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Is it time to trust a British bank with your investment nest-egg?

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is it time to trust a british bank with your investment nest egg

Investing through your high street bank was once a big no-no. 

Renowned for their steep charges, poor performance and limited choice, they rarely offered the best option for investors. But as they slash costs and smarten up their offerings, could investing where you do your everyday banking finally make sense? 

All of the big five high street banks – NatWest, Lloyds Bank, HSBC, Barclays and Santander – operate investment platforms for customers. 

The banks are well placed to capture their custom. They have brand power, a high street presence – and customers already trust them with their money. 

Money in the bank: All of the big five – NatWest, Lloyds Bank, HSBC, Barclays and Santander – operate investment platforms for customers

Money in the bank: All of the big five – NatWest, Lloyds Bank, HSBC, Barclays and Santander – operate investment platforms for customers

High street banks also now offer ready-made options for investors who have neither the time nor inclination to research investment funds, pick stocks or reposition a portfolio through periods of constant economic change. 

This month, NatWest raised the stakes by cutting service fees – from 35p per £100 invested down to 15p, in a bid to entice more customers into its investment fold. 

Dylan Williams, head of ‘affluent’ at NatWest, says: ‘We need to make investing more accessible for everyone – cost must not be a barrier. This is an opportunity for those individuals and families who can, to invest and secure their financial wellbeing for the long-term.’ 

Ready-made investment funds allow you to choose the level of risk you want to take with your money and the bank then looks after everything else from that point onwards. 

You can select from a basic menu of between three and five funds, ranging from low-risk to a bolder strategy for the long term. 

Lloyds Bank has three different funds to choose from, Santander four, while Barclays, HSBC and NatWest each have five. 

Alternatively, you can reach for a bit more hand-holding with an advice service that helps people decide which fund to tip their money into. 

All offer this except Lloyds Bank, which shares guidance but not advice. 

Typically, investors can start with just £50 a month – with Santander it is as low as £20 and with Lloyds Bank it is £100. 

NatWest, Barclays, Lloyds Bank and HSBC only allow their own online banking customers to sign up to their no-frills investment plans. But Santander welcomes customers who bank elsewhere. 

Customers with a current or savings account with a high street bank will find the path to investing with them easy to navigate. The familiarity may also be appealing if they have never invested before. 

And an uncomplicated route to investing is welcome if it translates into more people doing it. 

Holly Mackay, of straight-talking investment website BoringMoney, says: ‘Some traditional financial advisers will not see clients with less than £100,000 of investments and so people need a credible digital alternative. 

‘For those people who want help – and feel hesitant – I think digital advice services from banks are worth a look.’ But investors could be forgiven for questioning whether investing through their bank represents good value for money. 

Justin Modray, of independent adviser Candid Financial Advice, says: ‘Banks have historically been poor value for investments, with customers typically suffering from high charges and poor performance. Thankfully that is changing, to an extent.’ 

Modray points out that most banks also offer a platform with a wider range of investments from across the market, allowing more engaged retail investors to pick their own funds or individual company shares. 

He adds: ‘Provided your bank does this, then gone are the days when you should avoid investing money with them at all costs.’ 

However, for people chasing an easy life it will be the ready-made funds that appeal. 

And some experts argue that these ready-made funds still don’t offer good value. 

Damien Fahy, founder of personal finance website MoneytotheMasses, says: ‘NatWest offers five investment choices, all of which have underperformed their respective benchmarks since launch.’ 

For ‘medium risk’ ready-made portfolios, Santander’s fund has also underperformed its benchmark. 

What other options are there for investors? 

Established investment platforms offer an alternative to high street banks. They tend to provide more choice and can be lower cost. 

Modray says: ‘There are plenty of investment platforms vying for your business, such as AJ Bell, Fidelity and Hargreaves Lansdown. 

‘They all fundamentally do the same thing but charges and service, along with bells and whistles, vary. It’s worthwhile comparing your bank to these and finding a platform that best suits your needs.’ 

These longstanding platforms offer an extensive range of investments and the option for investors to choose funds themselves. 

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For those who prefer less choice, they also provide suggested portfolios of funds, depending on your appetite for risk. 

Modray adds: ‘A wide choice of investments is great, but not if it confuses or leads to you making a poor decision. 

‘Recommended portfolios of funds are a sensible starting point.’

Robo-advisers are another alternative. 

These are online companies that ask customers a series of questions and find a portfolio suitable for them based on their answers. 

Fahy says: ‘Costs are broadly in line with those of NatWest but they offer more fund choice – often including ethical options – and in many cases better investment performance.’ 

Examples include Nutmeg, Wealthify, Wealthsimple and Moneyfarm. Robo-advisers often come with state-of-the-art apps for smartphones or tablets and modern branding. 

But Mackay doesn’t write off banks completely. She adds: ‘Banks might not have the same sexy apps that some of the newer robo-advisers do, but they present a credible way for less confident people to put a toe into the world of investing.’ 

She highlights a useful tool from Santander’s ‘digital investment adviser’, which guides customers through a series of questions to work out a person’s risk profile, how they might cope with financial loss – and then comes up with a personalised suitability report. 

If a customer chooses to buy the £20 report, it will also recommend which one of its four funds to invest in. 

Mackay says: ‘It’s up to you whether you proceed with Santander or another provider. But that report in itself is useful. Most people just want someone to tell them what to do – if that sounds like you, then at least have a look at the tools and take the questionnaire.’ 

Investing at the bank may be an imperfect start for investors, but sometimes starting is what matters most. 

Mackay adds: ‘It’s affordable and will often beat the alternative for long-term savers – which is sitting there doing nothing with your money for another year whilst you worry about what to do.’  

HOW THE FUNDS MEASURE UP:

Each bank offers between three and five investment funds, ranging from low-risk to adventurous. They primarily invest in index-tracking funds which helps to keep costs down. 

For each bank, we have given details of the mid-range – or balanced – fund. 

NatWest

Its five funds range from ‘cautious’ to ‘daring’. They are all managed by Coutts and made up of bonds, equities and cash. 

NatWest describes its balanced fund as ‘like the first dip in a lake. It may be colder and get your heart rate going, but there should be some beautiful views’. Its largest holding is Vanguard FTSE UK All Share Index Fund. This is comprised of all the companies listed in the UK. 

If you had invested £5,000 at the fund’s launch in June 2016, it would be worth £6,758 today.

HSBC

Its five funds are made up of cash, equities, bonds and property. 

The largest holding in its Global Strategy Balanced Portfolio is HSBC American Index Fund. Its biggest equity holdings are Apple and Microsoft. A sum of £5,000 invested five years ago would be worth £7,800 today. 

Barclays

It offers five funds, all managed by Barclays Investment Solutions. Its mid-range fund is Barclays Wealth Global Markets 3 (Balanced). Its risk level is described as like ‘riding a bike in the road, but still in the cycle lane’. 

It has 12 per cent in cash, 38 per cent bonds and 50 per cent in shares. If you had invested £5,000 five years ago, it would be worth £6,792 today. 

Santander 

Its four funds are named Multi Index fund 1, 2, 3 and 4. 

Santander’s Multi Index Fund 2 has its largest holding in sterling corporate bonds (43 per cent), followed by UK equities (18 per cent). It will never invest more than half of its portfolio in global equities. The fund was launched in 2016. A sum of £5,000 invested three years ago would be worth £5,392 today.

Lloyds Bank

Its three ready-made funds are managed by Scottish Widows, which is part of Lloyds Banking Group. Managed Growth Fund 4 is made up of 49 per cent shares with the rest primarily in bonds and property. The fund was launched in September last year and its largest holding is Scottish Widows UK All Share Tracker. 

This post first appeared on dailymail.co.uk

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I have had intermittent internet signal over the past few weeks. How can I get compensation?

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i have had intermittent internet signal over the past few weeks how can i get compensation

A car crashed into the broadband cabinet at the end of my road a few weeks ago and since then my internet has been cutting out intermittently.

I am working from home so this has been frustrating. On one day, I had no internet at all as Openreach tried to fix the issue.

I am hoping it is now resolved but I am looking to get compensation as I have been without full internet usage for weeks. What can I do to get this?

Getting compensation for a faulty broadband connection has to come from the provider

Getting compensation for a faulty broadband connection has to come from the provider

Getting compensation for a faulty broadband connection has to come from the provider 

Grace Gausden, This is Money, replies: Being without properly working internet for many is now like losing a vital utility, such as electricity or water, especially with the rise of home working. 

On the days when the internet cut out multiple times, and one day when it didn’t work at all, you had to go to a family member’s home nearby to work.

We’ll point out here this was earlier in the month and you live in a Tier 1 coronavirus area. 

You have been speaking to Openreach about the issue on and off for the last few weeks, hoping to get the issue resolved.

They have sent engineers several times to rectify the issue but work was unable to proceed due to ‘technical issues’.

Due to these technical issues, the damaged cabinet was left to be powered by batteries. 

These were changed every few hours, but in that time, households nearby, including yours, experienced broadband dropouts as the batteries ran down.

Fortunately, your internet is now working and the issue has been resolved but you are looking for compensation for the time you spent without it.

You contacted Openreach directly about this but were told it would not be able to help and instead you would need to speak to your internet provider – despite the fact they had not been involved in the failure of the connection.

While this may seem strange, when looking for compensation, customers have to go through their internet supplier.

Openreach said that even though they are fixing an issue, they don't provide compensation

Openreach said that even though they are fixing an issue, they don't provide compensation

Openreach said that even though they are fixing an issue, they don’t provide compensation 

The internet providers own the end-customer relationship and are responsible for communication with their customers and billing matters including compensation.

Openreach will only pay compensation to suppliers when it doesn’t meet agreed standards.

It is advised that anyone experiencing any problem with their broadband or home phone service should report it to their internet supplier in the first instance.

They will carry out checks to try to identify where the issue lies and if they think it needs further investigation by Openreach they will arrange for an engineer to visit and keep their customer up-to-date.

A spokesperson for Openreach replies: Openreach provides a wholesale service to over 600 service providers and those companies are responsible for communication with their customers, billing and compensation.

Openreach pays compensation to Service Providers when we don’t meet agreed standards, but we also have to observe and respect industry-agreed processes and protocols.

Anyone with ongoing issues should speak to their provider so that further investigations can take place.

Grace Gausden, This is Money, adds: Fortunately, you have since spoken to your internet provider which is giving you six months free internet by applying a monthly credit to your bill each month, leaving you with a total of £0 to pay. 

For other households who have struggled with their internet connection, they can speak to their supplier for more information or to Ofcom.  

The telecoms watchdog introduced a compensation scheme in April last year, which is what you managed to claim under. 

Under this customers who haven’t had their service fixed after two full working days of a fault not being repaired will be compensated £8 for each day it is still ongoing.

If an engineer doesn’t turn up for a scheduled appointment or cancel with less than 24 hours’ notice, customers will receive £25 per missed appointment.

Similarly, if a provider promises to start a new service on a particular date but fails to do so, customers will receive £5 for each calendar day of delay, including the missed start date. 

Compensation should be paid no later than 30 calendar days after a delayed start of a new service is resolved or the service is cancelled, 30 calendar days after the loss of service is resolved or the service is terminated or 30 calendar days after the date of the missed appointment. 

Unless you agree otherwise, compensation will be a credit on your bill.

However, if the loss in service is caused by equipment or activity within your home, you are not entitled to compensation under the scheme.

Similarly, you won’t receive compensation if you breach your contract, if you caused the service failure or if you prevent it from being resolved – for example if you ask for a later engineer appointment than the one offered and delay repairs to the service.

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What tax changes could happen in Arizona, Colorado and Illinois?

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what tax changes could happen in arizona colorado and illinois

While the eyes of the world will be on who wins the White House next Tuesday, there is plenty of other action going on across the US.

Every year, states across the country vote to elect local representatives and to change local laws, on issues ranging from same sex marriage to legalising psychedelic drugs.

Unsurprisingly, many of those will concern the money in people’s pockets. Voters in 12 states next Tuesday will be asked to vote on 19 measures which could affect the taxes they pay on their incomes, properties or purchases.

With the question of how to pay for the coronavirus crisis one that is at the front and centre of the political debate on both sides of the Atlantic, This is Money looks at three states asking voters to put their money where their mouth is.

Donald Trump and Joe Biden are competing for the White House next Tuesday, but further down the ballot states are asking voters' views on a whole range of topics

Donald Trump and Joe Biden are competing for the White House next Tuesday, but further down the ballot states are asking voters' views on a whole range of topics

Donald Trump and Joe Biden are competing for the White House next Tuesday, but further down the ballot states are asking voters’ views on a whole range of topics

Could Illinois abolish its flat tax?

Illinois, the Midwestern state home to the Windy City of Chicago, is asking voters to abolish part of its 50-year-old constitution which currently requires it to tax all citizens at the same rate.

It is worth noting at this point that Americans pay both federal taxes to the US Government in Washington DC and then a variety of state taxes, in a similar, if much more complicated, way to how people in the UK pay tax to HMRC and then council tax to their local authority.

US federal income tax rates, like ours, are progressive, in that they increase according to the amount people earn, but the way states run their affairs is up to them. 

Many, most notably Florida and Texas, don’t tax people’s incomes at all, while Illinois is currently one of nine states which levy a flat tax.

Illinois is one of 9 US states with a flat income tax, but is asking voters whether they wish to change to a system which would charge people more if they have higher incomes

Illinois is one of 9 US states with a flat income tax, but is asking voters whether they wish to change to a system which would charge people more if they have higher incomes

Illinois is one of 9 US states with a flat income tax, but is asking voters whether they wish to change to a system which would charge people more if they have higher incomes

Taxpayers are charged 4.95 per cent of their net income regardless of their earnings, the ninth-lowest top tax rate in the US among those states which do charge income tax, although those in the state do pay comparatively high taxes on property.

It is one of three Midwestern states, along with Indiana and Michigan, which taxes its citizens this way.

And while the vote is only on repealing the language from the state’s own constitution that requires a flat tax rate, if voters approve it, from January Illinois will instead replace it with six tax bands of between 4.75 per cent, for those earning up to $10,000 or £7,707, to 7.99 per cent for those earning more than $750,000, or around £578,000.

How could income tax rates change for those in Illinois? 
Earnings  Old marginal tax rate  Potential new marginal tax rate 
$0 – $10,000 4.95% 4.75% 
$10,001 – $100,000  4.95%  4.90% 
$100,001 – $250,000  4.95%  4.95% 
$250,001 – $350,000  4.95%  7.75% 
$350,001 – $750,000 4.95%  7.85% 
$750,001+  4.95%  7.99% 

The only people who would pay more under the proposals would be those earning more than a quarter of a million dollars, meaning around 175,000 people will foot the bill for the supposed $3billion tax rise.

Illinois was already in massive financial trouble before the coronavirus, facing a massive hole in its pension fund. 

But the pandemic has made things much worse. It faces a budget shortfall of around $6.2billion, or £4.78billion, this year and saw its income tax take fall by 23 per cent annually between April and June.

However, arguments in favour of the proposal have mostly centred on making the tax system fairer, rather than as a way to raise taxes on the rich to cover the cost of the coronavirus.

Even though Illinois is near certain to vote for Joe Biden on Tuesday, driven by heavily Democratic Chicago, the campaign has become one of the most expensive state ballot initiatives in history.

34953678 0 image m 6 1603894819526

34953678 0 image m 6 1603894819526

Illinois governor JB Pritzker (above) has poured $56.5m (or £43.5m) of his own money into the campaign to change Illinois' tax system, while opposition to the measure has been largely bankrolled by hedge fund boss Ken Griffin

Illinois governor JB Pritzker (above) has poured $56.5m (or £43.5m) of his own money into the campaign to change Illinois' tax system, while opposition to the measure has been largely bankrolled by hedge fund boss Ken Griffin

Illinois governor JB Pritzker (above) has poured $56.5m (or £43.5m) of his own money into the campaign to change Illinois’ tax system, while opposition to the measure has been largely bankrolled by hedge fund boss Ken Griffin

Supporters and opponents have together raised more than $121million, or £93million as of the end of last month. 

It has largely been a fight between two billionaires, with the money in support of the measure largely coming from Illinois governor JB Pritzker, part of the family who own the Hyatt hotel chain.

On the other side, US hedge fund manager Ken Griffin, the 120th wealthiest person on Forbes Magazine’s rich list, has poured in $53.75million to try and stop the measure from passing, while another $750,000 has come from Pritzker’s own cousin Jennifer.

In a poll in February, before the pandemic, 65 per cent of 1,000 people surveyed said they favoured a tax system where those on lower incomes paid less and those on higher incomes more.

Could Arizona slap an extra tax on the rich?

Arizona has voted Republican in every US presidential election since Bill Clinton was re-elected in 1996, but has recently emerged as a state increasingly up for grabs for the Democrats.

Further down the ballot paper, the south western state is asking citizens to decide whether it should enact an additional 3.5 per cent tax on those earning more than a quarter of a million dollars to raise money for schools. 

Asking for ‘those with the broadest shoulders to bear the heaviest burden’ is a common phrase when politicians argue the rich should pay more tax, and Arizona has followed a similar path.

What income tax rates do people in Arizona currently pay? 
Income  Current marginal tax rate 
$0 – $26,500 2.59%
$26,501 – $53,000  3.34% 
$53,001 – $159,000  4.17% 
$159,001+  4.5% 

Although unlike Illinois, Arizona is a state with a progressive tax system and the richest do pay a higher rate of tax already, with four brackets charging between 2.59 per cent and 4.5 per cent, with earners paying that top rate once they hit a $159,000 threshold. 

This top rate is currently the fifth-lowest in the US, having been cut from 4.54 per cent for this tax year.

The state took in $1.13billion from income taxes between April and June this year, and if the vote is passed then around 90,000 people in the state would see their tax rate rise to 8 per cent.

The measure is supported by senator Bernie Sanders, who twice tried to run for president, among others, with supporters raising $21million and opponents of the tax rise $5.7million, making the race about a sixth as expensive as Illinois’.

One of the latest polls carried out in September found two-third of the 420 people surveyed were in favour and 25 per cent opposed it.

Former presidential candidate senator Bernie Sanders is one of those backing a 3.5% hike in the rate of tax paid by those in Arizona earning more than $250,000 (£192,800)

Former presidential candidate senator Bernie Sanders is one of those backing a 3.5% hike in the rate of tax paid by those in Arizona earning more than $250,000 (£192,800)

Former presidential candidate senator Bernie Sanders is one of those backing a 3.5% hike in the rate of tax paid by those in Arizona earning more than $250,000 (£192,800)

Could Colorado put £28.50 in everyone’s pocket?

If Illinois and Arizona plan to raise taxes for at least some of their citizens, those in Colorado are set to vote on a measure which would cut taxes for everyone in the state. 

Like Illinois, Colorado is one of the nine states with a flat income tax, having had one since 1987.

It currently sits at 4.63 per cent, a fraction higher than Arizona’s top rate of tax, having been cut from 4.75 per cent in 2000.

The state in the American west, probably best known for the ski resort of Aspen in the Rocky Mountains, also has a particular quirk in that since 1992 any tax rises proposed by elected officials must be approved by voters.

How much will people in Colorado benefit from a proposed tax cut?
Taxable income  Tax owed at current rate of 4.63%  Tax owed at proposed rate of 4.5% Decrease
$10,000 $463 $455  $8
$25,000  $1,158  $1,138  $20 
$50,000  $2,315  $2,275  $40 
$125,000  $5,788  $5,688  $100 
$250,000  $11,575  $11,375  $200 
$1,000,000  $46,300  $45,500  $800 

As well as codifying the state’s flat tax, its ‘taxpayer bill of rights’, or TABOR, also caps how much state and local governments actually get to keep of the tax take. 

Anything above that is supposed to be reimbursed to citizens, although this ‘TABOR refund’ hasn’t been received by anyone in five years and 51 of the 64 counties in the state have voted to lift this cap.

But the ballot measure, one of four tax-related initiatives voters will make a choice on Tuesday, could still serve to put a sum back in everyone’s pocket. 

If it passes, the income tax rate will be cut across the board from 4.63 per cent to 4.55 per cent, which would take it to just above Arizona’s.

This would amount to a tax cut of $37, or £28.50, per taxpayer on average, according to the Colorado ‘blue book’, an impartial booklet sent out to voters every year to explain the various measures they are being asked to vote on.

Colorado has had a flat rate of income tax since 1987, and since 1992 has required politicians to get approval from voters if they ever wish to raise taxes

Colorado has had a flat rate of income tax since 1987, and since 1992 has required politicians to get approval from voters if they ever wish to raise taxes

Colorado has had a flat rate of income tax since 1987, and since 1992 has required politicians to get approval from voters if they ever wish to raise taxes

Supporters of the cut, who have spent $1.4million during the campaign, say it leaves more money in the pockets of taxpayers at a time when people are struggling to make ends meet, while critics say it will lead to a loss of revenue the state cannot afford and largely benefit those earning more than half a million dollars.

The blue book estimates it will cost the state $357million in revenue over the next two year.

The latest polling this month of 1,000 people, perhaps unsurprisingly, found the majority of voters, 51 per cent supported handing themselves money by voting in favour of the cut, while 35 per cent opposed it.

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No claims bonus: East Dorset drivers have highest number of years

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The quiet roads of East Dorset are among the safest in the country after it was revealed that motorists in the area have the highest average of no claims at eight years.

The residents of the South West county have less claims than any other location in Britain, according to data from Compare the Market.

Meanwhile, the lowest no claims is in the London borough of Tower Hamlets, where the average is just four years.

There are benefits to having no claims as drivers that do not make any over a long period of time will be eligible for a no claims bonus which can make a significant dent in a motorist’s premium.

East Dorset saw the highest number of no claims whilst Tower Hamlets saw the least in the UK

East Dorset saw the highest number of no claims whilst Tower Hamlets saw the least in the UK

East Dorset saw the highest number of no claims whilst Tower Hamlets saw the least in the UK

The comparison site analysed its collected data from car insurance enquiries on its website between May 2018 and July 2020. 

It found the average person in Britain has a no claims bonus of seven years.

However, there’s one part of the country that can boast of being the true no claims capital. 

East Dorset was the only region to have a no claims average of eight years, however, there were 253 places that had an average of seven years.

This includes Plymouth, Dover, Stratford upon Avon and York.

There are also 133 locations that see an average of six years no claims including Ipswich, Pembrokeshire, Aberdeen City and Southampton.

Meanwhile, there are considerably less regions – just 22 – that have an average of five years including Manchester, Birmingham, Cambridge and Oxford.

Of these 14 of these are unsurprisingly in London including Hackney, Wandsworth, Lewisham and Islington.

The research also examined how the average number of no claims has changed over recent years, finding that the number increased from six to seven years during 2018 and reached an average of eight years by July 2019. 

As technology has improved, cars have got safer, and telematics devices which track driving have been introduced, it is to be expected that the average number of years of no claims increase. 

Accident data from the Government also shows the number of accidents has been going down each year which is likely why less claims have been made. 

As technology improves over the years, it is expected there will be a higher no claims average

As technology improves over the years, it is expected there will be a higher no claims average

As technology improves over the years, it is expected there will be a higher no claims average

However, the average amount of no claims dropped back down to six years in October 2019, suggesting that despite improvements in safety, there is perhaps not a huge benefit when it comes to no claims bonuses.

Despite this, it is likely that the there will be more a higher number of no claims made in 2020 as there are less cars on the road due to the coronavirus pandemic.  

Dan Hutson, head of motor insurance at Compare the Market said: ‘Lots of factors are taken into account when calculating a driver’s risk profile but having a higher no claims could be a good indicator that someone takes care while on the road.

‘It’s unsurprising that remote areas such as East Dorset have the highest bonuses when compared to other areas of the UK with large cities.

‘Having more years of no claims could mean that your risk profile is lower, and that you could be offered lower car insurance premiums as a result.

‘The size of the car insurance no claims bonus varies between providers, if offered, so it’s as important as ever to shop around for a best deal to suit your needs.’ 

To find out if your area has a high or low no claims average, click here.  

Crackdown on uninsured drivers 

All 43 police forces in the UK are going to be hunting down uninsured motorists on the road as part of a dedicated campaign against illegal drivers this week.

‘Operation Driver Insured’ – which kicked off today and runs until 1 November – will see increased policing to detect and seize uninsured motors.

The crackdown comes as figures revealed that 137,410 uninsured vehicles were taken off the road last year – equating to one every four minutes.

AA president Edmund King said he fully supported the seven-day sting, but added that it highlights a ‘fundamental’ lack of policing on our roads, which would result in uninsured drivers being caught ‘every day of the year rather than just in a one week campaign’.

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This post first appeared on dailymail.co.uk

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