Personal insolvencies 'down 11%'

3 February 2012 Last updated at 11:09 GMT Some families' finances were hit by rising prices during 2011 Fewer people were declared insolvent in 2011 in England and Wales than during the previous year, but the number of companies going bust increased.

There were 119,850 people declared insolvent over the year, the Insolvency Service said, which was down 11.3% on the record high of 2010.

In the final three months of the year, there was a 5.6% fall compared with the same period a year earlier.

The number of firms going bust in 2011 increased by 1.3% compared with 2010.

Debt choices

Personal insolvencies are still running at significantly higher levels than before the credit crunch. One in 366 people became insolvent in 2011, compared with a 25-year average of one in every 1,600.

Yet, the figures show a clear shift in the way people chose to deal with their financial troubles over the year.

There was a 29% fall in the number of people who were declared bankrupt, considered to be the most traditional form of insolvency, but one that puts assets such as a home at risk.

Continue reading the main story Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditorsIndividual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of yearsDebt Relief Orders: Introduced in April 2009, these allow people with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy The total number of bankruptcies stood at 41,845 in 2011. This sharp drop meant the annual total was overtaken for the first time by Individual Voluntary Arrangements (IVAs).

Under this arrangement, an official deal is done between the individual and creditors on how to pay back debts. There were 49,056 IVAs in 2011, a fall of 3.2% on the previous year.

There was also a notable rise of 15% in Debt Relief Orders (DROs) in 2011 compared with 2010. There were 28,949 DROs - a relatively new style of insolvency for lower levels of debt.

However, Nick O'Reilly, an insolvency practitioner at chartered accountants HW Fisher, warned that these people could still face escalating problems.

"To qualify for a DRO, a person must have relatively small debts of less than £15,000. But there is every chance that those struggling with DROs now could slip into insolvency proper," he said.

Official figures from Scotland were released in January, which showed a 2% rise in personal insolvencies in the third quarter of the year compared with the same period a year earlier.

Continue reading the main story

We have known for a while that many businesses are surviving but not thriving, operating as 'zombies'”

End Quote Frances Coulson President of R3 Accountant in Bankruptcy (AiB) reported 4,664 personal insolvencies in the third quarter of 2011-12 in Scotland. This was 13% lower than the previous quarter.

Business worries

The number of businesses going bust in England and Wales fell slightly in 2010 as companies recovered from the recession, but crept up again in 2011.

There were 4,972 receiverships, administrations or company voluntary arrangements last year, up 1.3% on the previous year.

The number of firms that were liquidated - the end point of the insolvency process - was up 5.1% on 2010, to 16,871.

"The increase in corporate insolvencies is unsurprising given the challenging economic environment that businesses are operating in," said Frances Coulson, president of R3, the trade body for insolvency practitioners.

"We have known for a while that many businesses are surviving but not thriving, operating as 'zombies' and eventually some would have to fail.

"What is still clear however is that insolvency numbers are historically low compared to previous recessions and we have not seen volume of business failures that one would expect. This is certainly the calm before the storm and in fact if the economy is to recover, we must see some businesses fail, to allow viable ones to thrive."

Who is affected?

Some commentators have suggested that there has been a rise in the number of professionals facing insolvency.

Miquita Oliver is facing bankruptcy after failing to pay a tax bill

There were 28,973 personal insolvencies in England and Wales in the final three months of the year.

Those facing bankruptcy include television presenter Miquita Oliver. The 27-year-old from London rose to fame presenting Channel 4's Saturday morning music show, Popworld.

She failed to pay a tax bill of more than £170,000, according to accountants Baker Tilly.

There is a tendency for people to put off applying for help with debts until after Christmas and new year celebrations, so some debt experts predicted a rise in insolvencies in the first months of 2012.

"We have seen a noticeable increase in professionals filing for bankruptcy and we can see this trend continuing," said Louise Brittain, partner in Deloitte.

She predicted that the number of individuals entering insolvency in 2012 would rise above 120,000.

Credit reference agency Experian said a group including mostly married or middle aged people, bringing up children in family houses, had seen their share of insolvencies rise the most in 2011.

"Redundancy and relationship breakdown are typically the main reasons for why people experience serious financial difficulties," said Simon Waller, of Experian.

Game shares soar on lending deal

3 February 2012 Last updated at 10:30 GMT Continue reading the main story Shares in the video game retailer Game Group have jumped 40% after lenders, led by state-backed RBS, revised the firm's banking arrangements.

Game said the new arrangements would allow it "to continue to trade".

Game Group shares plunged by more than a third in November after the retailer cut its revenue forecast.

It is now predicting an underlying pre-tax loss of about £18m for the year to the end of January.

The firm has also agreed to provide an updated strategic plan for review by its lenders, which also include HSBC and Barclays.

All aspects of the business's activities and strategy will be reviewed, including its 664-store overseas operations.

"Management may look to exit parts or all of its international operations to reduce losses and to raise cash," said Singer Capital Markets analyst Mark Photiades.

In September, Game reported a £51.5m pre-tax loss and its share price has fallen over 70% since the start of the year.

Game has seen its business eroded by competition from online-only retailers such as Steam and Amazon, with Game holding on to 19% of the online market.

Cold front ad for Mini backfires

2 February 2012 Last updated at 12:49 GMT Snow and ice have made many forms of travel in Germany a challenge in recent days An advertising agency for BMW has paid to name a cold weather front sweeping Europe "Cooper" in Germany, after the carmaker's Mini Cooper.

But the public-relations stunt by the agency went wrong after the freezing conditions led to dozens of deaths.

Germany's meteorology institute allows the sponsorship of weather systems.

On its website, advertising agency Sassenbach says that naming the front after the open-air vehicle was a "wind- and weather-proof idea".

It is encouraging people to follow the path of the weather on meteorological websites.

While the snow and ice have brought some stunning scenes across Europe, the freezing temperatures have led to at least 100 deaths, mainly in Poland and Ukraine.

In Ukraine alone, nearly 950 people are being treated in hospital with hypothermia and frostbite, the Associated Press news agency reports.

The Munich-based advertising agency said it was no longer commenting on the unfortunate correlation between the progress of the severe weather and the car it sought to publicise.

It has also named a warmer weather front to follow "Minnie".

BMW has apologised for the stunt, which cost the advertising firm 229 euros (£190).

In a statement, the carmaker said it could not influence exactly when names for weather fronts would be used, or what a weather system would do.

It said it deeply regretted that the weather front had taken on "catastrophic proportions" and claimed so many lives.

The meteorological institute's "Adopt a Vortex" scheme has been running since 2002, with the money raised helping to fund weather monitoring at Berlin's Free University.

The institute is the only one outside the US which names weather systems.

Hackers fool bank security system

2 February 2012 Last updated at 16:12 GMT By Spencer Kelly Click presenter Since banks brought in "two-factor" authentication, official figures have shown fraud fell significantly Criminal hackers have found a way round the latest generation of online banking security devices given out by banks, the BBC has learned.

After logging in to the bank's real site, account holders are being tricked by the offer of training in a new "upgraded security system".

Money is then moved out of the account but this is hidden from the user.

Experts say customers should follow banks' official advice, use up-to-date anti-virus software and be vigilant.

Devices like PINSentry from Barclays and SecureKey from HSBC - which look a lot like calculators - ask users to insert a card or a code to create a unique key at each login, valid for around 30 seconds, that cannot be used again.

This brought a new level of online banking security against password theft.

The additional line of defence provided security even if a user's computer along with any password information was hacked, and they still offer the best level of protection available against online banking fraud.

While these chip and pin devices make the hackers' job more difficult, the hackers themselves have raised their game.

'Man in the Browser' attack

A test witnessed as part of a BBC Click investigation suggests even those with up-to-date anti-virus software could be at risk.

There is no specific risk to any one individual bank.

In the test the majority of web security software on standard settings did not spot that a previously unseen piece of malware created in the software testing lab was behaving suspiciously.

The threat does not strike until the user visits particular websites.

Called a Man in the Browser (MitB) attack, the malware lives in the web browser and can get between the user and the website, altering what is seen and changing details of what is being entered.

Continue reading the main story If your transaction seems to be taking longer than normal, there is a chance it is going via a fraudster's systemIf you are asked for more information than normal, especially entire passwords where previously you were only asked for part, your machine may have been infectedComputers that have been infected often slow down while malware monopolises both the processor and the internet connectionSome versions of the MitB will change payment details and amounts and also change on-screen balances to hide its activities.

With the additional security devices, the risk of fraud is only present for one transaction, and only if the customer falls for the "training exercise".

"The man in the browser attack is a very focused, very specific, advanced threat, specifically focused against banking," said Daniel Brett, of malware testing lab S21sec.

"[Although] many products won't pick this up, they've got a much bigger scope, they're having to defend against all the viruses since the beginning of time."

Every time a new update to the malware is released, it takes the security companies a number of weeks to learn how to spot it - to learn its common features.

Continue reading the main story Contact your bank by phone, not by emailTell them the time and date you believed you were accessing your bank account, and if the bank's records do not match, it is likely your computer has been compromisedIn the UK, banks usually refund victims of online fraud as a matter of courseBut one security company did privately concede that, if this threat had come from a source not known to be bad and started communicating with a web address also not on the black-list of "bad" sites - until they had discovered and analysed it - it probably would have beaten their protection.

Fraud detection software

Makers of many of the security products featured in tests argued that it was not valid as it only tested one part of their protection.

They point out that they continually search for and blacklist websites, emails, and other sources of malware.

Mark Bowerman, of Financial Fraud Action UK, said: "Banks also employ what's called back-end security and that's what's happening behind the scenes to protect you from online banking fraud.

"We've got intelligent fraud detection software, and it's used to seeing how you operate your online bank account.

"Any deviations from the norm and the software is going to pick it up - that may be the type of transaction you've made or the amount."

Hackers can even manipulate online statements so customers will not automatically see changes

Most computer security products will block this kind of threat if their security settings are turned up to maximum but will also block many legitimate programs too.

Online banking fraud losses totalled £16.9 million in the first six months of 2011, according to Financial Fraud Action UK.

In the UK, banks usually refund victims of online fraud as a matter of course.

Banks and experts say customers must continue using online security anti-virus products.