The Week Unzipped: Watchdog cracks down on charges for phantom loans

CONSUMER watchdogs at the Office of Fair Trading are to crack down on loan sharks who demand upfront fees for loans there is little chance of being granted.

Unscrupulous credit brokers cold-call thousands of consumers offering loans in return for hefty fees. But the credit is never forthcoming.

In future these fees will have to be refunded if the loan is not subsequently arranged.

John Fingleton, the OFT's chief executive, said: "Our evidence suggests some businesses are deliberately taking people's money upfront with no realistic expectation of finding them the type of loan they need."

At the same time, the OFT is launching new rules clamping down on debt management firms. They must also stop charging expensive upfront fees and can no longer make misleading claims in adverts.

Finally, they must stop posing as money advice charities, as some do, to attract business.

Scots have it covered

SCOTS are better at protecting their families and are more likely to have a life insurance or critical illness policy than those elsewhere in the UK, according to research from Scottish Widows.

More than half of Scots have life insurance in place, compared with the UK average of 44 per cent. The south and south-east of England have the lowest take-up of life cover at 41 per cent.

Scots also fare better when it comes to protecting their health, with 15 per cent of Scots having a critical illness product, compared with the UK average of 12 per cent.

The take-up of critical illness products in the south and south-east is again lower, just 11 per cent. However, in Wales the figure is just one in ten.

Indeed, Britons are more likely to insure their pets than their health, with 15 per cent of the population taking out pet insurance.

Leeds launches Isa

LEEDS Building Society has launched a new two-year fixed rate Isa paying 3.7 per cent. Depositors can withdraw a quarter of the fund without notice or penalty, which is unusual for fixed-rate savings.

Elsewhere, Norwich and Peterborough Building Society has increased the interest rate on its one-year fixed rate cash Isa by 0.2 per cent, now paying a guaranteed 3.05 per cent. It must be opened with the full annual Isa allowance of 5,340.

Couples' pet peeve

ONE in five separating couples go to war over who gets to keep the cat or dog, according to research by The Co-operative Pet Insurance, which found that 20 per cent seek legal advice, with one in ten going through formal mediation.

Lee Mooney, head of pet insurance at The Co-operative Insurance, said: "Where possessions such as TVs used to dominate divorce proceedings, the custody of the family pet is now one of the subjects that causes the most upset and arguments for separating couples."

Boost for buy-to-let

WOULD-BE buy-to-let landlords have been given a boost via a new range of base-rate tracker mortgages. Skipton Building Society has also cut from 30,000 to 20,000 the minimum income required.

Borrowers with a 40 per cent deposit can track base at a 2.74 per cent premium, giving a pay rate of 3.24 per cent. Those with a 30 per cent deposit pay slightly more at 3.09 per cent over base, giving a current pay rate of 3.59 per cent.

The loan comes with a 245 application fee and 995 completion fee. There is a 4 per cent early repayment charge, although overpayments of up to 10 per cent are permitted for two years.

The loan reverts to base rate plus 4.45 per cent at the end of two years, although there is help towards legal and valuation fees.