Retailers booed me for saying ‘don’t blame the delivery company, blame the retailer’

Retailers booed me for saying 'don't blame the delivery company, blame the retailer'

Retailers booed me for saying ‘don’t blame the delivery company, blame the retailer’

The internet revolution has turned the clock back to a 1950’s delivery culture, though these days it’s more often a (wo)man in a van, than a boy on a bike. Getting and receiving parcels has become a regular part of many of our weeks – yet this last mile of delivery has turned into a regular nightmare.

I spoke at the Retail Week conference yesterday, a gathering of many of the UK’s major and minor retailers, and discussing this issue got me booed!

My point was quite simple. I explained that when a parcel company is either:

  1. Inflexible eg, ‘you must be in at 2.40pm on a weekday afternoon’, or
  2. Mistreats you eg, – it bungs your parcel over a fence, leaves it in a wheelie bin when you’ve said not to, delivers late, fails to deliver, claims you weren’t in when you were etc…


THEN DON’T BLAME THE DELIVERY FIRM – BLAME THE RETAILER.


I then explained that my hope was that this would mean retailers, which employ bad delivery firms, suffer brand damage (that was the point they booed me on! Watch it here).

Yet it’s important to stir the pot. The point is quite plain, your contract is with the retailer, your consumer rights are with the retailer, your relationship is with the retailer – if it chooses to sub-contract its delivery to an incompetent firm then it must face the repercussions.

Of course if this is just an odd one-off, it won’t be a real issue, but if it is systemic then the repeat nature of it should hurt.

Many people complain about Yodel and other delivery firms (see our poll of the best and worst delivery firms) yet retailers still choose to employ it – in which case they need to face the brand consequences.

The system most companies use for delivery isn’t flexible enough for the modern world. Things are improving, but not quickly enough. If they want us to move online as it cuts their costs, they need to improve the last mile service.

I’d love your views below…

Related guide:

Now we’re getting closer to the referendum itself, I wanted to bash out an update,

The pound has tanked in recent months. Last year £1 bought you as much as 1.43, now it’s just 1.26. Against the dollar, last year’s high was $1.58, now it’s just $1.42. Some of this is on the back of the uncertainty about the EU referendum.

Back in March I wrote a blog responding to the huge number of questions about the impact of the referendum on holiday money. And since then, they’ve kept coming, such as these on my Twitter feed:

ncluding a possible trick to beat the system.

It’s first worth putting the current situation in perspective. While the current rates look poor compared with last year, actually go back two years and £1 bought €1.20, and the year before that, €1.15 would’ve been worth whooping about. So it’s low, but not anomalously so.

Much of this is about uncertainty

The EU referendum has caused uncertainty, and currencies are always hit by that. Yet trying to fathom the future isn’t easy. The only sure thing is that, until the vote on 23 June, there’ll be more uncertainty and the vote will have an impact, one way or the other.

However, as we get closer and the likelihood of an out vote looks more plausible, it’s not controversial to say,  if that does happen, the immediate impact is likely to cause the pound to weaken further (ie, a pound will buy fewer euros, dollars, etc), and possibly substantially.

I’m not making a judgement by saying that. An out vote would be a big change – for good or bad depending on your opinion – and the markets hate change. So in the short run, it will likely hit the currency (though there’s no certainty). If we vote in, as no change is likely, it is of course possible the pound will strengthen.

While many other factors can affect currency movements – such as general economics, speculation, relative interest rates – at the moment if you try to predict what’ll actually happen to the pound it incorporates a big gamble on the outcome of the referendum.

Even many professional currency speculators will get it wrong. Therefore, unless I find a cheap crystal ball somewhere, I certainly won’t be making predictions.

PS: Read my How to Vote in the EU referendum blog for help making your decision.

Ask yourself what rate is good for you?

Whatever happens to the euro rate, the future is out of your control. So forget trying to guess the market and instead ask yourself:

 ‘Would I be happy to get a rate of €1.26 for my holiday money…?’

If your answer is: “It’s a decent rate, I could have a reasonable holiday on that, and my real fear is it getting worse because that’d make things unaffordable” – then go safe and buy now. However if you do that and the pound strengthens, and in hindsight you’d have been better off waiting, don’t let the bitterness ruin your holiday.

For those stuck on what to do, there are a couple of halfway houses. To hedge your bets, simply buy half of what you’ll need now (using the methods below) and leave half until after the referendum. For another possible alternative, see the trick I’ve added at the end of this blog. (Or see the trick below for another halfway house.)

Personally I don’t do speculation. Instead, I just ensure I always get the best rates on the day.

The easy way to do this is with bureau busting, specialist travel credit cards. The two top picks right now are Halifax Clarity and Creation Everyday, which give near perfect exchange rates in every country, so just pocketing one means you know you’re getting a good deal. Though you do need to pay them off IN FULL each month to minimise interest.

Then if you’re really cool, funky and, ahem, down with the kids, like me, you can put them in your overseas wallet.

How to lock into the current rate

If you do decide you’d like the safety of grabbing some foreign exchange for your holiday now, in case things get worse, there are a few different and easy ways to do this:

  • Get yourself euro cash. To do this, use our TravelMoneyMax.com Travel Money Comparison, which shows you the best all-in rate for collection or delivery.

    However, be sure you’ve somewhere secure to put the cash. Some travel bureaux let you buy ahead and then send you the cash at the locked-in rate nearer the time, but if you do this and the bureau goes bust, you’d likely lose your cash as there’s little protection. So I’d avoid that.

  • Load up a prepaid card. These are effectively modern-day travellers’ cheques but used like a debit or credit card. You must load cash on them in advance, and the rate you get is the rate on the day you load. But don’t assume the cards are all the same – there can be huge differences in rate. See Top Prepaid Travel Cards for our top picks.
  • Get a UK euro bank account. This is only really worth doing if you often travel to Europe (perhaps you own a holiday home) – or spend substantial amounts. A few UK banks offer these, including CitibankBarclays and Lloyds Bank (monthly fees may apply, so check). They operate as a normal bank account, but in euros. If you’re depositing cash, the bank will usually do the conversion for you, but be careful as the rates are often awful – so don’t do it automatically, check in advance.

    You can often call the bank to try to negotiate a better conversion rate (especially for larger amounts). Alternatively use one of the international money transfer firms to deposit the cash there for you.

  • Send money to an overseas bank account. If you have an overseas euro account (again, likely for those with second homes in Europe), then sending money to it will do the job. However, watch the conversion rate. An international money transfer firm will often improve it for you.

A possible trick to beat the system

Big bureau de change Travelex has a ‘buy back’ promise on its foreign currency. So pay £4 when you buy, and you get a right to sell it back your currency at the rate you bought at, within 45 days.

Now, its rate isn’t usually as good as the top bureaux on TravelMoneyMax. Yet it does mean if you buy now, and the pound gets a lot worse, you’ve done well. If the pound strengthens, you can sell the currency back to Travelex at the rate you got it, and then buy your holiday money at the new better rate.

This on the surface is a good option, but I’ll be honest, we’re in the midst of checking it out (and some other firms have suspended this for the referendum); I’ve not dotted all the i’s and crossed the t’s, we plan to do detailed work over the next few days and will include it in the next weekly email.

What will you do?

So where do you sit on this? Are you ‘buy now to at least be sure it won’t get worse’?  Or a ‘play the best rate on the day’-type? Do let me know via the discussion box below.

End car insurers auto-renewal rip-off! 10 rule changes needed

End car insurers  auto-renewal monopoly! 10 rule changes needed

End car insurers auto-renewal monopoly! 10 rule changes needed

It used to be that you had to be insured to drive a car, but since 2011 you have to be insured to own one (unless you’ve a SORN). Car insurers have taken advantage of these continuous insurance rules to lock customers in by auto-renewing.

In itself auto-renewing isn’t a bad thing – continual cover is a convenience for many – and the new rules also have positive aspects. They were brought in to help cut the number of uninsured drivers and to create an insurance database so those driving without policies were easier to catch.

My problem is the the way the auto-renewal is structured. Insurers usually increase prices each year to take advantage of inertia, and their systems are set up to make it bureaucratically far more difficult than needed to switch.

And while many do successfully ditch existing firms to save cash (see cheap car insurance for how to cut costs), auto-renewing effectively locks more people than necessary into their policy.

10 rules to make auto-renewing fair

I’ve been banging on about this for a while now and we put together a 10 point plan in 2012 as part of a policy discussion with the Government. I realised today I’d never published it. So as I’ve seen others starting to mutter on this recently, I thought it time to dust it out.

1. Policyholders should have the choice of opting in or opting out of auto-renewal when a policy is bought.

Issue: Policyholders are automatically auto-renewed by most insurers. While this is useful for ensuring people remain insured, it’s bad for consumer choice and competition.

Change: When getting a policy people should be given a choice about whether their renewal is opt in or opt out. In other words at renewal time, if it’s opt in, they can be automatically renewed by default. If it’s opt out, they will only be automatically renewed if they approve of the renewal at that point.

2. More info on no claims bonus (NCB) transfers should be in the auto-renewal document allowing for easier NCB transfers.

Issue: To switch insurer if you have built a no claims bonus requires proving the length of that bonus. This can be difficult and is used by existing insurers as a disincentive to switch and a way to retain existing customers.

Change: The auto-renewal quote documents should include detailed no claims bonus information that can be used, without any further reference to your current insurer, to switch – taking out a block in the system.

3. Information on last year’s premium should be prominently displayed on the auto-renewal form.

Issue: Many companies use inertia based pricing to increase policyholders premiums each year. They don’t put the previous year’s costs on insurance documents so people can’t see the rise.

Change: Insurers are compelled to notify customers of their current rate and the percentage rise when it is time to renew.

4. The reasons for any premium increases should be fully explained.

Issue: Many policyholders may find that their premium has increased at renewal yet there is no listed reasoning behind the increase.

Change: Insurers are compelled to list any material factors, which may have led to the premium increase, explaining why this affects underwriting.

5. Policyholders should be able to cancel their cover using the same method they did to sign up.

Issue: While you can buy insurance online, face-to-face, or over the phone, cancelling cover can be much more restrictive. Many of the biggest insurers don’t allow you to cancel online even though they allow you to sign up online.

Change: Insurers are compelled to allow customers to cancel in the same way they signed up – so if they signed up online, they can cancel online.

6. Policyholders should have more notice about upcoming renewals.

Issue: Policyholders currently get around 28 days to auto-renew – if it is offered – but this may not be enough to assess the marketplace properly to find a new policy.

Change: Insurers notify policyholders six weeks before renewal with a further reminder two weeks before.

7. Cancellation fees for auto-renewal should be abolished.

Issue: Policies that are auto-renewed still attract a cancellation fee if the policyholder finds a better deal elsewhere and needs to cancel the renewed one.

Change: Insurers should be prevented from charging cancellation fees on an auto-renewed policies.

8. Insurers must ask customers about changes in circumstance before issuing new quotes.

Issue: Many people are driving with invalid insurance because they were auto renewed and didn’t notify the insurer of material changes such as speeding points.

Change: Insurers must ensure that they have all the updated information. The customer needs to actively verify this.

For opt in auto-renewal, this will ideally be before the renewal, but can be up to three months after. If there is no verification the insurer needs to formally contact the individual to suspend the insurance.

For opt out auto-renewal the verification would be part of the sign up process.

9. Insurers should not be able to take policyholders’ money before renewal.

Issue: Some insurance companies, including Swinton, take money from the accounts of their policyholders who pay by monthly direct debit, ahead of renewal as a deposit. Many policyholders are not aware that this will happen.

Change: Insurers are barred from using this practice.

10. Renewal fees should be abolished.

Issue: A limited number of smaller insurers charge policyholders if they decide to auto-renew. The fee can be as high as £50.

Change: Insurers should be barred from using this practice.

Auto-renewal poll

Also, back in 2012 at the time we were doing this policy work, we ran a site poll on your views of auto-renewing. 10,500 voted and the results are telling…

  • Ban all auto renewals – 3,914 votes (37 %)
  • Allow auto renewing only if premium not increase – 2,198 votes (21 %)
  • Allow auto renewing – 211 votes (2 %)
  • Auto renewing allowed only if people opt in – 2,930 votes (28 %)
  • Auto renewing allowed but must offer an opt out – 1,273 votes (12 %)

I’d love to know what you think of the ten points; whether you agree or disagree, if there are any you’d add that we’ve missed, and your auto-renewing experiences.

Citizens Advice launches the (gulp) ‘Martin Lewis Fund’

Citizens Advice launches the (gulp) ‘Martin Lewis Fund’

Citizens Advice is an amazing charity of professionals and volunteers who help people with debt, legal, consumer rights and a range of other issues. 

This week the organisation is announcing it’s setting up the ‘Martin Lewis Fund’ using money from a recent donation I made, and I thought it’d be good to explain what it’s doing.

And just to say at the start, I was somewhat gobsmacked and moved when I heard they were naming the fund after me. It’s not normally a part of my giving strategy, but it’s very kind of them.

My donations to Citizens Advice have been made for three main reasons:

1) They need money and it does a great deal of good.
2) To make sure people realise Citizens Advice is a charity, so if they’ve been helped, and are in a position to, they should donate too.
3) As a bit of shaming about how its public funding has been cut over the years.

This new fund comes from the more recent £1m donation given as part of the MSE earnout (also see the full £20m giving strategy blog).

Rather than explaining what it does myself, here’s the info from Citizens Advice’s internal website and the blog of its chief executive Gillian Guy…

“Last year, consumer champion Martin Lewis gave our service a very generous donation. This money is being invested in the local Citizens Advice network through the Martin Lewis Fund, a process designed to ensure this money makes a real difference to clients’ lives across England and Wales.

“This is an opportunity for you to develop an inventive project to meet client needs, run it for up to a year and then take it to potential funders with proof that it’s a workable and needed service.

“We will support you to make sure projects are funder-ready where possible, and help capture and share learnings so that successful projects can be replicated by other local Citizens Advice.”

Gillian’s (internal) blog – launching the Martin Lewis Fund

This is taken from Gillian’s blog about the new fund…

“As you all know, last year Martin Lewis gave our service a very generous donation of £1 million, to be split between Citizens Advice, Citizens Advice Scotland and Citizens Advice Northern Ireland. Today I’m pleased to launch the Martin Lewis Fund – a way for local Citizens Advice in England and Wales to apply for a share of this funding to develop inventive projects that will benefit clients and be replicable across our network.

“In Martin’s video about the fund, he explains that he wants his donation to go to the front line, and that he’d like you to use it to find ways to improve our service and make it “fit for twenty first century Britain”. We have agreed the following project categories:

1. Engaging with a digital world

2. Expanding our reach in health and social care

3. Responding to local government reorganisation

4. Volunteer roles for 2016 & beyond

5. Increasing our financial resilience

“These are all areas where we feel there are real challenges and opportunities for our service.

“The funding will be allocated in three stages. In the first stage, up to 50 projects will be awarded £1,000 each to develop their ideas and test with users, supported by the bidding support team. After assessments and interviews, up to 25 projects will then be awarded up to £25,000 each to continue for one year. Finally, up to 10 of these projects will be funded for a further six months to build the evidence and knowledge base needed to replicate their work across the network.”

[Then there are details about how you apply, which are internal for Citizens Advice only.]

“We’re very grateful to Martin for providing us with this exciting opportunity to invest in new ideas which will solve problems for our clients and change even more lives. He is looking forward to see what you come up with – and so are we. I hope you will all get involved, and wish you the very best of luck.”

How to vote in the EU referendum

It’s the biggest consumer decision any of us will ever make. It affects our economy, foreign policy, immigration policy, security and sovereignty. Our vote on whether the UK should leave the EU will reverberate through our lifetimes, and those of our children and grandchildren.  

If you’ve already made up your mind how to vote, good. I’m not campaigning – I don’t want to change it. If you haven’t, my aim is to help you ignore the spin and sales to weigh up the right decision for you, your community, our nation and the wider world too.

Contents of this blog:

Want to share this blog? The short link is www.mse.me/eu

There are no facts.

My mailbag’s been drowning with questions and concerns. The biggest being: “Please just tell us the facts, what’ll happen if we leave?” I’m sorry, but the most important thing to understand is: there are no facts about what happens next.

Anyone who tells you they KNOW what’ll happen if we leave the EU is a liar. Predicting exact numbers for economic, immigration or house price change is nonsense. What’s proposed is unprecedented. All the studies, models and hypotheses are based on assumptions – that’s guesstimate and hope.

So accept the need to wrestle with uncertainty. The EU referendum is far from a black and white issue; there are more shades of grey than E L James’s bookshelf.

Frustratingly though, most politicians try to come across as doubt-free. Those pro-EU pout that all elements are good, while those against frown at them. Yet like life, it’s a mix, and the debate would be better if both sides admitted that.

  • The Good. There are things many tout as the EU’s strengths. It makes us part of arguably the world’s largest trading block, boosting UK businesses and jobs.

    It strengthens workers’ rights and gives consumers common standards that aid product choice and rights valid everywhere.

    There’s freedom for us to live and work anywhere in the EU, easy travel, and cheap mobile roaming.

    Plus sustained peace among EU nations was one of the reasons for the community’s foundation. Though whether it’s happened due to the EU binding nations or its coincidental membership of NATO is questioned by some.

  • The Bad. Then there are the things many decry. Some of its regulations are unsuited to the UK. I met the Chancellor recently over my concern that the Mortgage Credit Directive, or at least the UK interpretation of it, is stymying people’s ability to get a cheap remortgage deal.

    While we don’t have unattended borders – barring with Ireland – as we’re not part of the European (not just EU) Schengen area, freedom of movement of course means other EU citizens can move here – either an unaffordable crowding out of our schools, NHS and culture, or a boost to the size, wealth and talent of our nation, depending on your view.

    For many – worst of all – the EU organisation is without doubt distant, only vaguely accountable, inefficient, and out of sync with the sentiment of much of Europe’s population. Even many IN voters berate that, but think the gains outweigh it. Yet were it made more democratic, some would still worry as it’d then have a stronger claim to more sovereignty.

    Note, though, that if we leave the EU, it’s the UK’s system that would pick up the slack, and some castigate its democratic deficit too. It’s also managed by civil servants, though here controlled by elected officials. It has an unelected legislature in the shape of the Lords, and only 37% of those who voted picked Conservative, yet they govern.

    And of course being elected doesn’t prevent stupid policies. Whether it’s the Tory ‘bedroom tax’ that penalises council tenants for not moving to often non-existent smaller homes, or Labour’s pledge to ‘cut tuition fees’ to help poorer students, when the maths showed it’d only be rich graduates who saved.

  • The Ugly. Finally there are the misunderstandings. From myths about the EU banning curved bananas to comments such as “I’m out due to interference of the European Convention (or Court) on Human Rights”, even though that’s a separate treaty from the EU, and this vote doesn’t affect it.

So how do you square this and the myriad of other issues, like the EU’s Common Agricultural Policy, regional variations, and the risk to the UK union if Scotland votes IN but overall it’s an OUT.

Well, do some reading on useful independent sites that run through the issues, such as The UK in a Changing Europe or BBC Reality Check, but after that for most people this comes down to a risk assessment.

This is all about risk.

A vote for Brexit is unquestionably economically riskier than a vote to remain. Yet don’t automatically read risk as a bad thing. It simply means there’s more uncertainty – a greater variance of possible outcomes. Much of the debate stems around ‘free trade’ issues – which in simple terms mean no tariffs or taxes on imports or exports between countries.

Leaving the EU risks us being left on the sidelines. A shrinking power, spurned after a bitter divorce from our neighbours, who, wanting to discourage other leavers, offer us hideous trading conditions, while the rest of the world sees us as too small to bother with.

Or we could in the long run become a nimble low-tax, low-regulation, tiger economy. Trading unfettered with all nations across the globe, able to create our own rules and speedily reacting as a niche player to a changing world (though whether that’s good or bad depends whether you’re a Brexiteer from the political left or right).

The likely truth is of course somewhere between the two. But most independent analysis suggests Brexit will be detrimental to the economy, and on balance I think a wobble of economic uncertainty is more likely, at least in the short to medium term. Though again, it’s about chance, so it doesn’t mean it’s definite, and of course money isn’t the sole issue.

A vote IN has a level of uncertainty too. The future is always a journey, and the economies and politics of some EU countries are far from stable. But overall less change is likely. So looking only from an economic view, in summary:

If you're thinking you don't want to take the risk the economy could go bad, vote IN. If you're thinking things are so poor already, that you're willing to take the chance it could get worse, in the hope that it could get better, vote OUT.

I’ve focused financially as it’s more my area. But similarly you can do a risk analysis on most issues.

Take those who see EU freedom of movement as a bad thing. Brexit will leave the UK free to create its own immigration policy. Yet anything is possible.

There’s a risk, that, say, French and German leaders could demand freedom of movement as a condition of a future free trade agreement with the single market (a bit like with Norway) which if agreed, would see us in a similar boat as now, but without our seat at the EU top table.

The economy outweighs EU fees.

EU fees have become a hot potato politically, but it’s worth establishing the scale of the debate.

– The size of the UK’s annual economic activity was £1,800 billion in 2015.
– The annual fees to the EU in 2015 were £18bn, but we get a rebate, after that the fees are £13bn, plus there’s the money the EU spends in the UK; so what it actually costs us is £8.5bn.

So while fees for the EU club are huge, they’re dwarfed by the scale of our economy. That doesn’t diminish them as a political issue, but it does mean they can’t be viewed in isolation.

Just a 1% economic change is £18bn a year. The IN campaign’s worst case figure says Brexit could cost 7.5%, so that’s £135bn. Some OUT economists say the gain could be 4%, so £72bn. Regardless of which is right, it shows how you think the nation’s finances will swing should outweigh your view on fees.

Fees are more substantial compared with the Government’s £700bn annual spending. Adding £13bn (what we give the EU after the rebate) to that would have an impact. Though again, it’s still only equivalent to the change in the Government’s income from a roughly 1% move in the economy.

The video uses ballpark figures, the ones here are accurate.

You’ll never know if you made the right decision.

The volume of uncertainty means the only way to make the right decision is based on your political attitude to the EU, your gut instinct, and how risk-averse you are on each area that matters to you. I hope this article has helped at least put it in context.

Two people can both make the right decision but vote differently. And even then a good decision may have a bad outcome. More frustratingly, we’ll never know the right answer, as we can only ever know how one outcome turns out.

Sadly that means the spittle and bitterness over this will rage on long beyond 23 June. And indeed that’s where I should finish this, but…

How am I going to vote?

A couple of weeks ago I was so stunned I dropped my wallet (you can imagine how tightly I cling to that) when a Stronger In Europe leaflet popped through my door with my face and quote at the top. I hadn’t been asked for permission, nor am I campaigning for either side (see the truth about the leaflet blog).

The quote was accurate. It came from ITV’s The Agenda where I was put on the spot with a direct question. I’m not a politician, so I answered, saying: “On balance of probability, it is more likely we’ll have less money in our pockets if we vote to leave”.

On its own, especially as I cautioned it was a finely-balanced probability call, it isn’t a glowing endorsement. However, in the context of the leaflet it seems more.

Indeed ever since a November poll petrifyingly said I’m the UK’s most-trusted person on the EU vote, even some of my minor utterances have been picked up. Including when asked directly how I was likely to vote.

My concern is, having tried to present arguments from both sides, I don’t want anyone to read this and feel later I’d hidden something that is out there.

I’m generally risk-averse, and that pushes me just towards an IN vote for safety, maybe 55% to 45%. Yet just as my dream holiday isn’t necessarily yours, no more is my choice of what’s right a call for you to follow me. Far better is follow the logic above.

Most importantly, ensure you go to a booth, and put an X somewhere. Tomorrow’s the last day to register to vote, so check you’ve got one at www.gov.uk/register-to-vote.

Thank you to Full Fact for helping with the factual parts of this blog.

The viral letter about mis-sold student loans due to retrospective interest hikes is well meaning, but wrong

The papers are full of an angry letter from recent graduate Simon Crowther to his MP, which has been shared over 20,000 times, complaining about retrospective hikes to student loan interest. 

The letter is well meaning and does a good job in raising awareness. It’s been in all the newspapers, and indeed in articles in Huffington Post and The Guardian the letter has been linked to my own letter to the PM about retrospective changes.

However, while I agree with the sentiment – and the fact many students have been outrageously mis-sold loans due to changes – the content of the letter isn’t technically correct, and shows a continued general misunderstanding of how student finance works, that could mislead some.

So not to attack where he’s coming from, but to ensure people understand their own loans, I wanted to bash out a quick blog just explaining the situation (for a beginner’s guide to how loans really work see Student Loans Mythbusting).

The full transcript of his letter seems to have been taken offline before I could get to it, so I’m taking my quotes from the newspaper copy. If there was more in Simon’s letter explaining the bits I’m talking about, apologies to him.

1. There has been no retrospective change to interest rates

The newspapers write: “Crowther said that he took out the loan on the understanding the interest rate would remain at between 0 and 0.5%, but it has since risen to above 3%.”

The only people whose rates are above 3% are those who started university in or after 2012. For them rates are currently 3.9%, likely rising to 4.6% in September. And the rate’s never been below 3% for this cohort of students – nor, to be fair, has it ever been promised to be lower. It was always due to be inflation plus 3%.

In his letter Simon writes

“I feel we have been mis-sold the loan. A commercial firm would not be allowed to buy loans from another company and then hike the interest rates. This is not what I and thousands of others signed up to. How can it be allowed?

“How can our loan agreements be altered without our prior knowledge? This is a disgraceful act by a Government which encouraged us, when at school, to go on to higher education – helped by a Government loan with the promise of a low interest repayment scheme.

“Along with many of my former university colleagues, we have lost our trust in this Government. We have been told that as graduates, we are the future leaders of the country in politics, engineering and commerce.

“I trust when our generation reaches Parliament, our future Government is never so short sighted as to treat their ‘future leaders’ in such an underhand way.”

While I absolutely agree with ‘How can our loan agreements be altered without our prior knowledge?’ as they have (see point 3 below), that change isn’t about interest rates. For 2012 starters they have always been…

– While at university, inflation (RPI) + 3%.
– After leaving, a sliding scale between inflation (RPI) and inflation + 3%, depending on earnings – the highest rate being for those earning over £41,000.

The rate of inflation changes every September based on the prior March’s figure. This has been the case ever since student loans were introduced. The recent change of inflation is just the annual uprate; there’s no retrospective change. This was always due to happen and has happened. Full info on how this works in Should I pay off my student loan?

2. Just to cover the interest I would need to be earning £41,000 a year

In another section of the letter he writes…

“Just to cover the interest, I would need to be earning over *£41,000* a year. Unless I earn that much, my student loan will increase due to the interest.

“I would like to know how many new and recently-qualified graduates are earning over £41,000? I am only 22 years old and out of university less than a year.

“I have actually set up my own business and have been able to employ two people. As I am employing two people my own salary is lower, which means my student loan will be increasing due to the interest.”

This is an interesting point, not because it’s wrong, but because in some ways I think it isn’t a helpful way to think about the practical impacts on your pocket.

In many ways the interest is an irrelevance to all but the very highest-earning students (see my Student loans are interest free for most blog). The fact is you repay 9% of everything above £21,000, and you do that for 30 years. Most people won’t pay it off within that time, so it doesn’t matter what you owe, that changes nothing – it is effectively like paying an additional income tax at that rate.

The interest is a red herring as you’re not even clearing the loan before it wipes, so for most you won’t pay it anyway. Most people’s loan statements are in practice an irrelevance and could just be binned and not worried about – just accept you’ll pay 9% above £21,000 salary for 30 years. The amount ‘owed’ is notional, not real.

I know this is confusing. But the amount left when the debt wipes isn’t an issue for the individual, and shouldn’t scare anyone off university. It’s an issue for the taxpayer who has to fund the gap. If you’re finding this a little confusing, please do read Student Loans Mythbusting where I explain it in detail.

3. The real retrospective change students should get angry about

While there hasn’t been a retrospective change to interest rates, disgracefully and against all natural justice there has to the repayment level, and that is very costly to students. I suspect that’s what generated the passion to make this go viral, but to campaign on it we need to get the facts straight, otherwise we just give the Government an excuse to say “not correct”.

For students who started university in 2012, it was said that the £21,000 level at which you start repaying would rise annually with average earnings from 2017. Last year the Government backtracked on that. So now it’s frozen until at least 2021, when they’ll then review it.

In practice this means students will pay more each year. Here’s an example to explain…

Imagine it’s 2021 and the threshold has increased to £23,000 a year and you earn £24,000 – you’d repay 9% of the £1,000 gap, so £90 a year. Yet as the threshold is frozen at £21,000 you have to repay 9% of the £3,000 gap, so three times as much: £270 a year.

Over the five years it’s frozen this could add up to £1,000s extra for some students. And remember as most students don’t clear within the 30 years before it wipes, there’s no gain from paying more, you don’t clear the debt quicker, it’s just an absolute cost increase.

I’ve hired lawyers to look at challenging this, and will be blogging on that soon, though frankly it doesn’t look good. So the more students and parents that can campaign to their MPs about this hike the better.

Recent student loan blogs:
– Student loan hike: Meeting with Minister to propose mitigation measures

David Cameron snubs my retrospective student loan hike open letter

– Open letter to David Cameron about the retrospective student loan hike

– I’ve hired lawyers to investigate Govt’s retrospective student loan hike

– Help fight the Govt’s student loan U-turn that means many will pay more

British Gas customers – there’s a hidden way to cut £130+ off your bill…

British (and Scottish) Gas is the UK’s biggest energy supplier, serving over 10m homes. And no surprise for a provider still benefitting from its past monopoly advantage, it ain’t cheap!

After all, why should it be – many of its customers stick with it, price hike after price hike, bill after bill.

Currently though, there is a way to stay with BG and hugely slash your cost, but you can’t just call it and ask. Any of its customers in the UK (not Northern Ireland) can do this, providing you…

  • Already do or are willing to pay by monthly (variable) direct debit
  • Use it for dual fuel (so electricity and gas)
  • Are willing to be billed online

What is this magical British Gas money-saving potion?

Quite simply it will sell you the same gas, same electricity, same safety etc as you get right now, but charge less for it and it’ll guarantee it won’t hike the rate for over a year.  Yet you can’t just call British Gas and ask for it.

It’s a new tariff called British Gas All Online January 2019 and it’s only available via comparison sites (we’ve no indication of how long it’ll last, so it could be pulled at any time). So to make it easy, just quickly plug details from your bill – guesstimate if you don’t have it to hand – into our special Cheap Energy Club ‘My Current Supplier’ comparison.

This filters out all but British Gas’s tariffs. Then you can see your exact saving (it depends on where you live and how much you use) and then click the button to turn that tariff on, and pay less.

PS: While this should save you decent money, you can save far more if you’re willing to switch provider. So when you’re looking at the results page of your British Gas comparison, why not play with the filters on the side, to see how much you can save elsewhere too?

The new tariff is a fix, which means you’re guaranteed no price hikes until January 2019 (unlike the normal British Gas tariff, which can be increased any time), though of course if you use more, you’ll pay more. If – as is unlikely if you’re doing this – you want to leave British Gas before then, you’ll pay a £40 early exit fee.

Those who don’t already have a British Gas smart meter will need to book installation for one by 31 July 2018. These automatically send meter readings to your supplier, so you get exact bills and pay only for what you use (for more on that, see our Smart Meters guide). And you’ll need to join the free British Gas Rewards loyalty scheme, but that just earns you things such as free movies from the Sky Store.

PS: If you’re wondering why it’s only available via comparison sites, it has likely done this so it can target switchers from elsewhere, but thankfully it has allowed existing customers to get it too.

How much cheaper is it likely to be?

Someone with typical usage (defined by regulator Ofgem) currently on a British Gas standard tariff (as most with it are) currently pays £1,100/year.

On the same usage, the new tariff will cost you on average (it depends where you live) £995/year. Plus, switch via our Cheap Energy Club and you get £25 cashback, making the saving a typical £130.

Though obviously if you’ve higher bills you’ll likely save more than that, lower bills less than that (yet the cashback is always £25 regardless).

It is worth noting on the same usage the very cheapest deals from elsewhere would save you about £300 (hence the big bold writing in the box above).

Why is there a Sainsbury’s Energy deal in my ‘British Gas only’ results?

Sainsbury’s Energy is just British Gas in disguise – it’s the same company, just selling its wares under a different name. And there’s a new Sainsbury’s deal out at the same time which for some will top the new British Gas deal – it depends on where you live and how much you use.


It’s called Sainsbury’s Price Freeze November 2018, and as the name suggests it’s also a fixed tariff, though the price guarantee is shorter than British Gas’s. If this is cheaper for you, you may decide to plump for it instead. Frankly, it’s a very similar deal, though doesn’t require you to have a smart meter.

How come MSE pays cashback on this?

Like all energy comparison sites, if you can switch through us, we get paid. Though unlike some we still include all tariffs, whether they pay us or not (unless you choose to filter them out).

Yet we aim to give you about half of what we’re paid in cashback. Just to be clear, you get exactly the same deal as you would if you went to the firm (but in this case you can’t do that) plus the cashback on top that you wouldn’t get otherwise.

The rest helps cover our costs and hopefully makes us some profit. We’ve had to drop the cashback from £30 to £25 recently as suppliers can give us less – for more see MSE Jason’s blog.

The secret of how to pick your new energy provider from a list of firms you’ve not heard of

Comparing energy tariffs is easy. Yet as I’ve learnt over the last year, it’s picking your new supplier from a list of unknown names that is putting many off. So I wanted to bash out a quick blog to show you how to navigate through that.

The majority of people in the UK are overspending on energy by 30%, often £300+ a year – simply due to being on the wrong tariff. If you’ve not switched in the last 12 months and are with one of the big six – British Gas, EDF, E.on, Npower, Scottish Power or SSE – almost invariably that means you’re one of those people, as you’ll be on their very expensive standard tariff. If you’re with anyone else, you could still be overpaying too, so the right thing to do is check.

The easy way to check is using a comparison site. That’s necessary as who your cheapest is depends on where you live and how much you use. It’s best if you have your bills to hand to do this, but even if not, most comparison sites will estimate for you and the sin of inaccuracy isn’t as big as the sin of doing nothing. Yet many people find, or at least perceive, switching to be complex.

I’ve always found this difficult to understand, as when even newcomers to my Cheap Energy Club have tried it, the comparison process is completed in an average of around five minutes. And changing itself is no biggie – it’s the same pipes, gas, electricity and safety, and you don’t lose supply. The only difference is price and customer service.

However, when over the last year I’ve observed people switching at my TV roadshows, my eyes have been opened to the real problem. It’s not doing the comparison. It’s picking who to switch to that’s the real problem for many.

Too many small firms you’ve not heard of?

The huge encouragement given for new entrants to the energy market is actually putting many off switching. And to an extent, there’s good reason. The energy market is swamped with new firms, and often at launch they offer super-cheap deals to build a customer base. Yet the customer service feedback on these firms is either limited or worse poor, as they can’t handle the number of customers flooding in.

If you do a comparison right now, almost invariably the first five cheapest providers on the list are those you’ve never heard of – and for many that’s enough to put them off and stop the process.

The simple answer is SCROLL DOWN to a name you know, or one – small or big – which has a good customer service rating.

In fact, with so many new providers, you could scroll down a couple of pages of names and still only find it’s £10/yr or £20/yr more than the very cheapest, still saving you nearly £300/yr on typical usage. To make it easier use this good customer service only comparison energy club link, which automatically selects the service filter.

What if I just want a name I recognise though?

In that case, even though many of the big six have hideous tariffs, they can also offer some good ones too. At the time of writing, the cheapest big six deal for most people on average is a one-year fix with Eon, saving £230/yr compared to the average big six standard variable tariff. Yet always do a comparison, as the cheapest does depend on your situation. Again, to help use this big names only comparison energy club link, which automatically filters out smaller firms.

And remember most cheap tariffs are fixes, meaning you’re guaranteed no price rises for a set time.

What if I just don’t want to switch firm?

Many people ask me questions like: “I’m with Npower – is it cheap?” I can’t answer that, as what you pay depends on which of a firm’s tariffs you are on. Npower, for example, has one of the most expensive standard tariffs – for someone with typical usage it’s £1,161/yr – yet right now it also offers a relatively cheap fix at £969/yr.

In fact, EVERY big six provider has a cheaper deal than its standard tariff. So through gritted teeth, let me say: if you won’t switch as you’re loyal to your existing firm, at least ensure you’re on its cheapest tariff. Call them up and ask them. (Or better, use the what’s my current provider’s cheapest comparison energy club link, which filters out all other firms.  Though if it has tariffs under another name – eg Sainsbury’s Energy is really part of British Gas –  they’re included.)

What if I’m on a prepayment meter?

If you pay by a key or card meter, as many of the country’s poorest and most vulnerable do, then outrageously there’s nowhere near as much competition, and you pay more – though prices have been capped, which has helped a touch. If you do a prepay comparison there are often savings to be made, but often less than £100/yr.

If you can, try and switch to a billed meter. It’s free to do with one of the big six providers, and you’ll usually be credit-scored to check you’re capable of keeping up with payments.

Is comparing safe though? Isn’t it all about energy comparison sites making money?

Comparison sites, including my Cheap Energy Club, do get paid roughly £50 to £60 if they can switch you. Yet the price you pay is the same as if you switched direct with the energy firm. It comes from their marketing budgets, and if not paying a comparison site they tend to be paying advertisers.

In the case of Cheap Energy Club, we roughly split what we get paid with you (our share goes towards the pretty high costs and hopefully makes us a profit too). So on a dual fuel switch, if we can switch you we give you £25 cashback (£12.50 single fuel). That actually results in you getting a better deal than if you went direct to the energy firm (so we have a filter that enables you to factor this into the saving you make).

You have to be careful with some comparison sites as they are now allowed to only show you tariffs that pay them, which means you may not see the whole of the market. For the sake of transparency, Cheap Energy Club always defaults to the whole of the market – obviously if you click a link with a filter on as explained, then that cuts some providers, but not based on whether they pay or not.