Direct Line to pay out £30m to customers overcharged on car or home insurance after rule breach

 

Direct Line is set to pay out around £30 million in compensation to customers who were overcharged when they renewed their car or home insurance.

The insurer admitted to an “error” in implementing the financial watchdog’s new pricing rules which came into effect at the start of 2022.

The error meant existing insurance customers were charged more for their renewal than they would have done if they were a new customer, the Financial Conduct Authority (FCA) said.

The admission comes after The Independent revealed that almost 12,000 complaints were received by the Financial Ombudsman Service (FOS) in the past year – a four-year high – making car insurance the third most complained-about financial product, behind current accounts and credit cards.

The revelation follows this newspaper’s exposé into the great car insurance con, which found that car insurance premiums have been hiked by 48 per cent over the past year.

Car insurance is now the third-biggest household bill, behind council tax and energy, with soaring costs driving many motorists to sell up.

Direct Line was forced to act after the FCA brought in new rules last year, which prevent renewing home and motor insurance customers from being charged higher prices than a new customer would be charged.

“An error in our implementation of these rules has meant that our calculation of the equivalent new business price for some customers failed to comply with the regulation,” Direct Line admitted.

“As a result, those customers have paid a renewal price higher than they should have.”

The insurance company said it has launched a review into its past policies.

Direct Line did not specify how many people were expected to be compensated but it estimated that the total payments to affected customers would be in the region of £30 million.

Not all customers who have renewed their home or car insurance since the FCA’s new pricing rules came into effect will have been overcharged, it is understood.

Direct Line said it would be contacting affected customers directly, and customers do not need to do anything themselves at this stage.

 

What are the highest-paying CD rates right now?

 

 

Looking back at 2020 and 2021, interest rates were extremely low across the board. Mortgage rates were hovering near 3% — which was a big draw for potential homebuyers — and the rates on everything from personal loans to car loans were lower than normal, too. But while that may have been great for borrowers, savers weren't so lucky. Deposit account interest rates were also quite low at that time, so there wasn't much room to substantially grow their savings account balances — not if they were just relying on interest, anyway.

That's no longer the case these days, though. The Federal Reserve has increased its benchmark rate nearly a dozen times over the last 18 months, and the tables have turned. Borrowing is now a lot more expensive than it was just two years ago, but savers now have the opportunity to earn significant returns on the money in their savings accounts.

And while high-yield savings accounts are one good option — in fact, you can easily find a high-yield savings account offering a rate of 5% or more right now — there are other good options to consider as well. That includes certificates of deposit (CDs), many of which are offering even heftier returns on your money. But if you want to maximize the returns on your savings, it's important to know what CDs are offering the top rates today — and what the requirements are for opening an account.

What are the highest-paying CD rates right now?

If you're looking for the highest-paying CDs right now, the following options may be worth considering:

• Credit Human Federal Credit Union 1-year CD — 6.00% APY: $500 minimum deposit requirement to open; a penalty is imposed for early withdrawal
• TotalDirectBank 6-month CD — 5.76%: $25,000 minimum deposit requirement to open the CD and earn the advertised APY; maximum deposit amount per client is $1 million; a penalty is imposed for early withdrawal
• Forbright Bank 9-month CD — 5.75%: $1,000 minimum opening deposit requirement to open; early withdrawal penalty is equivalent to three months of interest
• Popular Direct 1-year CD — 5.67%: $10,000 minimum opening account deposit and balance requirement; $25 fee for closing the account within 180 days
• LendingClub 1-year CD — 5.65%: $2,500 minimum opening deposit requirement; maximum deposit amount of $250,000; a penalty may be imposed for early withdrawal
• Newtek Bank 2-year CD — 5.60%: $50,000 minimum opening deposit requirement to open the account; $50,000 minimum balance requirement to obtain the advertised APY; maximum opening deposit is $220,000
• Valley Direct Bank 3-year CD — 5.60%: $500 minimum deposit requirement to open; $500,000 maximum deposit amount; $500 minimum daily balance required to obtain the advertised APY
• Western Alliance 1-year CD — 5.51%: $1,000 minimum deposit requirement to open; early withdrawal penalty applies if funds are withdrawn within six days of account opening or subsequent withdrawal
• Bread Savings 1-year CD — 5.60%: $1,500 minimum opening deposit requirement; maximum deposit limit of $1 million per account and $10 million limit per customer; a penalty is imposed for early withdrawal 
• MYSB Direct 6-month CD — 5.36%: $500 minimum deposit requirement; $5,000 balance requirement to earn advertised APY; a penalty may be imposed for early withdrawal
• Popular Direct 2-year CD — 5.30%: $10,000 minimum opening account deposit and balance requirement; $25 fee for closing the account within 180 days
• Quontic 1-year CD — 5.30%: $500 minimum deposit requirement to open; no monthly service fee; a penalty is imposed for early withdrawal
• Bread Savings 2-year CD — 5.25%: $1,500 minimum opening deposit requirement; maximum deposit limit of $1 million per account and $10 million limit per customer; a penalty is imposed for early withdrawal 
• Discover 1-year CD — 5.20%: $2,500 minimum deposit requirement to open; withdrawing your funds early will result in an early withdrawal penalty worth six months of interest
• Quontic 6-month CD — 5.05%: $500 minimum deposit requirement to open; no monthly service fee; a penalty is imposed for early withdrawal
• Popular Direct 3-year CD — 5.00%: $10,000 minimum opening account deposit and balance requirement; $25 fee for closing the account within 180 days
• CIT Bank 6-month CD — 5.00%: $1,000 minimum deposit requirement to open; a penalty may be imposed for early withdrawal of principal and any early withdrawal (principal or interest) will reduce earnings

The bottom line

Settling for a low savings rate isn't necessary these days. There are lots of CD accounts offering top rates on your money — and there are a variety of CD terms to choose from. That means there are options for every type of saver, whether you have a ton of money to deposit or whether the focus is on your short-term or long-term financial goals. But if you want to rake in the interest returns, it may make sense to move quickly. Rates can change quickly, but if you open a CD today with a top rate, you'll lock it in for the full term, no matter what happens with the overall rate environment.

 

 

MoneyWatch For some people with student loans, resuming payments means turning to GoFundMe

 

Student loan repayments resumed in October after a three-year pandemic-era pause and the Supreme Court this summer dashed hopes for relief by blocking President Biden's plan to erase up to $20,000 in debt for eligible borrowers.

With the resumption of payments proving a financial hardship for many Americans, some people are turning to other means to find the money: asking for handouts. 

Through October, the number of crowdfunding campaigns on GoFundMe tied to college loans has surged nearly 40% over the last 12 months, with those seeking to raise money coming from diverse backgrounds and across all age brackets, according to data the platform shared with CBS MoneyWatch. 

"GoFundMe is often a reflection of real-time needs because it is a resource people turn to when they find themselves with unexpected expenses," Margaret Richardson, GoFundMe's chief corporate affairs officer told CBS MoneyWatch. 

Similarly, GoFundMe saw a five-fold increase in fundraisers by schools trying to raise money when an emergency federal program offering free school meals ended in 2022.

More than half of federal student loan borrowers said say they would have to choose between making loan payments when the pandemic forbearance ended and covering necessities like rent and groceries, an August survey from Credit Karma found. Food banks also report an increase in requests for assistance since student loan payments resumed.

"As people realize they have obligations and are already at or beyond their budgets, GoFundMe is often a place people will turn for support from their families and communities to meet their needs in ways they otherwise can't between their income and savings," Richardson said.

Among the student-loan related GoFundMe campaigns is a plea for help from Jevaughn Edwards, a Drexel University senior studying economics. Edwards wrote that his grandparents, the cosigners on his student loans, recently passed away.

"As I embark on the last year of my studies, I am seeking any sort of support, aid, etc. that may be available to me. I am currently unregistered for the upcoming quarter due to a financial hold on my account amidst my situations," Edwards said, adding that he has "no other resources to tap into."

Edwards told CBS MoneyWatch that he has turned to GoFundMe as a "last, last, last resort" to afford his final year of college, so that he can earn his degree and hopefully land a high-paying job that would allow him to pay off his outstanding student loan balance.  

"Honestly if I wasn't extremely desperate, I wouldn't have placed a GoFundMe on the internet. Asking for help publicly is icky for me," Edwards said. 

He's received job offers from several companies but they hinge on his obtaining a degree first, he said. 

Edwards is trying to raise $40,000, which reflects what he would owe were he to recommence his studies. To date more than 50 people have donated a total of just over $3,000. 

"A lot of people I don't know have donated. I have a really good LinkedIn profile so I received donations from people I don't even know on there," he said. 

Another college student, Michael Paddleford, started a campaign two weeks ago to pay off his remaining tuition balance in order to receive a bachelor's degree in criminal justice and human services. 

"Unfortunately, I was recently notified of a remaining balance on my account that will prevent me from receiving my degree until it is paid off," he wrote. "I have maxed out my student loans, and Financial Aid covered all but $5000 of my tuition costs."

Five donors have contributed $270 against his $5,000 goal.

Of course anyone can make up a story, but GoFundMe said one reason why the fundraising model works is that "everything is public."

"So there is social proof. If someone says they have a medical condition and publicize it to their networks, often networks' awareness of the medical condition is the social proof," Richardson said.

GoFundMe also has a policy of refunding money to donors who have given to campaigns started by people whose stories turn out to have been fabricated. "We have a GoFundMe guarantee to reimburse donors for anything they don't feel was right with a campaign they donated to," Richardson said.

House Passes Aid Package to Israel With IRS Cuts

 

 

The House narrowly approved an aid package for Israel on Thursday – a vote that ordinarily would have been an easy bipartisan victory but one complicated by Democrats’ accusation of a political “poison pill” in the GOP’s attempt to offset the new spending with cuts to the IRS.

In a 226-196 vote, 12 Democrats joined all but two Republicans to approve the legislation, which stands apart from the package the White House requested by leaving out humanitarian aid for Gaza and military support to Ukraine while also being paid for by cuts to IRS funding. It has no prospects in the Democrat-controlled Senate.

Democrats largely opposed the $14.3 billion aid package, acknowledging that while they support aid for Israel, the mechanism for providing it, along with the lack of funding in other areas, made it a nonstarter.

Though House Republicans had intended to offset the cost of the aid package with cuts to IRS funding granted in the Inflation Reduction Act – a key legislative victory for Democrats – the nonpartisan Congressional Budget Office found that the package would add billions of dollars to the federal debt by reducing what the agency takes in through taxes.

Adding to the package’s troubles, the White House issued a veto threat against the proposal, saying that it “fails to meet the urgency of the moment by deepening our divides and severely eroding historic bipartisan support for Israel’s security.” Meanwhile, Senate Majority Leader Chuck Schumer said the upper chamber won’t consider the “deeply flawed proposal” while it works on its own funding package that, in addition to aid for Israel, includes funding for Ukraine and humanitarian assistance for Gaza.

Nevertheless, Speaker Mike Johnson forged ahead with the vote, seeming to dare Democrats to oppose the aid package.

“If Democrats in the Senate or the House or anywhere else want to argue that hiring more IRS agents is more important than standing with Israel in this moment, I’m ready to have that debate,” Johnson said. “But I did not attach that for political purposes. I attached it because again we’re trying to get back to the principle of fiscal responsibility here. And that was the easiest and largest pile of money that’s sitting there for us to be able to pay for this immediate obligation.”

The bill’s passage sets up a clash with the Senate that could drag on in the coming days and weeks.

Will Trump’s Barbs Land Him Behind Bars?

 

 

It was a historic and jarring event when FBI agents searched former President Donald Trump's home last year to look for classified documents he was accused of hoarding. It was shocking when Trump was indicted in four separate cases, including three directly related to his conduct as president and as a former president. It was stunning to court-watchers when Trump continued to attack prosecutors, judicial personnel and potential witnesses as the cases against him proceeded, resulting in fines against the former president-turned-defendant.

But are judges willing to take the next step – perhaps the most unsettling for a country accustomed to being more deferential to its former leaders – and put Trump behind bars? If Trump violates gag orders or violates the terms of his bail by threatening witnesses or court personnel, will a judge – to use a phrase Trump frequently lobbed at his 2016 election opponent – lock him up?

Doing so could make the judge a target of vitriol and even violence and could be a security nightmare as authorities figure out how to safely incarcerate a man who has Secret Service protection himself. And it would forever change the narrative of American democracy, where misbehaving presidents are voted out or forced into self-imposed domestic exile, experts say.

But refusing to take a step that is used against virtually every other defendant who violates a gag order or conditions of bail could endanger American democracy even more, they say, by establishing a separate category of justice for the powerful.

"Trump will continue to get as close to the line, if not crossing the line, of propriety as far as the gag orders are concerned until he is actually and meaningfully penalized by a court," says Richard Signorelli, a former federal prosecutor who now has a criminal defense and civil litigation practice in New York City.

"Given his status as a former president and a current candidate for president, the courts will continue to treat him in a different and more special way than they would an ordinary litigant or defendant. However, if he continues his approach of testing the court, he will be punished in an escalating fashion. I do believe … if Trump continues to violate, she will order him detained in his home," Signorelli says, referring to federal Judge Tanya Chutkan, who is overseeing the case related to the Jan. 6, 2021, insurrection at the Capitol.

Sending Trump to jail for contempt – or even putting him in home detention, as legal experts think is a more likely scenario, given the security and public relations complications of putting him in a local or federal facility – has implications for Trump if he is convicted, experts say.

Prosecutors "didn't want to be the first person to charge a former president. Then, [New York District Attorney] Alvin Bragg opened the door and everyone walked right through it," says California trial lawyer and former federal prosecutor Neama Rahmani.

Similarly, if Trump is confined – at home or in a facility – for violating gag orders or the terms of his bail, it would create a new precedent that would make it easier to imagine Trump in prison if he is convicted of any of the 91 felony counts against him.

"Courts and prosecutors have to become normalized to the idea of detaining Trump – if he continues to violate gag orders and/or if he is convicted at trial," Signorelli says.

Less-powerful defendants have been punished with time behind bars for being in contempt of court (including violating gag orders) or threatening authorities. This week, Vitali GossJankowski, found guilty on several charges related to the Jan. 6 insurrection, was jailed pending sentencing after he "doxxed" FBI agents, releasing private information about them and threatening the agents on social media.

Sam Bankman-Fried, the former billionaire crypto trader, was put behind bars in August weeks before his fraud trial after giving a media outlet private writings by a witness. A judge said the actions amounted to witness tampering and violated the terms of Bankman-Fried's bail.

Trump is playing a game of legal chicken on several fronts: He has limited gag orders in two cases – a civil fraud trial in New York City, where two of his children testified this week, and the federal case on charges related to the events of Jan. 6, 2021.

In Georgia, where four of the 19 defendants in a case alleging conspiracy to undo the 2020 elections there have already pleaded guilty, Trump is free on $200,000 bail. But if he violates the conditions of his bail – which include threatening or intimidating witnesses – a judge could impose escalating penalties, including incarceration at a state facility or detention at home, legal experts explain.

Trump walked the line – and may have crossed it, former prosecutors say – when he lambasted his former chief of staff, Mark Meadows, after ABC reported that Meadows was cooperating in an immunity deal with special prosecutor Jack Smith on the Jan. 6 case.

"Some people would make that deal, but they are weaklings and cowards, and so bad for the future of our Failing Nation," Trump said on social media. Meadows, who has not been indicted in federal charges, is a co-defendant with Trump in the Georgia case.