon, Google and PayPal. That way McEwan might be able to secure the loyalty of sufficient numbers of younger consumers to take the sting out of branch closures and downsizing.”

Indeed, more than six in ten 18-30 year olds said they would like to contact their banks using mobile messaging banking apps. One in six of the so-called Hollyoaks generation has never visited their physical bank, while seven in 10 never call their financial services provider, with slow customer service named the top reason for hanging up on call centre helplines. This is according to recent research from Intelligent Environments, a financial services software provider, which is now urging the financial sector to reconnect with the 18-30s and bring customer service channels into the 21st century. David Webber, managing director of Intelligent Environments, says: “With the majority of Britons now managing their finances online, and bank branches rapidly disappearing from our high street, why should customer service channels remain stuck in the 1960s?”

There are signs that banks and insurers are starting to grasp the significance of technology and its potential to draw in young customers. Online banking has been a much-welcomed innovation and a number of developments tied to mobile banking have genuinely worked in the younger consumer’s favour. Take current account alerts which tell heavy spenders when their balances are running low. This could be helping thousands of people to avoid nasty overdraft charges.

Furthermore, websites and apps can be incredibly effective channels in the growing campaign to boost young people’s knowledge of and engagement with financial affairs. Imagine the potential for the industry to gain the loyalty and trust of young customers through thoughtful involvement with financial education.

But do most institutions understand, or even accept, the power of the young pound? I am not convinced. I can count the number of banking, insurance and investment products devised to tackle some of the biggest challenges facing young people and their families on the fingers of one hand. Seldom do institutions launch large–scale, compelling initiatives to attract and maintain a young customer base, even on issues that the industry obsesses about internally – the protection gap, the need for workers to save into pensions, the nation’s wafer-thin savings buffer.

Recently, I was invited to speak at one of the big four banks on the topic of technology and how it can provide the sector with a direct route to the younger generation. The main argument I put forward was not particularly controversial; payday lenders and other alternative providers could swallow up market share, perhaps with detrimental consequences, unless the big players stepped up to the plate and promoted better options for young people. I was somewhat bemused by the nonchalant reaction I received. Senior figures in the bank’s digital division effectively shrugged their shoulders and abdicated all responsibility for developing youth-friendly services and products, saying it was down to us to design the kind of virtual banking industry we want to use. They also cited commercial pressures as a stumbling block for these reforms, which is more understandable but still frustrating. So why are institutions even contemplating the young agenda?

I think it is because they know, deep down, that they must take their societal obligations seriously in the wake of the financial crisis. A steady stream of data shows that the under 30s have been hit hardest by the recession, with new research from the Institute of Fiscal Studies this month stating the case most powerfully. This suggests that society may be storing up a personal finance crisis of epic proportions unless more is done to help young people today. Financial institutions which reinforce positive financial habits, such as long-term saving, are bound to make households of the future – and their own bottom lines – more secure. Let’s hope this realisation catches on sooner rather than later.

Photos courtesy of

The Jack Petchey Foundation

http://thejackpetcheyfoundation.wordpress.com/about/

The Parent Normal Blog

http://www.parentnormal.com/tag/baby/

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How much do students rely on payday loans and how they can get out of a debt spiral?

Thousands of students could be directed to payday lenders by a growing pack of online brokers based overseas, as a new report warns that undergraduates are becoming resigned to debt.

BY IONA BAIn

The National Union of Students has stepped up its campaign to prevent payday lenders from advertising on campuses across Britain after its own research found a “worrying” number of undergraduates are applying for short-term loans, which typically charge at least 1,000 per cent in APR interest.

The research with accommodation group Unite published earlier this month found: “Rather than a two-way split between those who see debt as a problem versus those who do not, a third approach is apparent in which some students are merely resigned to the inevitability of debt.”

NUS Scotland has a campaign to encourage students to make their universities “shark-free zones”, claiming that some payday lenders are “targeting students specifically”.

Dundee and Heriot-Watt are among universities which have taken steps to limit payday lenders’ access to students.

However, debt charities warn that students are unavoidably at risk online, where typing “student loans” into a search engine produces multiple results for websites that claim to offer “quick approval” for loans, even if the applicant is unemployed.

Many of these sites are actually payday loan brokers, which use search engine optimisation to appear in results for common inquiries. The websites, often based abroad, then pass on customer details to actual payday lenders, receiving referral fees of at least pound(s)50 in the process.

Clues include descriptions in poor English and offers which seem too good to be true, including no credit checks or application fees.

David Rodger, chief executive of the Debt Foundation, said: “While this is a rampant online problem, it is effectively hidden from most people because you have to do the initial search for a payday loan, unlike the more upfront marketing efforts of mainstream online and high street payday lenders.

Borrowers find themselves passed on to different companies and end up not even understanding who they are borrowing from, let alone what the terms are or how much it’s going to cost them if they are late with their repayments.”

He added: “Because these are simply marketing sites, they pop up and quickly disappear, making them difficult to track, let alone regulate, and leaving huge amounts of distress in their wake.”

An “alternative” payday lender for students, Smart Pig, started by a group of undergraduates concerned at how they were being treated by the sector, says its “pricing, loan terms, tangible ethical safeguards and internal procedures mean our company works very differently from typical payday loan companies”.

It cites a 10-day penalty-free grace period if payments are delayed and a safety net whereby students never pay more than half of what they borrow in interest, as well as a ban on controversial “rollovers”.

Although a small minority — 2 per cent — of students have admitted receiving payday loans or “doorstep cash” in the past year, this could represent up to 46,000 undergraduates if the findings were replicated nationwide.

Previous research carried out by the NUS also found that 10 per cent of college students aged 19 and over had taken out “high risk credit”, with vulnerable students particularly drawn to payday loans.

There are plenty of free and independent sources of debt advice, like Glasgow-based Debt Support Trust, that anyone in payday loan trouble should consult before going any further.

Earlier this month the Competition and Markets Authority published its own probe into the sector.

It recommended that so-called lead generators explicitly disclose their business model, and said it was drawing up plans for a price comparison site for payday lenders.

ORIGINALLY PUBLISHED IN THE HERALD, COPYRIGHT OF IONA BAIN ©

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Filed under Payday loans, Personal Finance, Student Finance