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The advertising watchdog has told npower not to repeat misleading claims on large annual discounts for dual fuel customers
Npower, the energy giant, has been ordered not to re-publish advertisements promoting savings of £100 a year for direct debit customers.
The Advertising Standards Authority (ASA) ruled this week that the advertisements, which appeared on its website and in promotional emails in April, were misleading and exaggerated.
The email version claimed that dual fuel customers who were not already on direct debit could enjoy a discount of £100 on their bills if they switched to the payment method.
The website version went further and claimed that all of npower’s direct debit customers, both new and existing, could receive a £100 discount on their dual fuel bills.
But a complainant objected that the advertisements were misleading because they did not make clear that the discount was not available to customers on certain tariffs, in particular the Spreading Warmth tariff.
Npower said the the discount was available to Spreading Warmth customers, but admitted it would be of no practical use because Spreading Warmth customers on other payment methods already received a discount equal to the direct debit discount and would lose this extra discount by switching to direct debit.
The company said that, in accordance with the ASA’s ruling, it would ensure that a caveat to this effect is included in future on its website and in direct mailings.
An spokeswoman for npower said: “We are disappointed with the ASA’s findings as we feel we do our best to ensure that our communications to new and existing Spreading Warmth customers are clear about the structure of their tariff, particularly concerning the top-up discount”.
Mums and dads who put money aside to help their offspring later in life are suffering worse rates than average
Parents who want to help their children to fund future expenses, such as going to university or buying a home, are receiving pitiful returns, with most children’s savings accounts offering rates below 1 per cent.
Competition in the general savings market has gained some momentum, with the top instant access savings accounts paying the highest rates in more than a year, at 2.97 per cent, according to moneysupermarket.com, yet children are being short-changed with fewer choices and lower rates.
The average easy-access account for children pays only 1.15 per cent gross for a £500 savings pot, according to the financial information company Defaqto.
Michelle Slade, of the information group Moneyfacts.co.uk, says: “The level of money invested in children’s savings accounts is a lot lower than adult savings accounts and so have been neglected since the credit crisis started.”
Parents are more likely to keep their children’s savings with one provider over a long period instead of chasing better deals, meaning there is less incentive to offer top rates, Ms Slade added.
David Black, at Defaqto, says: “There is a significant difference in the interest rates available for children, with the rates payable on a £100 balance in an instant-access account varying from as little as 0.05 per cent up to 5.00 per cent.
“People can significantly increase their returns if they are proactive and search for the best rate.”
Like adults, children still have to pay tax on their savings, but they also benefit from the penalty-free personal allowance — £7,475 for the 2011/12 tax year. Most children do not meet this level of savings in a year and so are typically exempt from paying tax.
“The vast majority of children won’t have to pay tax on their savings provided that an R85 form is signed when the account is opened,” Mr Black says. “Your bank or building society will be able to provide the R85 form.”
In addition to bonds, easy-access and regular savings accounts, there are tax-exempt savings plans and Child Trust Funds (CTF), both long-term tax-free options. However, CTFs are now available only to children born between September 1, 2002, and January 2 this year.
The replacement, the Junior Isa, is due to be launched in November and is a tax-efficient scheme, with money locked away until your child turns 18. Annual contributions will be capped at £3,000.
Adrian Lowcock, senior investment adviser for Bestinvest, says: “I would expect the Junior ISA to be more successful than Child Trust Funds as people understand the ISA tax wrapper better, and that is an important factor for savers. The main use will be more for families looking to invest on behalf of their children or grandchildren, and the tax efficiencies will only be significant later on.”
However, anyone hoping for a dramatic rise in interest rates payable on Junior Isas might find that they are disappointed. Mr Lowcock says: “The introduction of the Junior ISA should increase the rates available; however, this will only be marginal improvement as children are most likely basic-rate or non-tax payers and banks tend to take a bit of tax relief themselves.”
For more information about saving for children, visit direct.gov.uk. The Money Advice Service also has a “Parent’s guide to money” section on its website, moneyadviceservice.org.uk
Mortgage lending increased by 12 per cent in May as demand recovered following the previous month’s bank holidays and royal wedding, figures indicated today.
A total of £11.3 billion was advanced during the month, up from £10.1 billion in April, and also 1 per cent higher than a year ago, according to the Council of Mortgage Lenders (CML).
However, lending for buying homes was down on a year ago, with the increase accounted for by remortgaging.
Michael Coogan, director general of the CML, said that he expects demand for remortgages to fall in the coming months after the Bank of England again opted to keep interest rates at their record low of 0.5 per cent, stifling hopes of an imminent increase.
As a result, he said that he expects lending levels to remain “essentially flat” over the next two months.
The fall in lending to people buying a new home who are applying for a first time buyer mortgage supports recent gloomy data on house prices.
Earlier this month, the Royal Institution of Chartered Surveyors said that house prices dropped by 1.1 per cent in April as the market failed to benefit from its traditional “spring bounce”. It blamed concerns about the economy and the ongoing problems in the mortgage market.
Meanwhile, Halifax said that house prices fell at their fastest annual rate for 19 months in May, to an average of £160,519.
And Jonathan Samuels, of Dragonfly Property Finance, said that it could be some time yet before the market reaches pre-2007 activity levels.
He added: “The CML expects flat lending for the next couple of months but realistically lending activity looks set to remain flat for the next couple of years, just as it has been over the past year.”
In some good news for those now priced out of the market, the Government today unveiled details of an initiative to help thousands of first-time buyers onto the housing ladder.
The Homes and Communities Agency allocated almost £180 million to more than 100 housebuilders and housing associations to help facilitate sales of almost 10,500 homes under the FirstBuy scheme.
The scheme will provide buyers of new homes with a loan of up to 20 per cent of the purchase price. The buyer must be able to provide a further 5 per cent as a personal deposit in order to get a 75 per cent mortgage.
Broadband costs have jumped 11 per cent over the past year – more than double the rate of inflation, according to price comparison website www.broadbandchoices.co.uk
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Insurance may seem like just one more expense, but in reality, it can save you a whole lot of money if disaster strikes. From accidents to lawsuits, businesses need to be protected. There are four types of insurance no business should be without: property insurance, liability insurance, auto insurance, and worker’s compensation insurance. These different types of insurances will cover you if the unexpected should occur.
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Almost a million extra households face fuel poverty after one of Britain’s largest energy companies, Scottish Power, announced steep price increases this week. Many will be wondering what the implications are for them, and how they can respond to keep their bills as low as possible.
To help, here is a quick Q&A
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New European Union legislation has banned the sale of 36-month mobile phone contracts giving consumers a greater choice of short-term deals, but the cost of the cheapest contract has nearly doubled since the rules came into force reports personal finance site Business Bytes
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Do You Need Insurance for Your Small Business?
If you are considering opening your own small business, proper insurance coverage is a must. Insurance should be attained prior to opening the business is possible so that you are prepared and protected in case an immediate accident should occur. The following forms of insurance are necessary for most small business owners.
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As we all adjust to the realities of austerity, one of the things we will have to take into account is the tougher line lenders are taking on granting credit. Gone are the days when banks were falling over themselves to extend loans to anybody who wanted one.
Now financial groups are tightening their lending criteria and looking hard at each individual's credit score before granting any money
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Electronic giant Sony admits hackers have personal information of up to seventy million customers in a security breach believed to be one of the world's biggest thefts of data.
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