What Is APR (Annual Percentage Rate) And Does It Work?

It seems that its getting easier and easier to apply for–and receive–a credit card or a short term loan. Mailers arrive each and every day at our homes advertising special perks, airline miles, or one-time-only low fees to entice us to apply for a combination of loans or credit cards.

There are ads on television and on the radio. Lending companies are even known to set up shop at colleges and universities across the globe offering free promotional t-shirts in exchange for a credit card application.

As a result of these efforts, it’s not uncommon to hear heartbreaking stories of people trying to dig themselves out of massive debt. But all too often it’s not the debt alone that is the culprit.

Before taking out payday loans, an unsecured loan, short term loan, or applying for any number of credit cards it is imperative you understand what an annual percentage rate is.

This is often considered a “hidden cost” that many consumers don’t fully grasp, forcing them further into debt. But as long as you do your homework, and educate yourself on how annual percentage rates work, you can avoid debt and other unnecessary charges. `

What is APR?

Annual percentage rate, often referred to as simply APR, is is the price you pay the credit card or loan company for borrowing money–essentially the percentage you can expect to pay in one year in order to borrow money tomorrow.

Many financial advisors suggest that consumers think of APR as a service fee.

Borrowing money is one kind of service, and you must fork over some amount for said service–just as you would for a mechanic who fixes your car’s engine or a delivery fee for a driver who drops off a big online purchase at your door.

That said, it always helps to read the fine print on any offer, as many companies allow consumers to avoid paying interest–or even an APR in full–if you make sure to pay your balance in full each month by a specified due date.

For this reason, it’s important to remember that no loan or credit card works exactly the same. Do your research and be smart about how you borrow cash!

What Determines The APR You Are Charged?

Many lenders will first turn to an applicant’s credit score in order to accurately determine a loan or credit card’s annual percentage rate. Typically, the better your credit score the lower your APR.

In addition to credit score, companies may also base your personal APR on details within your credit history. They may look to see if you have a tendency to pay your bills late or if you occasionally miss a payment.

A good rule of thumb to keep in the back of your mind is that if you have a poor credit score–or any existing unpaid loans–you will likely have to fork over a higher APR because the lender will be worried that you l will not be able to repay the loan.

This is an example of what lenders deem a “high-risk borrower.”

However, it is imperative that you always read the fine print in full. In some instances, you may actually be able to negotiate a significantly lower APR with your lender.

Additionally, some credit card or loan companies simply charge a fixed annual percentage rate, which basically means that the rate remains exactly the same throughout the loan’s life span, regardless of your personal credit score. But this is not the only alternate scenario.

There are other lenders out there who elect to charge a customer a variable annual percentage rate.

This can be confusing, as with a variable APR, rates can fluctuate both up and down based on a number of volatile factors, such as the health of the global stock markets.

That said, don’t worry too much about these types of APR rates if you do elect to go with one. Lenders are not permitted to adjust APR rates without notifying you ahead of time.

But it doesn’t stop there. Many lenders or credit card companies may also offer a low or reduced introductory APR rate in order to initially entice you to do business with them.

Again, it’s incredibly important to carefully read all the fine print, as these offers may be almost too good to start, however, after a specified amount of them of time, the lender may increase the APR.

Finally, it helps to keep in mind that payday loans, bad credit loans, and unsecured loans are notoriously expensive. Because of this it always helps to try and negotiate a lower APR.

How Do Lenders Calculate APR?

While APR sometimes sounds complicated, there is actually a pretty easy formula to calculate it. Simply follow the steps below:

  • Step one: Divide the finance charge by the amount of the loan (this will be different for each person).
  • Step two: Multiply the above result by 365 (for each day of a calendar year).
  • Step three: Divide the result by the term of the loan (again, this will likely be different for everyone).
  • Step four: Multiply the above result by 100.

Mis Sold Pensions (SERPS) | What To Do If You’re Affected By The Scam

Many individuals work hard their entire lives, and one of the pay-offs of that is earning a secured pension to make life easier once retired.

A pension is a type of fund into which money is paid throughout the years that an individual is employed. After the individual retires from work, periodic payments are drawn out to support that person’s retirement period.

Pension plans differ from employer to employer and also vary country to country. Often government pension arrangements are created as additional supplementation to the basic state pension.

In the UK, State Earnings Related Pension Scheme (SERPS) is a pension scheme where the amount an individual is paid is dependent upon the amount of years they have worked for their employer, as well as the salary they have earned within a certain period of time.

What Is A SERP? (State Earnings Related Pension Scheme?)

The UK is known as a country whose government looks after their aging population. As such, the UK government provides employees with the option of partaking in a State Earnings Related Pension Scheme (SERP), based on accrued earnings during a specific period.

Originally called the ‘state earnings-related pension supplement’, the SERP was a government pension plan that was contributed to by employers and employees in the time period between April 6th, 1978 and April 5th, 2002. In 2002, the SERP was replaced with the State Second Pension (S2P).

For employees who were paying into the Class 1 National Insurance (NI) contribution between 1978 and 2002, they earned a SERPS pension. These members could also be ‘contracted out’ by their employers.

In these instances, employees and employers paid less into NI contributions, thus the employee’s earnings of serps pensions would be virtually non-existent.

What was the Purpose of SERPS?

The purpose of the SERP scheme was to supplement the basic state pension by providing individuals with a pension that was relative to their accrued earnings during that specific time period.

SERPS were founded on the principle that all employees would receive a SERPS pension of 25 percent of their accrued earnings.

That 25 percent would be above a ‘lower earning limit’, which would approximate the basic state pension’s amount.

The scheme was slowly brought in over 20 years with the intention that people retiring before 1998 would receive a SERPS pension relative to the number of years they were contributing to it.

The ‘upper earning limit’ was approximately seven times the lower-earning limit, outside of which earnings were disqualified for NI contributions and SERPS pensions.

Social Security Act of 1986

The Social Security Act of 1986 lowered the SERPS pension from 25 to 20 percent of an individual’s accrued earnings between the lower- and upper-earning limits.

Pensions earned prior to April 6th, 1988 remained the same, and the change was integrated for people who were retiring between 1999 and 2009.

The ‘Contracting Out’ Option

When the scheme was introduced, employers with established final-salary pensions could select the option to contract out of SERPS.

Employers were allowed to contract out if scheme members were granted a ‘Guaranteed Minimum Pension’. Employers who opted out of the SERPS would pay less into NI contributions.

For the first time, in 1988, constituents of pension schemes were permitted to contract out. Rather than being obliged to provide a ‘guaranteed minimum pension’, the schemes were obligated to pay savings of NI contributions into the pension plan.

To incentivize this arrangement, the government made an additional payment into the pension scheme of every instance where the SERP was contracted out in this fashion.

Post 2002

April of 2002 saw the termination of SERPS accrual as it was succeeded by the State Second Pension. This change was instituted with the goal of providing people of lower incomes with a larger pension.

Controversy of SERPS Mis-Selling

According to the Financial Services Authority, many policy holders who contracted out of the state pension may have been victims of pension mis selling and lost funds that deserve compensation.

Hence an investigation was launched to investigate the claims that millions of employees had been led astray with the advice to contract out of SERPS.

As the government began to question the long-term affordability of the SERPS, they offered incentives to encourage people to opt out of the SERPS into an Appropriate Personal Pension (APP).

The rebates offered by the government as incentives to opting out have since been cut, causing many to question whether it was misleading to encourage people to opt out, as many are now being advised to opt back in.

Ultimately, investigations have shown that mis-sold pension affected some, but not others. For some, returning to the state pension is a favorable option, but for others in different financial circumstances and with different financial needs, the APP option is also beneficial.

Positive Examples of Leaving the State System

While leaving the state caused monetary losses for some, not everyone is in the same financial situation, and for many, APP has its merits.

In terms of cash availability, individuals have the option of taking 25 percent of their pension as tax-free cash from an APP; this is not an option in the Second State Pension.

With an APP, the pension is available at age 50, rather than 65 as with the state pension. The accessibility of cash in an APP can be a necessity for people who are ill or facing death in the short-term future.

Death benefits also differ between the state and APP as state pensions are provided to widow and widower’s survivors, but unmarried people don’t apply. APPs can be applied to the individual’s estate.

Additionally, some individuals simply prefer for their pension entitlement to be under their control, rather than the government.

Storefirst Limited

Sadly, as hard as people work to secure future pensions, there are also scam artists who will work equally hard to steal those funds away.

Pension scams take place when an individual is convinced to cash in their pension pot to invest in something that promises a large return.

A Warning From Serous Fraud Office

An example of this came with the Serious Fraud Office’s warning regarding a £120m pension scam involving UK-Based self-storage units.

As storage units have recently been hailed as having great investment potential, many people are being convinced to invest their pension pots with the enticing promise of gaining an 8- to 12-percent return.

While ‘pension liberation’ scams have always been around, the steady upsurge is partly understood as resultant of government-introduced reforms granting people over the age of 55 more freedom to access and invest their retirement funds.

While more traditional pension scams use the allure of investing in hotels or services in exotic locations, a local approach hailing the investment-return potential of buying individual storage units has also proven effective.

What Was Involved In The Scam?

Storefirst Limited storage unit pension scams toted the potential of a 14-percent annual return with the purchase of individual units. Basically, the investor was encouraged to purchase a unit from Storefirst Limited, which would then be sublet to a management company that would rent it out.

While Storefirst has denied culpability in the scam, the warning is clear: if you are contacted suddenly by someone promising a large return on a foreign or local investment, think first before cashing in your pension pot and transferring your hard-earned funds.

A Guide To Buying Premium Bonds & The Truth Behind Them

Premium Bonds were first introduced by a man named Harold Macmillan in 1956. A Premium Bond is a lottery bond that is issued by the United Kingdom Government’s National Savings and Investment Agency.

The Bonds are entered a regular prize drawing. If you no longer want your Bonds entered the drawing, the government will buy them back for the original price that you paid.

If you are thinking that you want to buy Premium Bonds, you should understand how they work first.

What Is the Minimum and Maximum Investment Allowed?

If you are thinking about purchasing bonds and you don’t want to invest too much money, the minimum number you can buy is £100.

If you are looking to invest more, the maximum holding you can have is £50,000.

How Can I Buy Premium Bonds?

There was a time that bonds could be purchased at any of the post office branches. This is no longer the case. Post office branches no longer sell these bonds. Fortunately, there are a few simple ways that you can purchase them.

  • Apply Online: NS&I Premium Bonds makes buying very simple by offering an online buying option. You would simply visit the website and then follow the links.
  • Apply By Phone: If you don’t have internet access or if you don’t feel safe entering your personal and financial information online, you can apply by phone. To apply by phone, you can contact NS&I at 0500 500 000. A highly trained representative will take your order over the phone quickly and efficiently.
  • Apply By Post: If you prefer to do your ordering through the mail, this is an option. On the NS&I Premium Bonds website, there is a downloadable form. You would simply download and print the application form and then fill it out in its entirety. Once you have decided how many bonds you are going to buy, you would need to write a cheque for that amount. The application and the cheque would be mailed to: NS&I, Glasgow, G58 1SB

When Do New Premium Bonds Enter the Monthly Drawing?

When you first purchase your bonds, you would need to wait one full month before they would be entered the next drawing.

The drawing happens at the beginning of each month. Depending on when you purchased your bonds, it could be anywhere from 5 to 8 weeks from your original purchase date before you would have your first chance to win.

For example, if you were to purchase your bonds in the month of September, you would need to wait until that same date in October for your bonds to become effective.

This means that you would need to wait until November 1st before your bonds would be entered the drawing. It is important that you understand how your bonds work and when they are entered the drawing.

If you have any questions regarding when your bonds would go into the drawing, you can call and speak to someone. There are plenty of representatives on staff who can help you understand how the drawing dates work.

How Much Can I Win With Premium Bonds?

Currently, the lowest prize available is £25 and the highest prize amount available is £1,000,000. The amount of money that you can win depends on your initial investment and the number of bonds that you purchased.

What Are the Chances of My Premium Bonds Winning?

Every Premium bond that is entered the drawing has an equal chance of winning the prize. If one of your bonds wins a prize, your other bonds can also win a prize that same month. If one of your bonds wins a prize, you have an equal chance of winning the next month.

It is important to understand that each drawing is separate and the results have no effect on any future drawings.

Where Does the Money For the Winning Draws Come From?

Premium Bond holders are required to pay monthly interest rate of 1.35 percent. The prizes that you can win comes from the combination of all the interest rates paid by buyers.

How Many Prizes Win Each Month?

Every month over 2 million of the Premium Bonds purchased will win a prize There are two prizes in the amount of £1,000,000 paid out every month. There are many other prizes awarded as well. They include:

Multiple winners for the lower amount prizes in the amounts of £25, £50, and £100

  • £500
  • £1,000
  • £5,000
  • £10,000
  • £25,000
  • £50,000
  • £100,000

How Do Higher Rate Taxpayers Benefit From Buying Premium Bonds?

If you are in a high tax bracket, you can benefit from buying bonds. A general savings account will pay out no more than 1.6 gross interest. This equals out to about 0.96 percent after taxes for people in a high tax bracket. The 1.35 percent interest rate on bonds is tax-free. Higher rate taxpayers have a potential to earn 0.04 percent from the tax-free bonds.

It is important to understand that the interest rate would be applied to the entire fund and not to your initial investment. This means that you could end up with several pounds to invest.

If you are in a higher tax bracket, there is a chance that you can beat the standard savings accounts that are taxable.

How Are Premium Bonds Prizes Paid To Me If I Win?

There are many ways that you could be paid your prize.

  • Default Payment Option: If you choose the default payment option, you can have a cheque sent to your registered address.
  • Direct Deposit: If you don’t want to wait to receive a cheque, you can have the money paid directly to your bank account. This is much faster than the default payment option because you wouldn’t need to wait for the cheque to be printed and then sent to you. Also, you will have access to the funds immediately. With the default payment option, you would need to wait at least a week for the cheque to clear.
  • Reinvestment: If you don’t want the cash, you can have your winnings automatically reinvested into your bonds account. This will increase your chances of winning the next monthly drawing.
  • ** If you win and you already hold the maximum number of bonds allowed, you would receive a cheque.

Who Can Benefit From Buying Bonds?

There are a few savers who these bonds would be suitable for:

  • Anyone who wants a chance to win the £1 million jackpot and other tax-free prizes
  • Anyone who has at least £100 to invest
  • Anyone who wants 100 percent security on their investment
  • Anyone who wants to take advantage of tax-free investment opportunities

Who Will Not Benefit From Buying Bonds?

There are certain people in certain situations where bonds would not be beneficial.

  • Anyone who is hoping to earn a regular income by purchasing bonds
  • Anyone who is looking for a guaranteed return on their investment
  • Anyone who is worried that inflation will erode their savings

If you want to invest your money in something where you have a chance of winning, you should consider buying Premium Bonds. If you like taking the chance and the gamble, this is an investment that can be very enjoyable.

A Guide On How To Finance Your New Art Purchases

Investing in artworks can be challenging but it is also very rewarding. When you invest in this business, you simply take calculated risks in order to make profit.

It follows that if you want to make money from your investments, you should understand the art world and learn how the market operates.

In addition, you should learn the vital trick of buying and selling at the right time. There is also the little matter of raising capital to finance your investments.

Authentic artworks cost good money so you need capital to operate effectively in this market.

However, you can start small and increase your capital base as you grow in the business. Below are some secrets of success for smart people who want to make good money in this exciting and rewarding market.

Understand the Market

In every business, knowledge is power and reliable information is vital to success. This is why you should make the effort and understand how the market operates before you even buy your first artwork.

Investing in this business is not all about buying the paintings of Masters like Pablo Picasso, Vincent van Gogh and Michelangelo.

You are an investor and not a connoisseur so you should take a holistic approach to investing in artworks. As a dealer, you should know all about Minimalists,

Abstract Expressionists and Renaissance Masters. Your knowledge of this business should extend to Chinese porcelain, African woodcarvings, works by masters of the Impressionist era and even struggling artists who may just create masterpieces in future.

Keep Accurate Records

Accurate record keeping is one the qualities of a great investor. Buy a large diary and record details of “market behavior”. Remember that this market is very much like the stock market.

Prices go up and down in this market and some works have cycles. This means that there are specific periods in the year when prices rise and fall. Use this killer information to buy low and sell high.

In addition, the market is driven by consumer sentiment sometimes. Prices can head north or south on a whim. Learn to recognize trends in the market and try to profit from these trends.


In every business, it pays to diversify because this move protects you and increases your chances of success. Think of your collection as a stock market portfolio.

A stock market portfolio contains penny stocks, blue chip stocks, mutual funds and other money market instruments. In your case, your portfolio or collection must include works by established artists, struggling artists and others in-between.

The point here is that you cannot afford to risk all your capital on just one or two artists. When you diversify, you enjoy a huge advantage because if some of your purchases do not bring you good money others will.

Think Long Term

If you are investing in this business, you should look at the big picture. It is not always possible to buy an artwork today and sell it in a week or two. Sometimes, you get more value for money if hold on to the goods for a while and sell when the price appreciates.

Just think; some works that go for millions of dollars today were selling for just $200-$500 some years back. Now, you may not hit such heights with your purchases but the point is simply this. Buy your artworks for both short-term and long-term profit.

How to Finance Your new Art Purchases

Art can be an incredibly personal type of possession. Most buyers would prefer to buy works from certain artists, or they would like artwork that is in a specific style.

Other individuals merely want pieces that resonate with them, or feature a subject that is of interest. No matter the style the buyer wants, he or she may not have enough money on hand for these beloved art pieces.

Therefore it is a good idea to consider options for financing. There are numerous ways in which to get acquire the funds needed for purchasing art. Enthusiasts find it important to invest in art, whether it is make their homes more customized or for some other reason.

Read on to learn about more ideas on how to finance the artwork of your dreams.

Secured Loan

You can raise capital by taking a loan to get started in this business. If you have stocks in some reputable companies, you can easily get a secured loan using your share certificates as collateral.

At this point, you are testing the waters so take a small loan at the start. After you repay this loan, you can apply for a bigger one. As your business grows, you may need more money to operate but this is not a problem.

Your bankers will keep financing you as long as business is booming and you are repaying the loans at the right time.

Secured financing is a way to have the money for purchasing art. It can be for nearly any amount, as long as the individual has collateral that is equal to the amount they wish to receive.

This type of loan often is based on a value of items that are used as security. It may be necessary to get an appraisal of said items.

Secured loans typically are an alternative to other types, when the person has rather poor credit. It gives a lender confidence with giving out a loan, in the instance that the borrower defaults on the loan.

The lender will be able to take possession of collateral that is in place as security. He or she can put up jewellery, current artwork, or property as a means of loan security.

Secured loans are for more than just those individuals who have poor credit. They can be used by borrowers who have a high amount of debt, as well as on risky purchases.

It is possible for borrowers to receive lower interest rates for their secured loans, since this is less risky and he or she is backing the loan with something of value.

Some other items that may be used as collateral include the following: coin collections, antique firearms collections, antique cars, and historical artefacts.

Unsecured Loan

An unsecured loan is the one you get without putting up any collateral. These loans are granted based on your relationship with your bank and your financial integrity. If you want an unsecured loan to invest in artworks, your best bet is an overdraft.

This is short-term loan and it is usually approved for current account holders based on turnover and financial integrity. If you maintain a salary account with a reputable commercial bank, you can get an overdraft easily.

This is because your salary is paid into the account at the end of every month and this qualifies you for the overdraft. You can take this loan, invest and repay the loan after you have sold the goods.

Art financing sometimes may be made available with unsecured loans. There are numerous factors that must be considered before someone is approved. It is easier when one has a good credit score. However, this is not the only consideration in making the decision to approve someone for the unsecured loan.

If the individual has any debt, including car payments or a mortgage among other things, there may be an issue with getting an unsecured loan. Lenders will look at the debt to income ratio for the person.

They want to be clear that borrowers are not going to be overextended, and that they will be able to make loan payments.

Loans Covered by Your Collection

Some financial institutions will lend you money at relatively low interest rates if you have a collection already. In this case, the amount you get will depend of the value of the goods you have.

Maybe you have the opportunity to buy a great work at a decent price but you do not have the cash. With this option, you can easily raise the cash and repay the loan in installments.

Cash from Friends

Another way to raise capital is to get cash from friends and family. If your friends and relations are convinced that there are great prospects in your investments, they will lend you money to make the business grow.

Repay the loan at the right time and you can always borrow some more later.

Credit Cards

Credit cards are an alternative for purchasing artwork. It all depends on the credit card limit amount. It is important to note that they can have higher interest rates, depending on the negotiation made with the credit card company.

Interest will be added on to what you spend with the card if you do not pay it off within a month.

Credit card financing can be an attractive option, but other choices should be considered for the fact that there are no high interest rates or high monthly payments due.

Credit card financing is ideal for people who are not interested in buying pieces that are more expensive. Anyone who simply is in search of stylish art pieces for their house or office will do well to get credit card financing.

Auction House and Dealer Financing

Auction houses and dealers can provide financing to their clients. This can be used to buy art. The amount that a dealer lends is determined on the individual’s credit rating, as well as the likelihood of the borrower being able to pay back the loan.

Ownership of this artwork technically falls under the dealer until the buyer pays off the entire loan.

Since auction houses and dealers know the values of the pieces already, financing typically is arranged faster.

Lease to Own

A great way to acquire art is by leasing it. Certain companies will give buyers the option to lease art for a period of between five to ten years. Once the lease term is done, the lessee is able to purchase the pieces he or she wants. This is perfect for individuals who change up their home’s interior style on a regular basis.

Also, it makes it possible to learn more about what artists have to offer before making an official purchase. This lets potential buyers become aware of recent trends when deciding to lease a new piece of artwork.

There are several options for financing artwork. A viable method depends on different factors. These include the person’s current debt amount, what he or she has for collateral, and his or her credit worthiness.

Borrowing is a great means of securing art pieces, including what the borrower really wants to accentuate the style of his or her home or office. Even when he or she does not have the required money to make the purchase, there are plenty of possibilities.

Loans involve having to pay interest, so leasing may seem like the better option for some people. If the borrower does not feel the need to own the pieces of art right away, leasing gives potential borrowers the chance to determine if they would like to keep these artwork pieces or select something else to lease.

The individual also may go through auction houses, dealers, or banks to get financing.

Final Word

Investing in art is the way to go. There is big money in this business and you can become one of the winners here. Start small, think big, expand carefully and you will succeed in this lucrative business.

Weigh the alternatives carefully before you make your decision so that you do not end up regretting your choice for how you want to secure the financing for the artwork of your dreams.

Most importantly, take great enjoyment in the artwork that you thought you would only own in your dreams.

A Guide To GDPR Compliance | The New Data Protection Act Regulations

Approved by the European Union Parliament on 14 June 2016 after four years of preparation and debate, the GDPR will replace the current data protection directive from May 25, 2018 after a two-year transition period.

The GDPR is directly applicable and binding, meaning it does not require any enabling legislation. With that in mind, here is some more information about the GDPR.

An Overview of GDPR

The GDPR will introduce stronger rights and restrictions, as well as new accountability obligations on international data flows. The GDPR will require any organization that handles data about EU citizens to establish a robust personal data security framework.

Additionally, the GDPR will harmonize all the data security laws across all 28 EU member states to make it easier for non-European companies/multinationals to comply with all the applicable laws across Europe.

According to the European Commission, this regulation will make it simpler and cheaper for businesses to operate within Europe. The EU hopes to use the GDPR to encourage businesses to incorporate data security frameworks into their services and products from the development phase.

Beyond the typical types of personal data, such as name, photos and address, the GDPR extends the definition of personal data to include any sensitive data, such as IP address, biometric data and even IP address.

Scope of the GDPR

One of the main elements of the GDPR is the increased territorial scope. Specifically, the GDPR will apply to any company that handles data of EU citizens, regardless of the company’s location, meaning it will come with an extended jurisdiction.

As a result, it will remove the ambiguity in the current regulation, Directive 95/46/EC, which refers to data process ‘in the context of an establishment.’

Thanks to the extended jurisdiction, the GDPR will remove this ambiguity, which has arisen in several high-profile court cases.

Additionally, this regulation will also apply to the processing of personal data of EU citizens by a processor or controller not established in the EU, where the activities relate to monitoring EU residents within the EU and selling or offerings services and goods for free to EU citizens.

Moreover, any non-European business processing data of EU citizens will need to have a Data Protection Officer (DPO) in the EU.

The regulation also contains a separate Data Protection Directive that will govern how the criminal justice sector and the police exchange personal data at the national, European and international level.

Single Set of Rules

While a single set of rules will apply to all 28 EU member states, each national government will create an independent Supervisory Authority to investigate and hear administrative offences, sanctions and complaints.

All the SAs will offer mutual assistance to each other and organize joint operations. It is important to note that a business with offices across Europe will have only one SA called the “lead authority” stationed at its main data processing centre.

The lead authority will supervise all the activities of the business throughout the EU with the help of a European Data Protection Board (EDPB). It is important to note certain personal data is exempt from the regulation.

This includes data processed for the purposes of national security or in an employment context. Such data may still be subject to individual country laws.

Responsibility and Accountability

Under the GDPR, notice requirements must include the retention time for personal data, as well as the contact details of both the DPO and the data controller. Like the Data Protection Directive, the automated individual decision-making, including profiling, is contestable.

This means that an EU citizen can question or fight any significant decision that affects him/her that has been made on a purely algorithmic basis.

To demonstrate compliance with the regulation, the data controller should implement a data security framework that meets the principles of data protection both by design and by default as stipulated under Article 25.

Specifically, privacy by design and by default requires data security measures, such as pseudonymised personal data by the controller, be incorporated into the development of business processes for services and products.

This means the data controller carries the responsibility of implementing effective protection measures and more importantly, should be able to demonstrate the effectiveness of such measures even when the data processing is done by a data processor on behalf of the data controller.


Under the GDPR, the penalties for flouting the regulation are based on a company’s annual global revenue and they vary in terms of severity depending on the nature of the infringement.

For instance, a company found guilty of minor GDPR infractions such as failing to notify the relevant authority and data subject about a data breach or failing to conduct an impact assessment or failing to keep proper records can be fined up to 2% of its annual global turnover.

On the other hand, a found guilty of the most serious offenses such as violating the core of Privacy by Design concepts or lacking sufficient customer consent to process data can be charged up to 4% of its annual global revenue or €20 Million, whichever is higher.

It is important to note that these penalties apply to both controllers and processors, meaning even ‘clouds’ will have to comply with the regulation.

The Benefits of the GDPR to EU Citizens

The GDPR has several inherent benefits. For starters, it will instill and promote transparency because it will compel organizations to explain to consumers in a clear way how they process and use consumer data.

Secondly, it will help manage data breaches more effectively because it compels organizations to report data breaches to the relevant authorities and inform all the affected consumers. Thirdly, it will help enforce the “right to be forgotten.” This means you can ask an organization to delete your personal data from its records it there no grounds for retaining your data.

The Impact of Brexit on the GDPR

Although the United Kingdom is set to leave the EU over 10 months after the enactment of the GDPR, the UK government has said the regulation will work to the benefit of the country, so it will enforce it. In other words, Brexit will have no effect on the GDPR compliance in the UK.


The General Data Protection Regulations are essentially robust data protection regulations aimed at protecting the personal data of EU citizens.

The regulation requires any organization that process EU residents’ data to implement a robust data protection system, deliver a breach notification in the event of a data breach, as well as provide a description of the potential consequences of the breach.

The UK will also enforce the GDPR despite Brexit.

GDPR Compliance Services

Finance.co.uk have teamed up with GDPRI.co, who offer an easy solution to get you GDPR compliant through there online portal.

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Credit Reports Explained

What Is A Credit Report (or Score)?

A Credit Report is an analysis about your financial behaviour history. It is what lenders will use to help them decide whether to approve or reject your application for a loan, credit card or mortgage, amongst others. This analysis is summarised by a Credit Score (or Rating), a numerical value. The higher your score is, the lower is your level of risk to the lender, who will also use that to determine the interest rate you pay.

How Do I Check My Credit Rating?

Currently there are 3 credit agencies in the UK: Experian (Credit Expert), Equifax and CallCredit (Noddle). They will probably have slightly different versions of your credit report, so it is advisable to check with all three, and not only a single agency.

Under what is known as the Consumer Credit Act, you are entitled to obtain your full credit report from these credit agencies at a cost of £2, which you can do so online or by post.

You should check your Credit Reports regularly, as this is a great way to protect yourself from ID fraud, so make sure to check them at least once a year.

What Information Is Included?

The information in your credit report about your financial history comes from banks, credit card companies and building societies you have borrowed money from in the past or currently owe to. There will also be information from publicly available sources, from your mobile phone provider and others. Your report is likely to have to following information:

  • Your name, current address and other personal details
  • If you are on the electoral roll at your present address
  • Joint financial products you currently hold (such as a current account)
  • How much you currently owe to lenders
  • Missed payments on past or existing accounts
  • Late payments on past or existing credit card or unsecured loans / secured loans
  • If you joined an Individual Voluntary Arrangement (IVA)
  • County Court Judgements (called “Decrees” in Scotland) filed against you, bankruptcies and home repossessions for six years after they occur
  • If you have ever moved away while owing money

How Can I Improve My Credit Score?

By being responsible with your payments and making sure you haven’t been a victim of identity fraud, you are guaranteed to improve your Credit Rating or Score. Here are a few more tips to help you achieve that:

  1. Make sure you are correctly registered at the electoral roll for your present address, as some lending companies may reject your application if they can’t confirm where you live.
  2. As mentioned before, check your credit report regularly to make sure all the information is correct and up to date. If it’s not, you should file a dispute and get it corrected.
  3. If you’ve had financial links to any person which is no longer relevant, like an ex-partner for instance, ask for their information to be removed form your records.
  4. If you’ve had credit problems in the past due to special circumstances such as family bereavement, losing your job or similar, add a notice of correction to any late payments during this period explaining your situation.
  5. Any accounts you no longer use should be closed, as accessible credit which doesn’t require further checks may impact your credit score.
  6. The way best to improve your score is to begin building a good credit history now. By showing that you can repay on time, you will show lenders how responsible you are.

Key Man Insurance – What would you do if a key staff member were suddenly gone?

  • Protect against financial loss
  • Protect against the loss of key skills
  • Protect corporate finance guarantees

You’ve insured your business against theft, acts of god, even malicious damage by a member of staff. But what will you do if your star performer, the one person that makes the company soar, died suddenly or was injured in an accident and out of action for many months. How will your business cope with the inevitable losses and downturn in profits, or keep up with any financial guarantees made against that person? How will you keep the confidence of your creditors and suppliers?

Keyman Insurance can help by providing your business with compensation when a key member of staff cannot work through death or illness. It will allow you to:

  • Ensure business continuity
  • Hire or train replacement staff to maintain key business skills
  • Sort out share ownership issues
  • Offset lost income
  • Protect guarantee business loans or banking facilities
  • Keep up with debt repayments
  • Maintain creditor confidence
  • Sort out staff loan repayments
  • Preserve the value of your business

Life Insurance for your business

Keyman Insurance is a vital part of any business planning for a long, profitable life. The policy pays out a fixed monetary amount that can be spent any way you choose to mitigate and adapt to the loss of a key member of staff. Your could cover the costs of hiring and training both temporary and permanent replacements, pay for losses incurred by delaying or even abandoning projects, and make sure the full amount of any guarantees on loans taken out in your key person’s name are covered.

Our Keyman Insurance service can provide:

  • Free no-obligation quotes
  • Competitive prices
  • Expert advice
  • Policies that cover directors, partners, shareholders and key employees

In short, Keyman Insurance makes sure that when you lose someone valuable, it doesn’t mean financial disaster for the entire business.

What Is Invoice Factoring?

Invoice factoring is a transaction that involves a third party agreeing to buy a business’s unpaid invoices at a discount. In such a transaction, the buyer of such invoices gets to manage the sales ledger and collects any money owed to the business by its customers. According to the Asset Based Finance Association (ABFA), the annual turnover from companies that use invoice finance in the UK currently stands at €122 billion. This shows that invoice factoring plays a big role in many businesses’ daily operations.

How It Works

In general, for an invoice factoring transaction to happen, there must be a factor, a debtor and an unpaid invoice. The factor is the financial institution that offers or agrees to buy business debt or unpaid invoices. The debtor is the client who owes money to a business in the form of an unpaid invoice. Lastly, the invoice is the document that shows transactions between a business and its clients.

Here is how it works; the business raises an invoice for goods/services sold on credit to another commercial entity and then presents the invoice to the financer/factor for payment (advance payment). Most factors pay off such invoices within 24 hours upon receiving them and the business can receive up to 85% of the unpaid invoice amount. Then, the factor will collect the full invoice amount owed to the business when the invoices become due for payment, deduct its fee and interest, which typically vary from one factor to another, and then submit the remaining balance to the business. It is important to note that customers that do not pay on time may affect a business’s ability to access invoice factoring services.

Related Costs

There are two standard costs that you have to consider, interest and fees. Most financiers calculate interest charges daily and then apply them monthly. Interest rates range anywhere from 1.5% to three percent over the base rate. In general, you should expect to pay the same amount of money that you would have paid to access a bank overdraft. The fees you will pay cover the administrative costs of managing your business’s sales ledger and range from 0.5 to three percent of your turnover. Other factors that affect fees that you have to pay include number of customers and number of invoices raised.


For any business, cash flow can make the difference between success and failure. This is where factoring comes in handy because it allows a business to access funds without waiting for customers to pay. With the available funds, a business can buy more stock, extend credit lines to its customers, as well as focus on its core functions instead of chasing debtors.

Another benefit of using corporate finance is it allows a business to reduce its operational expenses. Remember there are administrative expenses associated with collecting debts from your customers. By selling the debts to a factor, you do not have to hire employees to manage your company’s debt portfolio.

A business that uses corporate finance also benefits from the expertise provided by firms that provide these services such as professional sales ledger management.


To start with, factoring can limit your business’s ability to access funding from other financial institutions because you will not be able to use unpaid debts as security. For a business that does not have other valuable assets that it can use as collateral when applying for a loan, this can be a huge disadvantage.

Secondly, using factoring means you are likely to lose the profits that you make from products or services that you sell to clients. In a competitive environment where profits are thin, this can push a business into bankruptcy. Thirdly, most factors will only buy commercial invoices. This means that businesses that sell to the public may have to look elsewhere for financing.

Fourthly, a factor that deals harshly with your clients may force them to shift their allegiance elsewhere.

Invoice factoring is a business debt help method whereby a financial institution pays a business that sells goods/services on credit to other commercial entities upfront. A business can receive as much as 85% of this funding within 24 hours of submitting its invoices to a factor. In addition, businesses usually receive the remaining 15% minus charges such as fees and interest once customers fully settle outstanding invoice debts. The upside to such an arrangement is it improves a business’s cash flow as well as reducing operational costs. The downside is you may lose profits from goods or services that you sell.

What Is Pre Pack Administration?

Struggling businesses often turn to pre pack administration when insolvency seems imminent because of its benefits compared to the alternatives.  A Prepack can minimize the damages of insolvency and provide critical business debt help by allowing an insolvent business to continue its operations while under the process of administration.  The company is also given protection from creditor legal action — such as forced liquidation — during this time.

What is Pre-Pack Administration?

Administration is the process by which an insolvent company may be restructured and sold to pay its debts while under the management of an administrator.  In the face of looming insolvency, directors may make all the arrangements to sell their company to a buyer(s) — who are sometimes the directors themselves — before appointing an administrator.  Upon being appointed, the administrator immediately sells the company according to the packaged agreement.  The pre-negotiated sale of a company’s assets by its directors before the company even declares insolvency is called a pre pack sale and is the essence of pre pack administration.

How does it work?

Companies that have not yet entered insolvency proceedings may agree to a pre-pack sale to avoid the fate of the company being left solely to the administrator.  In this procedure, the directors agree to either buy the company or sell it under certain conditions to a buyer before involving the administrator. A pre pack sale happens very fast; often within days of the appointment of an administrator.  This process is usually agreeable to administrators because it allows them to avoid the risks involved with marketing the company themselves such as the devaluation of the company’s assets.

What are the advantages and who benefits?

Although it is a controversial topic, the truth is many people benefit from pre pack administration.  First, directors sometimes benefit by being able to revive the insolvent company as its new owners.  Some criticize the fact that prepacks allow the directors who ruined the company in the first place to be central to its future restructuring.  This, however, is not always the case.

Secondly, employees benefit from the continuity of the business by suffering minimal disruption to their jobs during the administration process.  The preservation of jobs also facilitates the survival of the business and adds to its value by discouraging longtime employees from leaving.  Thirdly, the interests of secured creditors are served by the speed of the process.

Additionally, the administrator benefits from the ability to sell the company speedily and often for its greatest value. Finally, the most important benefit of the pre-pack administration process goes to the business itself.  By flowing smoothly from insolvency to administration and restructuring, a business preserves its continuity and value.

What are its disadvantages and who is affected?

The major concerns regarding prepacks come from unsecured creditors.  Because of the speed of the process, unsecured creditors may not even know until it a sale has occurred, much less be part of the decision making.  This can lead unsecured creditors to distrust the sale and think they could have gotten a better deal had the company been on the market longer.  Additionally, they may not be able to investigate issues regarding improper incurring of credit by directors of the insolvent company.  The end result, they feel, favors the directors and secured creditors.

Is pre-pack administration synonymous with business debt help?

A prepack can help a businesses continue operating under new owners should it ever face insolvency.  So, under the most extreme conditions, prepacks are a form of business debt help.  Selling the company to new owners –whomever they might be- can save a business from crushing debt and give it the chance to restructure.

Prepacks are particularly effective to those who value the company for more than its cash worth in comparison to other insolvency procedures.  A company that becomes insolvent may be forced to liquidate by its creditors or it may be entered into administration.  In any case, the future of the company rests in the hands of the creditors whose prime concern is usually retrieving the money owed them, not the survival of the company.  Pre pack administration is usually chosen over other insolvency procedures because it gives the company the opportunity to overcome debt and become successful again in the future.

What Is A Winding Up Petition?

A winding up petition (WUP) is court-instituted process that seeks to “wind up” the affairs of a business that cannot pay its creditors. In most cases, this happens to a business that cannot pay debts of more than £750. Some of the people who can file a petition to wind up a company include its directors, any creditor, the Secretary of the State, an administrator, or a clerk of the magistrates’ court.


The purpose of a seeking to wind up an insolvent company is to ensure all its affairs are in order. This includes stopping all its operations, collecting money from its debtors, selling any disposable assets, settling legal disputes, terminating all existing contracts, and settling its debts. Take note that a WUP does not mean that all creditors will get their money.

How The Process Works

To file a winding up petition, one must prove that the company in question owes him or her more than £750. In addition, one must prove that the company cannot pay up the amount of money that it owes. One way of proving these claims is by getting a form for a statutory demand from your local court and serving it to the business that owes you money. If the business does not pay you within 21 days, you can proceed to file a winding up petition.

You can issue a claim for judgment against a company if an earlier execution does not result in the seizure of assets that can clear all your debts. Another option is proving that the value of a company’s debts is more than its assets. Since this process involves legal issues, it is wise to hire a solicitor to help you present such a petition in court. Your advocate will help you complete form 4.2 and a statement of truth, issue the petition, serve the petition, as well as withdraw the petition if necessary. Your solicitor will also come in handy during court hearings.

Court Hearings

Hearings vary depending on where you file for a winding up order. Nevertheless, hearings always take place on the date indicated on the petition. It is not necessary for the individual or business entity that filed a petition to appear in court. They can instruct their solicitors to represent them. At this stage, one can request the court registrar to make a winding up order. Creditors can also request the registrar to dismiss the petition if the company that owes them money settles its debts.

If the registrar issues a winding up order, the official receiver will begin the process of liquidating the company involved in this case. This includes investigating its affairs to establish the reason it failed, advertising the winding up order in the London Gazette, meeting with creditors to appoint an insolvency practitioner, as well as collecting and selling company assets in order to pay creditors.


The threat of a wind up order can prompt a company to pay its debts as quickly as possible and seek business debt advice. This is especially true for businesses that want to protect their reputation. Secondly, the entire process is fast and can force a business to wind up its operations within six weeks. Thirdly, this process is quite affordable compared to issuing a claim.


To start with, this process can be messy if any of the parties involved dispute evidence presented in court. The debtor may mount a successful defense leading to the dismissal of the petition. Secondly, it may be impossible to reverse the legal process seeking to wind up a company even if the outstanding debt is paid. For instance, support for your petition from another creditor will lead to the closure of a company even if it pays your debt. Thirdly, the liquidator enforcing administration orders will distribute money realized from sale of company assets in proportion to the value of one’s debts.

A WUP may be necessary in the event a company is unable to meet its financial obligations, particularly to its creditors. One can institute such a process for as little as £750. The pros of a WUP include ability to jolt a debtor to pay off outstanding debts, inexpensive, and it is a relatively quick procedure. Conversely, its drawbacks include potential disputes leading to lengthy court hearings and distribution of proceeds from sale of a company’s assets in order of priority.