The Financial Conduct Authority (FCA) is one of the successor agencies to the Financial Services Authority (FSA) and is currently expected to be established by end-2012.

The FCA’s focus will be to regulate both wholesale and retail financial firms providing services to consumers and to maintain the integrity of the U.K.’s financial markets.

The authority will have the power to ban unacceptable financial products and enforce the withdrawal of misleading promotions, among other regulatory powers.

Much like FSA, the FCA promises to protect consumers by promoting transparency and healthy competition in the financial sector while helping consumers make the right choices; but will it be able to succeed where the FSA arguably failed?

The official “Approach to Regulation” document on the Financial Conduct Authority’s objectives and powers (.pdf, 508 kb) sets out how the authority will approach the delivery of its objectives. However, MPs and experts alike are worried that the FCA will be “more of the same”.

Back in August of 2011, a parliamentary committee announced an inquiry into the accountability of the FCA to be published by the Autumn of 2011 and earlier this week (albeit admittedly a bit late) the Treasury Select Committee published a full-blown report into Financial Conduct Authority. This in-depth report contains a number of recommendations for the Government’s consideration ahead of the drafting and publication of the Financial Services Bill early in 2012.

Among the Treasury Committee’s most significant recommendations are that the FCA is properly accountable to Parliament and that tools are available to enable the required level of explanation from the regulator.

Commenting on the publication of the report, the Chair of the Treasury Committee, Andrew Tyrie MP, said:

“We need a fresh approach to regulation.

The plain fact is that the FSA did not succeed in protecting consumers from spectacular regulatory failures. The mis-selling of PPI and endowment mortgages are just two examples. The FSA is not only expensive, for which the consumer always pays, but many have told us that it has also become bureaucratic and dominated by a box-ticking culture.

The creation of the FCA is an opportunity to create something much better.

If we are not careful, the FCA will become the poor relation among the new institutions. But it is the one that will matter most to millions of consumers.”

Even though there are legitimate concerns, especially given the FSA’s recent mistakes, some experts hope that with careful planning and the Treasury Select Committee’s input the FCA will hopefully turn out to be less expensive and more efficient than the FSA in safeguarding the consumers’ interests.

Virgin money has announced their first two savings accounts since Virgin Money officially acquired Northern Rock plc on 1 January 2012.

The two new accounts, Virgin Easy Access Saver and Virgin Easy Access Cash ISA offer a competitive annual interest rate of 2.85% that remains the same regardless of how the account is opened. This means that customers will enjoy the same benefits whether they open their account online, via phone, post or through one of Northern Rock’s 75 branches. Both accounts require no notice to access funds and customers are required a minimum deposit of £1 up to a maximum of £100.000.

Arguably the most notable feature in both savings accounts is that they are not reliant on introductory bonuses that might confuse buyers. Simply put, the interest rate announced is not inflated for the first year and customers will not be faced with lower rates after that year has passed.

With that move Virgin Money shows that they want to promote long-term financial relationships with their customers as customers will not be baited with inflated introductory rates in the first place and will not be forced to search for other savings accounts after any introductory rates have expired.

Chief executive officer at Virgin Money Jayne-Anne Gadhia said: “These new savings products are designed to be simple, fair and transparent. They have an attractive headline rate, without a bonus, offering good value for customers”.

She continued: “There are no differences in rate whether the customer chooses an ISA or a standard savings account. What’s more, customers can choose to operate their account online, through a branch or over the telephone and still benefit from the same great rate.”

Meanwhile, the two new savings accounts have received positive reviews from financial experts and pressrooms alike.

The financial comparison website Moneyfacts.co.uk praised the two new accounts, awarding them with four out of possible five stars and placing them “comfortably within the top ten of similar products.”

Both accounts Virgin Easy Access Saver and Virgin Easy Access Cash ISA will be available from this Thursday in Northern Rock branches across the country.

Despite the adverse economic climate, positive factors such as the low interest rates offered in the market as well as the promise of safer mortgage lending rules from FSA contributed to house prices rising by a modest 1% in 2011, according to Nationwide, with London prices surpassing the 5% mark.

In reality, the 1% increase in house prices is overshadowed by annual inflation and this is expected to remain true for 2012.

But what will happen to property prices in 2012?

The uncertain economic situation in the EU means that house price changes will be difficult to predict and many property market experts and forecasters have different opinions on how 2012 will play out.

Both Halifax and Nationwide predict a mostly stagnant market with stability in house prices.

Halifax’s housing economist, Martin Ellis, commented: “Overall, we expect continuing broad stability in house prices nationally during 2012. Prices are again likely to end the year at levels close to where they began with the market continuing to lack any real direction.”

Nationwide’s chief economist Robert Gardner commented: “2012 isn’t shaping up to be much better than 2011, for the UK economy or the housing market.”

Other predictions have been less optimistic for the coming year with several property market experts forecasting a moderate decline in house prices.

IHS Global Insight, Capital Economics as well as estate agent Knight Frank all predict no less than a 5% dip in house prices during 2012.

IHS Global Insight economist Howard Archer commented: “House prices will fall by around 5% overall from current levels by mid-2012 as weak economic fundamentals outweigh extended low interest rates.”

While Knight Frank said: “Our view is that conditions in the UK mainstream market over the next few years will resemble our “slow correction” scenario, under which the market will experience an extended period of low transaction numbers and price falls in real terms.”

Moreover, a few experts predict dramatic declines in house prices, with some experts forecasting declines of 10% or more.

Jonathan Davis of Jonathan Davis Wealth Management has made the grimmest prediction for the UK house market in 2012: “Fall of 7 to 12%. This year will be down a couple or a few per cent but, in real terms, it will be down around 8%. Not insignificant at all.”

However, a few house market forecasters are predicting a rise in property prices for 2012. Rightmove’s experts predict their house price index to turn a 2% increase over the next year.

Earlier today, the Financial Services Authority (FSA) announced plans for a new set of mortgage lending rules to prevent “a return of the risky mortgage lending seen in boom times”.

The new set of rules should prevent homeowners from borrowing more than they can afford and are likely to come in full effect by 2013.

FSA’s latest mortgage market review paper (pdf, 2.4 MB) outlines the need for all prospective borrowers to get the right information and advice. It also aims to ensure that mortgage lenders will be assessing the affordability of loans more effectively and be thoroughly checking each applicant’s ability to keep up with their mortgage repayments.

Existing borrowers who might have been prevented from remortgaging will also be allowed some degree of flexibility to manage their lending terms under the new mortgage lending rules.

According to the three key proposals of “good mortgage underwriting”, as explained by FSA, borrowers should avoid assumptions on future house prices and lenders should assess long-term affordability. The three key proposals specifically state that:

• Mortgages and loans should only be advanced when the borrower can afford repayments without relying on future house price rises.

• Every affordability assessment should take into account any future changes in interest rates with a minimum five-year outlook and borrowers should not enter contracts based on the assumption that the initial interest rates will not change later on.

• Interest-only mortgages should be assessed no differently than repayment mortgages unless the borrower has a viable option to pay off the loan that does not rely on the assumption that house prices will rise.

Chairman of the FSA, Lord Turner commented on the proposed rules:

“We believe that these are common sense proposals which serve the interests of both lenders and borrowers. While the excesses of the pre-crisis period have largely disappeared from the current market, it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return.”

“The three key proposals are, we believe, the most effective way to tackle the problem of risky lending. But it is essential that we understand what their impact would be – how many consumers would be protected from the distress of arrears and repossessions, and, how many consumers who could have afforded a mortgage might have to take out a smaller mortgage or to delay their purchase.”

“The estimates are inherently uncertain, but they suggest that the new rules would have only a marginal effect in current market conditions – and particularly so for first time buyers – but would act as a significant constraint if market practice were in danger of returning to the 2005 to 2007 pattern. That pattern of effect would be a highly desirable one. We are however particularly keen that lenders provide their detailed assessment of the likely impact of these proposed rules. Then the FSA will be able to make appropriate final decisions.”

“The proposals published today reflect the ideas and input of many stakeholders, including consumer groups and lenders. We believe these proposals will hardwire common sense standards into mortgage lending and guard against the risky lending practices of the past – leaving most borrowers unaffected, but better protected.”

The FSA Board will make a decision on the final form of the new mortgage lending rules in summer 2012.

This year’s Christmas period will see almost one in three Britons slip into some form of debt to fund their holiday spending, according to an online survey on Christmas spending by YouGov. (pdf, 815 KB)

The online survey was conducted on behalf of Halifax and yielded some very interesting, if not alarming, results. According to the survey, the average person in the UK plans to spend nearly £38 on gifts for each loved one, with women planning to buy gifts for 10 people whereas men will give gifts to seven people on average.

Despite the financial crisis it seems that only 31% of the people surveyed have cut back on Christmas spending compared to previous years while 32% have increased their spending, with many of them going into debt to fuel their holiday purchases.

YouGov’s latest survey also found that more than 52% of the consumers do not save any money for their Christmas spending, while only 14% of the people surveyed said that they save money throughout the year to fund their Christmas spending.

Arguably the most alarming fact is that 31%, almost one in three, will go into debt to fund their Christmas spending, with 10% using their credit card to buy presents and planning to pay the money back later.

This year in particular more people than ever consider taking out a payday loan and 20% of all UK adults who plan to buy Christmas presents believe they will need to directly borrow money to pay for some of their purchases.

Rob Wood, Head of Halifax Savings, commented on the survey’s results: “It seems Christmas spending has not slowed down as we head into the holiday period and only a small number of people have felt the need to save throughout the year to cover the costs. It is encouraging, however, that most consumers will have the money [upfront] to cover the costs of Christmas presents. Christmas can be a tough time financially for families and advanced planning and saving is the best way to ensure there is enough money to go around for all the extra costs.”

Loan expert Tim Moss at MoneySupermarket.com also commented: “This year has been incredibly tough for consumers with the rising cost of living really hitting the nation’s wallets hard. It comes as no shock that such a high number of people will be tipped into debt this festive season, particularly as Christmas is a time when people generally increase their spending. With many people also being paid early in December, January payday may seem a long way off, so planning ahead is vital to avoid carrying over the debt burden into next year.”

Addressing the less financially secure people, Tim Moss added: “For the large number of people who are unable to save, there are a number of ways they can reduce the Christmas spending hangover by the New Year, and it is essential to use the right product to meet their needs. For example, a credit card offering zero per cent interest on purchases might be the sensible option if they are able to pay off the balance in full within the zero per cent period. Dipping into the unauthorised overdraft may prove costly for those unable to pay this off, particularly as the charges for dipping in the red may not hit until January.”

According to house equity withdrawal (HEW) data released by the bank of England on Wednesday, households are paying back a record amount on their mortgage.

During the second quarter of 2011 alone, consumers paid back £9.1bn on their mortgages, amounting to 3.5% (-3.5% of HEW) of their post-tax income. This is the largest figure ever paid back in a three-month period since the Bank of England started collecting data.

To put these figures in perspective; in late 2006, house equity withdrawal had peaked at 5.6% of post-tax income, as compared to -3.5% from April to June of 2011. Simply put, house owners were remortgaging their properties a lot more before the recession.

Today, as home owners are cutting back on spending and house prices continue to fall, remortgaging does not have the appeal it had during the “boom” years. Since June of 2008 a grand total of £92.9bn has been paid back instead of being spent by home owners.

An article by Kate Reinold of the Bank’s structural economic analysis division (.pdf, 70 MB) published with the 2011 Q2 Quarterly Bulletin explained that the fall in HEW since the recession is “likely to reflect a fall in the number of housing transactions, with little sign that households in aggregate are making an active effort to pay down debt more quickly than in the past.”

IHS expert Howard Archer said: “The record net injection of housing equity in the second quarter points to a strong desire and perceived need of many people to improve their personal financial balance sheets given high debt levels and serious concerns over the economic situation and jobs.”

“Furthermore, extremely low savings interest rates have made it much more attractive for many people to use any spare funds that they have to reduce their mortgages. In particular, many people may be using the extra money that is resulting from their very low mortgage interest payments to reduce the balance that they still owe on their houses.”

Forbes analysts explain that the mortgage crisis of 2007 had forced Northern Rock to turn to the Bank of England for liquidity support to meet short term debt obligations and unable to an acceptable offer from the private sector, Northern Rock was eventually nationalized on February 17, 2008.

Now, the British Government is selling Northern Rock plc to Sir Richard Branson’s Virgin Money for £747m. Completion of the transaction is expected on 1 January 2012.

The official announcement states that “The sale is in the best interests of the taxpayer, secures the long-term future of the company and will increase competition in the banking sector. This is part of the Government’s wider strategy for the banking sector with safer ring-fenced banks and more competition for customers.”

As part of the sales agreement Virgin Money has committed to:
• No further compulsory redundancies, beyond those already announced, for at least three years from the completion of the transaction.
• Retaining and expanding the total number of branches currently operated by Northern Rock.
• Extending support for the Northern Rock charitable foundation for a further year.
• Making Newcastle the operational headquarters for the combined business.

According to the press release from Virgin Money the transaction will create a significant new competitor in UK retail banking and, in doing so, it will help increase diversity in the retail banking sector as Virgin Money seeks to innovate and expand into new market segments.

Virgin Money stated that the transaction has the potential to eventually raise more than £1bn for the taxpayer in the long term along with numerous other benefits including the return of public sector stakes in banks to the private sector.

Sir Richard Branson, Founder of the Virgin Group said: “Banking in the UK needs some fresh ideas and an injection of new competition. I’m delighted we will get the chance to work with the loyal staff of Northern Rock to create a new force in the market. Virgin has a history of entering new sectors to improve service and provide value for customers. We plan to do the same in banking”.

While many analysts have commented positively on these developments others are skeptical and some have warned that Virgin Money products must become more competitive in order to revitalize the stagnant banking market.

Adrian Coles, director general of the Building Societies Association, said that Northern Rock’s sale was a “bittersweet moment” with both positive and negative effects on the market.

According to FSA (the Financial Services Authority), 52% of people find it too complicated to compare financial products and another 46% are unsure whether they are getting a good deal on a financial product or not.

In an effort to help consumers choose between financial products Her Majesty’s Treasury has created a new steering group focused on promotion and development of “simple” financial products such as simple savings and protection insurance products to be brought to the market.

The steering group will bring together government representatives and specialists from trade, industry and consumer organizations. Together they will consider how “simple” products should be developed and forwarded to the market, starting with simple savings and protection products as well as simple investment products.

Former chief risk officer at Lloyds Banking Group, Carol Sergeant, has been appointed to chair the group which will submit its final report to Mark Hoban, Financial Secretary to the Treasury, in July 2012.

Ms Sergeant commented on the formation of the steering group: “Simple, easy to understand products need to be a viable commercial proposition for the industry, while offering consumers a straightforward benchmark that gives them the confidence to make good decisions in an often bewilderingly complicated market place.”

She pointed out that the success of this project “will require the involvement of consumer groups, financial regulators and the Money Advice Service, as well as the savings, investment and protection industries.”

Financial Secretary to HM Treasury Mark Hoban said: “Simple financial products have the potential to help many consumers make decisions that will help them save for the first time and plan for a secure financial future for them and their families. I am delighted that Carol Sergeant has agreed to chair a steering group to develop the thinking on simple products further and to work with industry and consumer groups to bring them to fruition.”

Average house prices across the UK have been steadily declining throughout the year and according to a survey by Halifax consumers expect house prices to drop even more in the foreseeable future.

According to the survey, thirty percent of the people surveyed predicted a further decline in prices over the next twelve months while a quarter said that prices will not change in the coming year. All the while a house price expectations index by Halifax fell to -2 from this year’s highest value of +9 in April.

Halifax economist Martin Ellis commented: “It is unsurprising that confidence in the housing market has been shaken a little over the last few months given the increasing uncertainty about the current economic environment, together with pressure on householders’ finances,” and he added: “We expect little change in both prices and activity over the next few months.”

Forecasts on house prices by analysts have also been pessimistic, predicting house prices to drop by as much as 5% in 2012. The generally weakened economy combined with substantial fears that the economy could start shrinking again point to further decline in house prices over the next twelve months.

However, as residential property prices across the UK continue to fall, prime central London prices continue their steady climb. According to the Land Registry house prices in London have increased by 2.7% since September 2010 and are now at an all-time high.

Many observers question the stability of those inflated figures, especially at the top end of the market, while others argue that these figures reflect a growing tendency for buyers, both local and overseas, to purchase central London property as a long-term investment.

Earlier this month, the Bank of England’s Monetary Policy Committee voted to give the economy an additional cash injection of 75 billion pounds.

This was the second round of quantitative easing (QE) as the bank had already injected 200 billion pounds back in 2009 in an effort to increase commercial bank lending.

While answering questions on the current status of economy to a parliamentary committee, Bank of England governor Mervyn King commented on the decision to increase QE and the impact that might have on bank lending:

“I can’t guarantee that it means that bank lending will rise, but what I do believe is that it won’t fall as far as it might otherwise have done and it may start to rise now we’ll see. But I think the action will make a difference to the amount of lending, but it certainly doesn’t guarantee that lending to the real economy is positive.”

Mr. King acknowledged that Britain’s economy has been problematic and mostly stagnant for the past year and warned that it could start deteriorating again as he commented on inflation and the causes of the “very large squeeze on household income”:

“Now that’s not the result of inflation being high, inflation is the symptom. The causes of that squeeze on living standards are real causes, they are a change in real prices of energy, and utility prices of gas, electricity at home, they are the consequences of higher Value Added Tax, higher food prices, and consequence of a fall in the real exchange rate which was necessary to enable us to be able to rebalance our economy in a way that was… after quite a long period, and of relatively overvalued exchange rate.'’

Finally, when asked why the Bank of England did not increase the QE plan earlier, possibly stimulating commercial bank
lending, the governor replied that the deterioration of the Eurozone and world economy could not have been predicted earlier.

“I don’t think the scale and the immediacy of how the problem deteriorated in the euro area was obvious at the beginning of the summer”, he replied.

A recent survey in England and Wales showed a continued decline in house prices in September as well as a nation-wide decline in the number of sales for the first time in almost a year.

House prices have been falling for 16 consecutive months and fell by 0.3% in September following a difficult August. The average British home lost £594 in value in September alone according to the latest LSL Property Services/Acadametrics House Price Index.

The Royal Institution of Chartered Surveyors (RICS) outlined a stationary housing market saying that homeowners are reluctant to sell and are pulling their home sales because of the current economic outlook might force them to drop their prices.

The seasonally adjusted house price balance calculated by RICS remained at -23 in September, one point higher than the figure expected by analysts but still indicative of a weak housing market.

The latest RICS UK Housing Market survey (11 October 2023) showed the balance for newly agreed sales falling to -4 from +2 in August and new vendor instructions also declining to -5 from -1 while new buyer enquiries rose to +3 from -2.

Members of RICS said that house prices are expected to continue their decline in the coming months while mortgage rates will remain relatively low.

Tom McClelland of RICS said houses were selling “at prices not seen for seven or eight years” and that “sellers who understand and accept where the market is are being successful and are finding buyers.”

RICS spokesman Michael Newey commented on the situation:

“Generally speaking, while it is hard to see what will give the market a lift in the near term, the announcement of a further raft of quantitative easing from the Bank of England will help to at least keep mortgage rates down. This, if nothing else, should ease the pressure on existing homeowners and limit the risk of a material pick-up in repossessions”.

The Conservative Party has said that it will abolish Home Information Packs at the start of a Conservative Government but sellers will still have to produce an Energy Performance Certificate (EPC) – that’s presumably because EPC’s are mandatory under an EU Directive.

We are yet to find out whether the EPC would have to be renewed every time a property is put on the market or whether it will be valid for a fixed period of time. What is clear is that the cost aspect of a EPC will be only a little less than the current cost of a HIP.

That’s because it’s the energy saving element of the HIPs that costs the most money to provide. But does the public have any confidence in the energy ratings? It seems that EPC assessments can come out with very different ratings depending on who surveys the property so it clearly is not a reliable assessment.

And in any case, when we’re off shopping for a new home do we really bring energy assessments into our selection criteria? Certainly not me!

But could there be another reason for EPC’s? I can just forsee some green politician suggesting that properties be subject to a new energy tax based on their EPC rating!

Over 100,000 people have attempted to get credit card debts and loans cleared off by using legal loopholes – but now a Judge’s decision seems to have closed the door for them.

The people owing the money have been trying to get their debts declared “unenforceable” because, for example, a credit agreement was worded incorrectly or could not be produced. But now a judge in the Commercial Court has ruled that even when an agreement is found to be “unenforceable”, this does not mean that a borrower was no longer liable for the debt.

Consequently, the borrower is not entitled to have their credit record wiped clean and the lenders still have the right to appoint debt collectors to recover payment.

A spokesperson for the lending industry said, “Some borrowers took out loans fully understanding what they were doing and properly borrowed the money. They have been trying to get the loans written off by using a technicality and that’s a cynical practice”.

We agree.

According to a recent report published by the Economic and Social Research Council, the recent rises in house prices are going to be reversed. As the government has to cut it’s expenditure, economic recovery will waver and house prices will fall again.

This in turn is expected to create a spiral as potential sellers take their house off the market and buyers find it harder to find what they want and, disillusioned, they too effectively leave the market. Then as household wealth falls, consumer spending falls and this again impacts on house prices.

The Council predicts that it could take three years for UK house prices to sustainably break out of this spiral.

If this is true, it is going to be three four, or even five, years before we see the mortgage lenders pluck up enough courage to accept low deposits as in a falling housing market. When markets fall, the equity homeowners have in their property can be eaten up very quickly leaving them in negative equity - and leaving the mortgage lender facing a potential loss on their lending. For the time being we are unlikely to see any lenders reduce their deposit requirements and this is not good news for first time buyers.

Let’s hope that the Economic and Social Research Council has got it wrong!

Last month a judgement slipped through the Newcastle County Court which could have major repercussions for the insurance industry.

The case related to a person who had been sold Payment Protection Insurance (PPI) by MBNA. The case was won on a technicality that will send shivers around the boardrooms of the companies that sold PPI.

The judge said that MBNA had created an “unfair relationship” by encouraging the client to take out PPI but failing to disclose the large commission that MBNA would earn as a result from the insurance company. Apparently, such an “unfair relationship” breaks new laws which were introduced in 2007.

As the judgement was delivered in a County Court, the case does not form a binding precedent but companies specialising in miss-selling compensation claims are rubbing their hands with glee. One claims company said, “This has massive ramifications. The unfair relationship issue is widely applicable as it underpins almost every sale of PPI”.

We think it probably applies to all other forms of insurance. Unless the seller informs the client of the commission they will earn, the case would seem to have been miss-sold.

The FSA plans to instruct banks to re-examine claims they have rejected for the miss-selling of payment protection insurance (PPI).

PPI was sold as a safety net to provide income to continue to repay loans and credit cards if the policyholder lost their job or became too sick to work or they had an accident. But these policies had restrictions. About 2 million people were excluded from claiming because they were self employed or part timers. Nevertheless the banks continued to sell the policies to people who had no possibility of making a valid claim. And it is not surprising that the banks were so keen on PPI – they made an estimated £1.4 billion a year from these insurances.

It now seems that the FSA believes that many of the compensation cases that have been rejected should not have been rejected. Consequently they are reported to be planning to instruct certain banks to review all the PPI claims they previously rejected. Apparently, this will affect around 40% of the companies that sold these policies and around 185,000 ex-policyholders.

The FSA have come to this decision because banks have been rejecting six out of ten miss-selling claims but when these rejections are referred to the Financial Ombudsman Service, nine out of ten are overturned in the customer’s favour.

So it seems that we can’t even rely on the banks to honestly review their own miss-selling without cheating!

Hey fellas, if your aged between 60 and 65 you need to have applied for your winter fuel allowance and it’s worth a cool £250! And for those aged 80 or over, the payment increases to £400.

The winter fuel allowance is paid automatically to anyone who receives a state pension but men between the ages of 60 and 65 aren’t eligible for state pension and, therefore, have to apply for the allowance separately.

Anyone aged over 60 by 27th September is eligible for the payment this year.
The Department for Work & Pensions is apparently concerned that some men are unaware that they are eligible for this allowance and have been advertising the availability of the payments. If you need to claim for this year’s payment, then get your claim in a.s.a.p. and in any event before 30th March 2010. Use the Winter Fuel Helpline on 0845 9151 515

Interest rates on personal loans are continuing to rise as lenders remain worried about borrowers keeping up with their repayments.

The rates from Marks & Spencer, Egg, and Tesco have all recently risen by 1.2%, 1% and 0.2% respectively. Twelve months ago, the typical interest on a three year loan for £5,000 loan was 11.2% whereas today it is 12.2%.

Rates have risen because lenders think that the outlook for defaults continues to worsen. As a result the anticipated losses have to be covered by the majority of customers who do fulfil their obligations. This tends to indicate that the banks are supporting those economists who foresee a worsening unemployment rate. Now that the government is clearly planning savage cuts in expenditure the fuller, longer term affect of the credit crunch it is coming home.

We have to advise that despite the recent signs of recovery, the best advice remains batten down the hatches.

We think that motorist and the motor insurers will have something to say about the latest advice given to the government. The advice is that motorists should always be legally liable for all accidents with cyclists – even if the motorist was not at fault!

The advisers are called Cycling England an organisation funded by the Transport Department and they want the civil law to be altered so that insurers would always be liable for compensation. Now hands up who thinks that advice comes from an impartial assessment from a neutral adviser?

I can’t see any hands! Let’s try again, who thinks that advice comes from an impartial assessment from a neutral adviser?

Thank goodness you’re all sitting on your hands, because the proposal seems absolutely daft to me!

Apparently, the proposal has been based on regulations in Denmark, the Netherlands and Germany whose laws are heavily skewed in favour of the cyclist. Now I am less concerned about laws “skewed in favour of cyclists” than I am by the proposal lying on our government’s desk which advises that motorists should always be liable for an accident with a cyclist. To me the UK proposal goes two steps too far.

Let’s face it, why should a motorist have to pick up the tab if a cyclist is involved in an accident whilst riding the wrong way up a one way street? And what happens when the cyclist jumps the traffic lights or even goes through the lights when they are against them. These things do happen – I’ve seen it many times, especially in central London.

Motorists unite. Insurers unite. Defeat this daft proposal.

Our tip for today is pay this months’ credit card and utility bills either online, by phone, at the post office or at you bank. Why? Because the regional postal strikes are extensively delaying postal deliveries and it’s set to become much worse.

If you usually pay your bills by post, there’s a strong possibility that your payment will arrive late. That means that your credit cards will charge you a late payment fee and that late payment will find its way onto your credit rating. So you face a two way hit.

Local postal strikes have been happening since June but a national strike is now on the cards after the Communication Workers Union balloted its members on strike action over conditions and pay.