MAKE MONEY ONLINE POSTS: 11/05/18

الاثنين، 5 نوفمبر 2018

My bank won’t lend me more money because I’m too old

It’s a decade since reader EF’s husband died. He used to sort out all the finances, so she asked her children to help since his death.

It has been a weight off her mind and now, at 91, this Moneywise reader of Sevenoaks, in Kent, can count her blessings. She is reasonably active and still living in her cherished family home.

EF’s late husband took out an interest-only mortgage some years ago, but she could comfortably meet the repayments so all was good.

Or so she thought. But last month, she got a shock letter from her bank.

Banking meltdown? How not to go into the red

The letter from Barclays demanded the repayment of £180,000 by March 2019. It was the full amount of the interest-only mortgage, and the demand was the first EF had heard of any repayment deadline.

She turned to her daughter SF who, after several frustrating false starts trying to sort things out over the telephone and online, finally got some sense from staff at a local branch.

But it wasn’t good news. “They told me that because of mum’s age, Barclays hasn’t got another mortgage product for her.”

In fact, Barclays’s standard policy is to only lend to people up to the age of 70 or their retirement age. That doesn’t mean it will lend to 70-year-olds – it’s much harsher than that.

The bank will only arrange lending up until a customer’s 70th birthday. That means a 65-year-old would only be granted, at best, a loan lasting five years. And that would only be the case if they hadn’t yet retired.

EF and her husband had been granted a longer-lasting loan 20 years ago by the Woolwich, before it was taken over by Barclays and before new stricter age limits were introduced.

SF contacted Moneywise asking for help.

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“Has anyone else found themselves in a similar position at an elderly age?” she asks.

The simple answer is yes and, in the future more older people could find themselves facing problems.

That’s because most of the big high street banks have introduced much stricter lending policies and slashed age limits.

Anyone with an interest-only mortgage with a bank could be faced with the same stark demand: pay up!

SF also asks: “What are my mother’s options?”

She would like to have the mortgage extended. She can still afford to meet the repayments and with the loan just less than one-eighth of the value of the home, there is little risk to the lender.

But if the bank insists on having its money, she would have to sell the property and move out of her family home. That’s an option she doesn’t want to consider.

The good news is that there is a whole raft of lenders that might be happy to take on the loan.

There are 14 building societies that have no upper age limit at all. That is because they can take an individual decision about lending and use common sense.

If someone can afford to repay the loan and there is plenty of security – as there will be with a property that has climbed in price over the years – then sensible lenders should be glad to have a new customer.

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Even lenders with a high upper age limit are likely to look beneficially on a new borrower such as EF.

I spoke to challenger bank Aldermore, for instance. It has an upper age limit of 99, but says it is likely to extend loans beyond that for people who still have a decent enough income to afford repayments.

SF will explore these different options with her mother. But she’s also appealed to Barclays’s chief executive office to get them to rethink its negative decision, as staying with the same lender could well be the best option.

Barclays told me: “This case is currently being investigated as a priority.”

“There are 14 building societies that have no upper age limit at all”

Fingers crossed that the bank takes a common-sense approach, especially as it appears the customer was surprised by the impending debt demand, causing much distress.

Even if it doesn’t extend the mortgage, EF should be able to get a loan elsewhere.

But the warning is clear for other older interest-only borrowers – you could be sleep-walking into problems, which means it is sensible to prepare now.

The best solution would be to start making payments on the mortgage, or saving the money elsewhere, so you can pay the loan off when it falls due.

You can find out more about which building societies may be able to help older lenders at Bsa.org.uk/information/consumer-factsheets/mortgages/building-societies-lending-age-limits.

OUTCOME: Barclays is investigating this case ‘as a priority’

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Banking meltdown? How not to go into the red

IT banking failures are increasingly common, leaving millions of customers locked out of their accounts. In some cases, customers are then falling prey to scammers. Here’s how to protect yourself

A slew of banking system failures over recent years has resulted in millions of customers being unable to use their accounts, with Barclays, HSBC, NatWest, RBS and TSB hit in the past few months alone.

Customers have been left unable to pay their bills, sometimes leading to late payment charges and penalties. In extreme cases, people have been unable to complete important transactions, such as a house purchase or paying for a wedding.

Hannah Maundrell, editor-in-chief at Money.co.uk, says: “Bank branches are closing left right and centre, meaning many people rely heavily on their online banking and app services. With these being so unreliable, people are struggling to access their money when they need it, which is unfair and unacceptable.”

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The most high-profile case this year is the IT meltdown TSB suffered in April when around 1.9 million online customers were locked out of their bank accounts and mobile apps. It happened when an upgrade involving migrating vast amounts of customer data to a new platform went wrong. TSB received more than 135,000 complaints and the cost of the meltdown reached £176 million.

Customers complained of being unable pay their credit cards and mortgage bills, leaving them facing charges. Some said that they were able to see the details of other customers.

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Whis is this happening?

Legacy systems at banks were originally set up for branch banking and are up to 40 years old in some cases.

Over the years, banks have bolted on technology upgrades to existing systems, making them more complex.

Nick Hammond, lead adviser for financial services at World Wide Technology, says: “These failures are happening largely because of the complexity of the systems and organisational design.

“Because of the need to compete with new entrants coming to the market, banks are facing significant amount of cost pressure and are trying to move to a more agile operating model.”

Experts have warned that there are further incidents to come as age-old legacy systems continue to leave most of the major banks at risk.

UK regulators are so alarmed, banks are also now required to make sure back-up plans are in place and that they can get their systems up and running again within two days.

Avoid the scammers

Fraudsters are exploiting the confusion over IT failures by taking advantage of worried customers.

Following the TSB IT meltdown this year, 1,300 customers reported losing money from their accounts. National crime and cyber-reporting centre Action Fraud received more than 300 reports of fake emails, texts and calls in May – 10 times as many as the previous month.

Many of the scam emails looked genuine and contained the TSB logo along with details of the system failure.

If you think you are a victim of fraud, you should contact your bank immediately. Where eligible, banks should refund stolen money as a result of fraud the day after you report the problem.

Lara Xenoudakis, detective chief inspector of the City of London Police’s National Fraud Intelligence Bureau, says: “Your bank will never call you out of the blue and ask you to divulge your details, PIN or password. They will not say there has been some fraudulent activity on the account or there is an insider on the branch.

“We advise people who are cold-called to put the phone down and find the genuine number from the website and if possible call on a different phone line.

“Do not open links in unexpected emails or texts and make sure that if you are approached this way, you’re not pressured into acting. Then go to the genuine website and make your own enquiries. Call the bank and say you have received an email and that you are you aware of it.”

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Get compensation

Customers who cannot access their accounts can claim compensation for any losses or knock-on costs.

You will need to prove the loss, so gather as much evidence as you can. Note down what went wrong, the details of the companies involved and charges you faced.

If you miss a payment for a loan, credit card or a mortgage, this could affect your credit rating. Contact your lender as you may be able to get the black mark on your credit score removed.

If you feel your bank has not dealt with the complaint satisfactorily, contact the Financial Ombudsman.

“If you’ll miss a payment, let your bank know straight away”

Protect against future outages

It makes good sense to have back-up plan. If you put some money in a second bank account, you will be able to access cash if there are problems with your main account.

It is also good idea to set up direct debits for bills so that if your banking app goes down you will still be able to make a payment.

Tashema Jackson, money expert at uSwitch.com, says: “If it seems like the outage will result in you missing the payment, let your bank know straight away. It may also help to let anyone who is expecting a payment know, just in case. Most will be completely understanding and won’t penalise you in these circumstances.”

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Consider switching

If you are unhappy with your bank, you may want to consider switching.

Earlier this year, comparison website GoCompare reported a 100% rise in customers using its current account comparison service following the chaos caused by TSB’s IT meltdown.

Georgie Frost, consumer advocate at GoCompare, says: “A lack of confidence in the current technology at their existing bank is a reason people are looking to move to those with better reputations.”

She adds: “There are however, positive reasons that people are looking to switch. Many banks will offer free gifts or money to get you through the doors.”

“If the bank calls me, I’ll hang up and call back”

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“I don’t think I will ever bank with TSB again”

Annette Ridlington, 35, lost thousands from her bank account with TSB earlier this year after fraudsters hacked her account.

The mental health nurse, from Eastbourne, first noticed something was up when her card was declined while out shopping.

When she checked her account, she saw a number of transactions she did not recognise.

Money had also been transferred from the Lloyds account she has with her partner. In total, fraudsters managed to steal £3,650. A week later, thieves took a further £850.

Annette says she was surprised she was hacked as she has always been very security conscious.

“I’m careful about phishing and I never click on any links. Even when the bank calls me, I put the phone down and then contact them. I don’t trust anyone when it comes to banks and the internet,” she says.

She says TSB called her to apologise, refunded her and offered her £250 compensation.

“I didn’t think the amount was enough and it wasn’t worth the trauma. It was a lot of stress and I am still suffering now. I was having nightmares about not having any money in my account. I have switched to Lloyds and I’m a lot happier.”

TSB says Annette was the victim of a phishing scam, but she isn’t so sure.