Fergus Muirhead answers your consumer questions
I'm Fergus Muirhead and I'm here to answer any questions you may have about any money or consumer issues.
Please drop me a line here at firstname.lastname@example.org with your questions.
You can also read more on money and consumer issues on my own blog.
Q. Last September my parents received a statement from Scottish Power advising their account was £17.86 in credit and their direct debit payment would be £23 per month. They then received a statement advising the account was £838.52 in debit and their new direct debit payment would be £228.00 per month. There was no explanation accompanying this statement. When I contacted Scottish Power initially they were unable to provide me with an explanation. After a number of days of contacting them they finally advised that they had discovered my parents had two meters in their home (one for daytime electricity and one for night storage heaters) and although they had been reading both meters they had only been charging for one. They advised that legally they were able to claim a year's worth of arrears. When I advised that this was unacceptable they advised they would look into the matter. My father also spoke to them and advised that I was handling their account and all correspondence should be sent to me. We fully accept that my parents will have to pay an increased sum per month to cover the cost of the night storage heaters, however to force them to pay the arrears in addition to this increased monthly sum will force them into fuel poverty. Scottish Power made a profit of £1.3 billion last year; it is immoral that they are pursuing this claim. Jackie Foster
The last statement you received from Scottish Power advises that your parents' account is now £1,153.67 in arrears, their anticipated electricity costs for the next 12 months is £796.87 plus VAT and their monthly payment will be £166.00 for a one bedroom flat in sheltered accommodation, which you reckon is completely unacceptable and unaffordable. You also said, in another email to me, that you have spoken to the Ombudsman and that he has proposed that your parents receive an apology from Scottish Power and that Scottish Power have to agree a repayment plan, but they feel that it was your parents' responsibility to understand the metering system in their house - even though you have pointed out that your parents are 80 and 79 years of age and you feel met their obligations by ensuring the meter reader had access and paying their direct debit on time. I'm happy to say that I have spoken with Scottish Power and they have agreed to wipe out the debt, and to go forward with a new monthly payment based on actual usage. A great response and one that I know you are happy with. If other readers are to take anything from this story, however, it is that you need to make sure that you are having meters read regularly and that you don't rely on estimated readings, since there can be a discrepancy between the two, and this can lead to larger than usual bills. Also please make sure that you regularly review the amount you pay by direct debit if you use this method of payment, since usage alters at different times of the year and you don't want to get caught out with a larger than usual bill after a particularly cold winter spell.
Q. Please can you let us know how to pay off our credit cards? I am just managing to pay the cards I have but I also have a loan and if I could have just one monthly payment that would help. One of the credit cards has to be paid off soon but I just don't know what to do? Name withheld
It's difficult to be really specific here as I don't have a lot of information to go on. Maybe some general pointers that would help anyone else struggling to make payments on credit cards and loans would be useful. You don't say, for example, whether you are up to date with all of your payments at the moment or in arrears. If you are up to date but feel that this might change because you are struggling to make payments then it is essential to contact the companies concerned as soon as you can. They can only help you if they are aware that you have a problem, and it is easier to help before you have big arrears to deal with as well. One monthly payment might well help and that would mean adding up all of your existing debts and finding a lender prepared to convert them all into one loan. It's not a bad idea, as long as you don't see it as part of a plan to continually swap one debt for another, in which case you might end up worse off. It may be that one of the money agencies, like Citizens Advice would be able to look at your situation and offer a bit of help, have a look at their site at www.cas.org.uk. Depending on your credit history it might be possible to consolidate all of your debts in this way but whatever you do please don't approach one of the 'debt management' companies that advertise in the national press. It will just cost you more money and they won't do anything that Citizens Advice won't be able to do for you. If you want to drop me another email with more details then I'll have a look at your situation for you as well.
Q. I wonder if you can help. My partner and I are tied into a mortgage with the Woolwich. It's a ten year fixed rate and we are three years into it. We have £55,000 to pay on our property which values at around £160,000. The rate is 5.9% and the monthly payment is £662. We are struggling with this. I called them and asked if there was a better deal but we would have to pay £3,300 to get out of this deal and get on to a lower rate so it probably wouldn't be worthwhile. Would you happen to know if anyone else is offering a better deal for us? My partner is retired on medical grounds and gets Disability Allowance and Incapacity Benefit. I earn less than £20k. E Johnston
There is no question that there are better rates around than you are currently paying but the point, as you mention, is that to get out of your existing loan you are going to have to pay more than £3,000 as an early-repayment penalty. My starting point would be to go to your existing lender and explain your current situation and ask if there is any way that they can let you re-mortgage to a more flexible deal and waive the charge. If the answer to that is no then you need to look at adding the £3,300 penalty to any new loan. This is not always a great idea, since it means that you are effectively borrowing an extra £3,300 and paying interest on it over the whole term of a new mortgage, but it may help you out in this case. You may then be able to arrange a new loan at a lower rate and over a longer period of time that would bring your monthly repayments down. I would suggest that you speak to an Independent Mortgage Broker to begin with, and make sure that it is someone who has access to the whole market. Also check out how much they will charge for their services as there is no point throwing good money after bad. You say that your partner is claiming benefits and your income is under £20,000 so it might be that you need to have a wider look at what you are doing with your money to make sure that you are receiving all the benefits that you are entitled to, and that you are paying the right amount of tax. Next week is financial planning week, and if you have a look at the Institute of Financial Planning website then you might find a few tips to help.