How much longer can insurance firms persist with a tax on the poor? asks JEFF PRESTRIDGE

The taming of inflation appears to be nearly complete, judging by the latest data from the British Retail Consortium.

According to its numbers, the cost of non-food goods (for example, clothes and footwear) in our country’s shops fell last month at an annual rate of 0.6 per cent, while food prices rose by 3.4 per cent (compared to 3.7 per cent in March).

It suggests that the official inflation rate (3.2 per cent in the year to March) could edge closer to 2 per cent when the April figures are published by the Office for National Statistics later this month.

It’s a shame, therefore, that price inflation in the car insurance market has yet to be quelled – although the Association of British Insurers (ABI) would like the whole world and his dog to think otherwise.

In a press release issued six days ago, the lobby group for the insurance industry said that motor premiums increased by just one per cent in the first three months of this year.

Struggle: The extra cost heaped on monthly customers has been described by the financial regulator’s head of insurance as a ‘tax on the poor’

Correct, but what it failed to mention is that, compared to the same period last year, the average price paid for comprehensive motor insurance was a whopping 33 per cent higher (£635 versus £478).

That’s one hell of an increase, whichever way you dissect the numbers. And, of course, the young and the elderly in particular are paying far higher annual premiums than £635 – and have experienced bigger premium hikes than 33 per cent.

In the association’s defence, its director of general insurance policy did admit that ‘car insurance costs are putting pressure on household finances’. (‘Stating the flipping obvious,’ I hear you say).

He also referred to the work the ABI has just started to ensure insurance customers who pay for cover monthly are treated better.

Currently, many who pay for cover this way (home as well as car) face interest charges of more than 20 per cent. It can mean a motorist with monthly cover pays on average £300 more a year than someone who pays upfront.

This price discrimination is justified by insurers on the grounds that they are effectively lending monthly customers their annual premium which they repay in instalments. But it’s an argument that few outside the insurance community accept.

The extra cost heaped on monthly customers has been described by the financial regulator’s head of insurance as a ‘tax on the poor’, as many households can’t afford to pay for cover any other way.

Consumer group Which? has called for ‘tough punishment’ to be taken against those companies levying the most punishing charges. The ABI’s response has been to publish a list of ‘principles’ which it would like firms to adhere to. These are centred on providing customers paying by instalments with greater pricing transparency and better value for money.

It then intends to report back next year on how effective they have been in driving down the extra cost of paying monthly premiums. All a smokescreen, I believe, to appease a regulator that the insurance industry has long run rings around – and continues to do so.

The losers remain the elderly, who often can least afford the rocketing cost of insurance cover – while continuing to assume that their longstanding insurer will always look after their best interests.

Nothing, dear readers, could be further from the truth.

If Worthing’s worthy of the big banks, why aren’t other towns? 

Best foot forward: Jeff running the Worthing half-marathon

Seven days ago, I spent a windy morning completing the Worthing half-marathon.

At one stage, I thought I would get blown into the English Channel.

Afterwards, I had a wander around the West Sussex town.

Although its high street (like many up and down the country) has taken a battering, it was good to see that all the big banks still have a presence – Barclays, HSBC, Lloyds, NatWest and Santander.

It begs the question: if they can all justify a presence in this town, why have they ALL deserted other locations worthy of a high street banking presence – for example, the likes of Windsor in Berkshire and Harpenden in Hertfordshire?

Answers to [email protected].

Victory at last in fight over Philips Trust fund 

At last, after a titanic battle, most victims of the Philips Trust Corporation scandal will get the financial justice they richly deserve. Brilliant news.

Four days ago, three leading building societies – Leeds, Newcastle and Nottingham – agreed to compensate customers who lost money as a result of the questionable actions of this despicable business (now in administration).

This ‘financial support’ means the losses that customers suffered at the hands of Philips Trust will be made good. There will also be financial support for those whose properties were transferred into trusts administered by the company.

The societies’ move is generous given that their role in this scandal was one step removed (they had no dealings with Philips Trust).

Yet, it is an admission that they were wrong to encourage their customers to purchase (unregulated) will writing and trust fund services from a third party, Estate Planning Group (EPG) – and receive generous commission for doing so.

Most customers were elderly and trusted what their building society told them to do. Philips Trust came on the scene later, taking over the management of trusts set up by EPG’s Family Trust Corporation. It then went into administration in April 2022, leaving funds in tatters.

In recent weeks, it became obvious that the three societies had to act. They had faced awkward questions at their annual general meetings, while an early day motion was tabled in Parliament calling for societies to cover victims’ losses.

Coverage of the issue in this column and numerous local newspapers also turned the heat up on them – while the Philips Trust Action Group was unrelenting in its quest for justice to be delivered.

In agreeing to meet customer losses, the three societies have ensured their good reputations remain intact.

The only shame about the deal is that it does not extend to smaller societies caught up in this scandal. I trust they will now follow in the footsteps of their larger rivals.

Banks must remove Nationwide hub block 

Thank you for your kind comments on my article last week on the success of the banking hub in Cambuslang, South Lanarkshire.

Among those to comment was Derek French, the former NatWest banker who was very much at the vanguard of the banking hub revolution. Without his passionate campaigning, there would be no hub in Cambuslang, or in 46 other towns dotted around the country.

While Derek is pleased that these community banks are now coming to the rescue of many towns where the last bank branch has shut, he doesn’t believe that the expansion in their numbers will be as rapid as some are saying.

Banking trade association UK Finance estimates that by the end of the year, a commitment to funding 225 hubs (including those already up and running) will have been made. Yet, Derek says this would only be possible if between now and December 31 there was a ‘tidal wave’ of branch closures in towns large enough to support a hub – and where Nationwide does not have a presence.

Under the current rules, the banks will not open a hub in a town where Nationwide has a branch, even though the building society does not offer business banking which is essential for many local retailers.

Derek says creating 225 hubs is only possible if the banks remove this Nationwide ‘block’. I agree.