Five Ways To Make Voters Happy!
Ahead of the local elections on 1 May, we suggest five new laws to help consumers to hang onto more money.
One thing that both politicians and pundits like to do is to pontificate. After all, sounding off is easy, whereas actually making decisions that affect people's lives is tremendously hard!
Thus, with the local elections (Mayoral elections in London) coming up on 1 May, I thought it would be amusing to compile a list of Foolish laws that I'd like to see passed. Here are my first five:
1. Limit booking fees on tickets
How infuriating is this rip-off? You book a ticket to an event, such as a concert, film or play. Let's say the ticket costs £50. You then get charged ludicrously high additional fees for booking ahead, delivery and paying by plastic card. It's not uncommon for these extortionate charges to add upwards of a fifth (20%) to the ticket price.
My Fool Rule: these additional charges must be capped by law, in order to reflect the true cost of these services. Let's say a maximum of 5% of the ticket price, or £5, whichever is lower. That's more like it!
2. Set a ceiling on lending rates
In many other developed countries (including France, Germany and Ireland), strict laws exist to protect borrowers against unscrupulous lenders. Although the UK's Consumer Credit Act outlaws `extortionate' rates of interest, this term is not defined. Thus, loan sharks thrive in this sea of legal uncertainty.
My Fool Rule: There must be a legal limit on lending rates. Any loan which breaches this ceiling is unenforceable and must be written off without recourse to the borrower. For argument's sake, let's set this limit at the Bank of England's base rate plus 20%. The base rate is currently 5% a year, so the cap would be 25% APR. Many store and credit cards already charge more than this today!
3. Abolish stamp duty on share purchases
When individuals and institutions buy shares, they must pay stamp duty of 0.5% of the value of the shares purchased. Thus, buying £2,000 of shares gifts £10 to HM Revenue & Customs.
My Fool Rule: Revoke stamp duty on shares, in order to encourage investors to buy into the long-term success story that is equity investing. This would help private investors, pension funds and other investment groups which manage our money.
4. Outlaw junk mail and unwanted sales calls
Although I'm registered with the Mailing Preference Service and the Telephone Preference Service, I still get unwelcome mailshots and telephone calls. These have multiplied since I started my own business 2½ years ago. In my view, companies which flout the rules regarding data protection get away with murder.
My Fool Rule: I'd introduce stiff penalties for both companies and individuals which break these rules with impunity. How about a fine of 20% of yearly turnover for firms, plus a two-year prison sentence for persistent offenders? These penalties would clean up the industry overnight!
5. Cap (or show) commissions on insurance policies
When you buy an insurance policy in the UK, you have no idea how much you're paying. In other words, you don't know what proportion of your premium goes towards paying claims and expenses, versus what gets gobbled up by commissions. For rip-offs such as payment protection insurance, four-fifths (80%) of your premium can be pocketed in profits!
My Fool Rule: In Australia, insurance commissions are legally capped at a fifth (20%) of the total premium. A similar cap over here, or a legal requirement to list commission amounts and percentages on all documents, would help consumers to identify and avoid swindling policies.
Finally, please feel free to reveal your financial pet hates and rip-offs in the comments section below. The best ideas will appear in a follow-up article. Thanks!
More: Find great-value credit cards and insurance policies | Savings Accounts With Strings Attached | The Easiest Car Insurance Trick