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OFT loses out to the banks on overdraft charges

November 27th, 2009 by tom | 0 Comments | Filed in Central banks, Daily News, Employment, Exchage Rate, Gold, Recession, Retail, The Markets, UK Bank Accounts, UK Banks, UK employment, World Banks

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The Office of Fair Trading (OFT) has lost its legal battle over bank charges with banks following the shock announcement by the Supreme Court on Wednesday. While the ruling effectively scuppers any chance of reclaiming fees in the foreseeable future it does clear the way for new rules to be drawn up that would limit charges. The Treasury did however stress that if lower bank charges could not be achieved voluntarily then it would consider passing legislation. The OFT’s four-year campaign and two-year legal case to win refunds for those overcharged by their banks after falling into an unauthorized overdraft fallen at the last hurdle. The Supreme Court, in a move that stunned campaigners, went against earlier findings by the High Court and Court of Appeal and decided the OFT did not have the right to assess the charges for fairness in the case

The good news from the U.K. economy is that it shrank in the third quarter less than previously estimated. It is now estimated that gross domestic product probably fell 0.3 percent from the second quarter, which less than the 0.4 percent drop is reported on Oct. 23, The Office for National Statistics will release its second estimate before the weekend.

More than £60 billion was secretly lent by the Bank of England to prevent Royal Bank of Scotland and Halifax Bank of Scotland from failing at the height of the financial crisis last year. In evidence to the Treasury Select Committee, the Bank revealed yesterday that such a catastrophe was averted when it decided "in exceptional circumstances" to act in its traditional role as lender of last resort and extended Emergency Liquidity Assistance (ELA) to RBS and HBOS. Meanwhile U.K. Chancellor of the Exchequer Alistair Darling Wednesday defended authorities’ secret provision of emergency assistance to Royal Bank of Scotland Group PLC and HBOS during the height of last year’s financial crisis. In a written ministerial statement to parliament, Mr. Darling said any disclosure of the loan at the time would have "seriously" jeopardized financial stability and "the risk to public resources was low" given the quality of the collateral received by the Bank.

Trading on the London Stock Exchange (LSE) was halted for three and a half hours earlier because of technical difficulties.

The LSE said it had been affected by connectivity issues, and at 1033 GMT had placed all orders for shares into an "auction call period".

This allowed traders to put orders to buy or sell shares into the system, ready for when trading restarted.

Normal trading was then able to resume from 1400 GMT.

Big banks will be obliged to disclose how many of their UK employees are paid more than £1 million, if City banker Sir David Walker has his way. Sir David is expected to announce that half of the bonuses paid to bank employees should be deferred for three to five years.

Travelers who book holidays on the internet could receive more financial protection if things go wrong, under plans in a European review.

Consumers who make up their own packages of flights, hotels and car rentals on one website or partner sites could get more protection.

Currently, only those who have booked specific package deals have rights to cancel or refunds if operators go bust. A review will consider help for passengers if airlines collapse.

Spanish investor Jorge Cosmen, the largest stockholder is reported to have boosted his stake in National Express Group Plc, the U.K. bus and rail company three times in as many days. The investor, a company board member, has spent 5.8 million pounds ($9.6 million) snapping up shares since Nov. 20. The third purchase, announced today by National Express, brings his family’s holding to 20 percent. Cosmen, who opposed National Express, wants the London-based company to refinance debt and reevaluate strategy before any rights issue, is apparently yet to decide whether to oppose the stock sale in a Nov. 27 shareholders’ vote.

The pound retreated slightly against the dollar, Swiss franc and the yen, while rising against the Euro.

  • Pound/US dollar 1.6506
  • Pound/Euro 1.10997
  • Pound/Japanese Yen 142.3998
  • Pound/Swiss Franc 1.6556

After trading resumed on the FTSE, the 100 went on to finish the day at 5,194, which was 130 points down on Tuesday’s closing price, while the FTSE 250 rose dropped 200 points to close on 8,880.52. Falls on the FTSE were also felt across Europe, as concerns about the wider impact of state-owned investment company Dubai World asking for a six-month delay on repaying its debts grew.

The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors.

The dollar slipped to 86.5 yen, its lowest level since July 1995.

The US has indicated it is unconcerned about the dollar’s slide, and will not intervene to strengthen it.

Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate.

The price of gold is currently at a record high of $1,194.5 an ounce

The Dow Jones average was looking stronger rising 53 points to 10464.5 The NASDAQ also rose thirteen points to finish up on 2176.05

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How it doesn’t pay to be either a lender or borrower in the UK of 2009.

September 17th, 2009 by tom | 0 Comments | Filed in Daily News, Debt, Money Management, Saving, UK Bank Accounts, UK Banks, savings accounts

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In times gone by, the self righteous members of the community were often heard to say "neither a lender nor a borrower be." Not a bad piece of advice it would transpire and one that should have been heeded more carefully a few years ago. However it must have been hard to take when handed out by your maiden Aunt who refused to lend you sixpence for your bus fare, which you had mistakenly spent on liquorice allsorts.

The last year has seen an all time low for both savers as well as those whose life style forces them to borrow just to survive. For savers it has been especially tough. According to statistics gathered by the Bank of England’s the average interest rate for savers has plunged from 4.49% to 0.41% in the last twelve months, as the BOE has cut interest rates to the bone to prop up the banks.

Interest rates for the average instant access account has plunged from 1.85% before tax (2.31% after tax) to 0.14% (0.17%), while the average price of fixed rate bonds has fallen from 4.53% (5.66%) to 2.42% (3.03%).

However the true picture for many savers is a lot less colourful than that, as these rates are only on offer frosh fresh deposits, while much of the money held in UK banks are on older long terms plans, where interest rates have plunged as low as 0.08% (0.1 %) interest, returning just 80 pence interest a year for every £1,000 saved.

For borrowers the picture is just as gloomy. Overdrafts are being cut and default interest rates being applied with a heavy hand. Those whose debt package is linked to their credit card have fared no better. Reports of rates hiking reduced borrowing limits or even having their credit cut off completely abound. And balance transfer deals and reward schemes are rapidly becoming part of banking history.

It may be a bitter pill for many to swallow, but Auntie might have been right!

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As the UK slowly winds its way out of the recession, have the Banks learned their lessons?

August 25th, 2009 by tom | 0 Comments | Filed in Central banks, Daily News, Debt, Money Management, Recession, Stocks and shares, UK Bank Accounts, UK Banks, UK Small Business, UK employment

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The signs are definitely there: Germany and France have already done it, even Japan, Hong Kong, Singapore and Thailand. The US is still in it, yet in name only. And the UK will be following not long after. To where?

If you haven’t already guessed, the answer is out of recession.

So what happens in post-recession Britain? Have we learned our lessons? Will the man in the street work longer hours, save up to buy that new 42" plasma, that Mediterranean holiday or to upgrade the family car? Or will he fall back into credit euphoria? Will UK businesses cut costs to build up their cash reserves or will they revert to being cash loan and overdraft junkies like before?

And the most leading question of them all is, will the banks be responsible and, if they succeed in becoming autonomous, will they once again become the profit-hungry, bonus-driven monsters that played a significant part in almost bringing the UK economy to total meltdown?

If there is a precedent to prevent the disasters of the first decade of the 21st century ever happening again then it is written in America’s 1933 Glass-Steagall Act. The act was drawn up following the Wall Street Crash that sparked one of the greatest depressions the world has ever known. One of the act’s principle provisions was to disallow risky investment banking and to channel bank funds and lending into the safer realms of retail banking, which the sort the UK public needs to finance the model life style that they deserve: everyday needs.

UK financial analysts hasten to point out that if such a system had been in place from around 2001 onwards, when the profit chasing was at full steam, the checks and balances would have prevented the UK banks from going as far over the top as they did. They would have been unable to hold the UK government to ransom and force the public to become reluctant shareholders in their business. Instead, the British public could have stood back and watched some of the more rickety financial institutions go to the wall, and without too many tears being shed in the process.

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Banks pledge to help small businesses

December 9th, 2008 by admin | 0 Comments | Filed in Business Acounts, Daily News, Money Management, Recession, UK Banks

Banks have promised to try and make life easier for small businesses by agreeing a ‘statement of principles’ brokered by Business Secretary Peter Mandelson.

Businesses say they are having problems arranging loans and overdrafts despite the billions of pounds the government has injected in to the economy as banks have screwed down lending criteria.

Following the meeting, banks have agreed to cut the time it takes to transfer business accounts from one bank to another from ten to five working days.

The Federation of Small Businesses said the concession was “very welcome” because it would allow firms to shop around more easily between banks in search of better lending terms.

Banks have also agreed to consider business assets as securities before business-owners’ personal assets. That could reduce the number of personal bankruptcies that result from businesses collapsing during the recession.

The borrowing problem seems to have bypassed care worker Kaylie Coomber, 20, from Highnam, Gloucestershire, who asked her bank for a £50 overdraft extension and got a letter back telling her she could have £84million.

She had telephoned the Alliance and Leicester to ask if they would give her the higher limit in the run up to Christmas – and the paperwork came through telling her she had an £84million overdraft facility and would only be charged £5 for the privilege.

Her bank, the Alliance and Leicester said: “We apologise for any inconvenience or upset caused to Kaylie and can confirm this is an unfortunate one-off incident. The letter was sent off incorrectly.”

Meanwhile, on the markets, both the FTSE and the DOW closed up – the FTSE rose 251 points from 4049 to 4300 and the DOW 296 points from 8638 to 8934. The Pound closed unchanged against the US dollar and Euro – standing at $1.47 and 1.56 Euros.

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Banks called to account for rule breaking

December 3rd, 2008 by jamie | 0 Comments | Filed in Daily News, Debt, Loans, Money Management

The Government’s is set to crack the whip over banks refusing to lend fairly to homeowners and small businesses after bailing out the banking sector with a £500 billion rescue package.

New powers for fining banks that breach the banking code are expected as part of today’s Queen’s Speech in Parliament as part of several major financial changes included in a new Banking Reform bill.

Now the Government has a major stake in the Royal Bank of Scotland, HBoS and Lloyds TSB, there is a new determination to make sure the banks don’t squeeze small businesses and homeowners facing hardships over loan repayments due to the credit crunch.

The existing code of conduct sets out minimum standards banks must provide. This includes lending responsibly, giving help for customers who hit problems and more transparent bank charges.

The plans will allow the Financial Services Authority to police the banks and penalise them with unlimited fines for breaking rules or refusing to improve their service.

Royal Bank of Scotland was told yesterday that its lending policy, boardroom appointments and business strategy were under review as the government took control of 58% of the bank.

Meanwhile the bank promised to grant a six-month cooling-off period to homeowners struggling to keep up with mortgage payments. The move was welcomed by the Treasury and is expected to become an industry standard.

HBOS announced new support for businesses this morning. Small and medium-sized firms who are Bank of Scotland customers will be offered funding worth £250m, which will be available at up to 0.8% below standard lending rates, and guarantee pricing on small business customer overdrafts for 12 months from the date of arrangement for new loans and renewals.

On the markets, the FTSE closed up 58 points at 4123 and the DOW recovered 270 points to 8419. The Pound weakened against the US dollar to $1.47 and against the Euro to 85.74 pence.

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Getting the most from your current account.

September 23rd, 2008 by admin | 0 Comments | Filed in Money Management, UK Bank Accounts

In these difficult financial times, there are very few people that can afford to keep money on deposit, and most are managing their current account on a month to month basis.

This is the very reason that it is important to find the right bank to manage your current account to enable you to get the most from it, and not to fall into any expensive traps that can cost you money as well as causing you discomfort and possible embarrassment.
The criteria that you should set when looking for the best bank to house your current account are simple. Your bank should allow you the flexibility to manage your account as you see fit, with play at both ends of the scale. If you would like the ability to transfer what remains in your account at the end of the month into your savings account, you should be able to do this online with no fuss. It will also be nice to know that if unforeseen expenses arise during a given month and you fall into a situation where your income will not cover your costs for that month, that your bank will provide you the opportunity to go into a temporary overdraft situation up to an agreed amount. On an overall basis, if you manage your finances properly, there should be no reason to ever go into overdraft. The unexpected can happen, and the ideal test of how your bank relates to you as a client, is if and when it does. If you find yourself in need of a constant top up to your income through overdraft, it is a sure sign that something is wrong in the way that you manage your income, and you should go back to the drawing board to put things right. In today’s climate, banks are coming down hard on unauthorized overdrafts, and they can be very expensive.
If you manage your current as it should and you know that both of these options are in place and can be taken up then you can save a lot of your time as well as that of your banks. An ideally managed current account is one where visits to the bank are kept to the minimum.
Nowadays it is possible to manage a bank account almost entirely online. If you have a fixed income you can pay your major expenditures by standing order. These will include your mortgage or rental charges, any bank loans, insurances etc. Major utility bills can also be paid online. For an average family this means that all that remains of their monthly outgoings is food, clothing, petrol and car maintenance, entertainment and other incidentals that can arise during the month. These can be paid for by credit card, making life simple and easy for you and your bank manager. Once again, if a person is keeps track of the their overall financial situation, then they should also be well aware of how much credit they will need on their credit card on a monthly basis, and they should do their utmost not to go over this figure Staying within your credit card limit, more than any other factor, is the key to a healthy and well managed current account and will allow you get the most out of it.

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