Welcome to Sarah Pennells’ personal finance column
Sarah Pennells is a personal finance journalist and the face behind SavvyWoman.co.uk. We think she does a great job at explaining financial subjects in a very clear and accessible manner. You can find her column below where she writes about the latest financial news, and helps you get more from your money.
Ever paid the wrong person by mistake?
There’s nothing like that sinking feeling after you’ve pressed ‘send’ and realised you’ve sent a bank payment to the wrong person. It’s not happened to me (yet) but I’ve been contacted by a number of people who’ve said this has happened to them. And in some cases, the person who’s received the payment has happily ignored their bank’s letters asking for the money to be repaid.
A few months ago, the Payments Council (which represents the major banks and building societies) introduced a code of practice which said that banks would have to take action within two working days of being told about the payment mistake. The problem is that banks don’t always do as much as they should to help their customers get their money repaid.
Now Nationwide building society says it’s changing its terms and conditions so that if one of its customers has received a payment they shouldn’t, they’ll do more to get the money back. Other banks or building societies may follow their lead.
In the meantime, if you’re making an online or phone payment, make sure you:
- Double check the account number and sort code it’s going to. Banks use these numbers and not the account holder’s name, to decide where a payment should go.
- Don’t type in someone’s cheque number or other number where the account number should go. Account numbers are always eight-digit.
- If you’re sending a large payment, you could try and send a trial payment of £1 and check it’s been received.
- Once a payment has been made, it can’t normally be retrieved. The faster payments system means that payments can be made within minutes.
- If you don’t get the help you need from the bank, you can complain to the Financial Ombudsman Service, which deals with complaints free of charge, or to the Information Commissioner’s Office (ICO).
Switching energy provider
Now that autumn seems to have arrived, you might be putting the heating on (or you could be a hardy type who refuses to put the heating on until November!). Either way, the winter weather normally means big energy bills.
I have to confess that I’m not a fan of switching energy supplier repeatedly. It can save you money and it’s definitely worth doing if you’ve never switched, but – if you’ve already switched several times – the savings could be quite small. Here are my tips for switching:
- Make sure you have a year’s worth of bills to hand so you know how much energy you’ve used – and therefore what you could save.
- Compare the deals offered by two or three price comparison sites. In the past I’ve had different results from different sites.
- You can switch if you’re on a prepayment meter (even if you owe up to £500 on each meter). You can also switch if you’re in a rented property, as long as you don’t pay for your gas and electricity as part of your rent.
- You don’t just have to switch to save money – some energy suppliers have a much better track record than others for service and some use ‘green’ energy (sourced from renewables, such as wind and solar power).
Smart meters are coming – eventually. By 2020, every home in the UK should have a smart gas and electricity meter. These meters will tell us how much energy we’re using and will mean that we don’t have to pay too much (or too little) for our energy through estimated bills.
But this week the consumer organisation Which? warned that the £11 billion cost is in danger of spiralling out of control. Under the plans, each energy company is responsible for buying its own smart meters, whereas Which? says that the energy suppliers should pool their resources and bulk buy the meters.
More savings protected
Savings of up to £1 million in a bank or building society will be protected by the savings compensation scheme, if plans by the Bank of England go ahead.
Currently, the first £85,000 of savings that you have in a particular bank or building society is protected under the FSCS (Financial Services Compensation Scheme).
The Bank of England plans to increase this limit so that if, for example, you sell a property and don’t buy a new one for a while, you can put the money from the house sale in a bank and know that it’s protected.
SAVVY TIP: The new limit of £1 million would only apply for a fixed time period, such as six months. It’s expected to be introduced by next summer.
Here’s a quick guide to the current savings compensation scheme.
- The first £85,000 of savings you have are protected. If you have a joint account, the amount is double at £170,000.
- Strictly speaking, it’s not the first £85,000 you have in any one bank as some banks are part of a bigger group and are covered by one ‘authorisation’ or banking licence. For example, Halifax, BM Savings, Bank of Scotland, IF (Intelligent Finance) and some savings with the AA and Saga are all covered by the same licence. That means that if you have more than £85,000 split between these brands, only the first £85,000 across all the brands would be protected.
- The £85,000 includes any interest so, to be on the safe side, it’s best to keep less than £85,000 in your account.
- UK banks and building societies and overseas banks that operate in the UK are covered by this scheme. It’s a condition of them being authorised by the regulator in the UK. The only exception is banks that have their parent company headquarters elsewhere in the European Union, as they can choose to have their savings protected by a scheme in their home country. The compensation limits are very similar at €100,000, but the claims process may be different.
SAVVY TIP: In reality, only one or two of the smaller banks that are owned by companies based in the EU but outside the UK have not signed up to the UK’s savings compensation scheme (but they’re still covered by their home country’s scheme).