The government has announced new plans to protect consumers' money with a crackdown on government saving schemes, fake reviews and subscriptions. The new government proposals will see a clampdown on the writing and hosting of fake reviews, businesses tieing consumers into subscriptions and better protection for those using prepayment schemes such as savings clubs to save for Christmas.
In this article, we share the new plans announced by the government as well as how you can ensure your money is protected.
What new laws are being introduced?
On Wednesday 20th April the government announced new plans to protect consumers' money, however, the exact date of when these will be enforced is unknown and pending parliamentary approval. We outline the new proposals below.
Christmas saving clubs
New plans by the government are set to offer better protection for consumers that use prepayment schemes such as Christmas savings clubs. A Christmas savings club allows customers to save a monthly amount throughout the year and pays out in time for Christmas. Currently, prepayment schemes like Christmas savings clubs are not protected by the Financial Services Compensation Scheme (FSCS) but the new rules will ensure that savings club providers fully safeguard customers' money via insurance or trust accounts. The move comes to prevent any further scandals like Farepak in 2006 which saw the Christmas saving club go bust and over 150,000 savers struggle to get their money back.
Fake reviews & subscriptions
New legislation will be introduced making it 'clearly illegal' to pay someone to write or host a fake review. It is hoped that the new proposals will help prevent customers from being misled by false ratings. In addition, new subscription rules will make it easier for customers to leave unwanted subscriptions and prevent customers from paying for things that they no longer want. Businesses will be required to make subscription contracts clearer and issue reminders that a free trial or introductory offer is due to end and a reminder should also be sent when a contract is due to auto-renew. The average UK household will spend an additional £900 a year as a result of influence from online reviews and £60 on unwanted subscriptions, according to the government. The Competition and Markets Authority (CMA) will also be given greater authority to directly enforce the consumer law as well as the ability to fine firms 10% of their global turnover for the mistreatment of customers.
How to ensure your money is protected
One of the key things to check when saving any cash is that you have protection from the FSCS. The Financial Services Compensation Scheme is an independent body that offers consumers compensation in the event that a financial provider should go bust. One of the drawbacks of Christmas saving clubs is that they do not currently offer consumers protection in the event that the company goes bust meaning there is a risk of you losing your money. As a result, the government is proposing this new legislation to provide more protection to savers.
For more information on the FSCS and how to ensure your money is protected, read our article 'What is the Financial Services Compensation Scheme?'
The best ways to save
If you're looking to save money then check out our Best Buy Savings Tables for some of the best savings rates currently on the market. You can also use a range of savings apps that connect to your bank account and help you to save as you spend using round-ups. This means that whenever you make a purchase, the spare change is rounded up to the nearest pound and moved into a separate savings pot, with the idea that it builds up over time. To find out more about the best savings apps for your smartphone, read our article 'The best savings apps in the UK'.
