Consumer confidence in banking falls

According to a recent survey the levels of consumer confidence in banking have fallen recently, and experts state that much of this reduction in confidence has been fuelled by the recent turmoil and chaos faced by Northern Rock.

The survey was carried out by Teamspirit, and showed that levels of confidence in banking and the finance industry as a whole have taken a real knock over recent weeks, affecting many sectors of the finance and banking industry.

Almost 2500 people were polled as part of the survey, and the results showed that only 46% of consumers now had trust in high street banks. A slightly higher number of consumers expressed confidence in building societies, with 48% stating that they trusted building societies. Online banking also took a hit, with just 25% of consumers stating that they trusted inline banking – experts state that this could be partly due to severe problems that Northern Rock customers experienced over the past couple of weeks.

One official that was involved in the survey stated that the whole Northern Rock situation had resulted in a damaging effect in terms of consumer confidence in finance and financial institutions.

She said: “The Northern Rock situation has contributed to the low levels of trust that the British public has in companies that look after their money.”

Another factor that has also affected levels of consumer confidence according to many experts is the turmoil that has hit the financial markets over the past month, which was sparked by the credit crunch in the United States. This has had global repercussions, affecting many areas of the financial sector in the UK as well as in other countries.

Tom Smith
25th October 2007

Tags: high st, building, Banking, personal, bank, accounts, finance, society, confidence

No interest will be charged on A&L overdrafts

Another bank has revealed its new charge structure with regards to overdrafts and bounced cheques. According to recent reports the Alliance and Leicester will now no longer be charging any interest at all on its overdrafts on current accounts.

The bank will also be reducing the charges applied for a bounced cheque, which will go down from £34 to £25. Officials from the Alliance and Leicester state that in place of interest charges on overdrafts new daily charges will come into force.

Banking will still be free for customers that keep their accounts in credit, state bank officials. The new charge structure is due to come into force around the third week of October. Some banks, such as Lloyds TSB, have already announced their plans to reduce overdraft charges and fees for bounced cheques, which many think is a direct response to the investigation into bank charges that has been carried out by the Office of Fair Trading.

However, officials from Alliance and Leicester claim that this is not the case, and that they had plans to change the fee structure prior to the investigation.

One official from the Alliance and Leicester stated: “The combination of fees and interest is unnecessarily complex when you are trying to present your business as simple.”

Under the new charge structure customers using an authorized overdraft will be charged 50p per day up to a maximum of £5 per month. If the overdraft is unauthorized then the customer will have to pay £5 per day until the account is brought back into order.

One industry professional stated: “Customers should ask themselves whether the new simplified fee structure does actually save them money in the long-term.  According to our analysis, the new way of charging will result in Alliance & Leicester customers being marginally better off.”

Tom Smith
24th October 2007

Tags: alliance, bank, pay, account, cost, balance, customer, overdraft, unauthorized

‘Whole range’ of green mortgage options

Borrowers have been advised that there are many approaches to finding a “green” mortgage.

The Co-operative Bank has said the there is no specific framework for a green mortgage, but that options vary from lender to lender.

A spokesperson for the bank said: “As part of the Co-operative Bank’s established ethical policy, we are committed to tackling climate change and [are] supportive of government efforts to increase awareness of energy efficiency.”

She added that the company makes a “contribution” to a climate change action organisation Climate Care, for each mortgage taken out with them. This is then put towards worldwide carbon-cutting measures.

The Council of Mortgage Lenders explains that it is down to individual lenders whether or not they offer green products.

Some offers include benefits for those borrowing to invest in energy efficiency or for an energy efficient home. Others are carbon offsetting their “mortgage footprint” by donating to the Carbon Trust or planting trees.

Tags: carbon-cutting measures.the council, Financial services, government efforts, green mortgage options, efficiency

Who is covered by the Treasury guarantee over Northern Rock savings?

Over the past week Northern Rock has suffered huge problems after it was revealed that the bank had taken a loan from the Bank of England.

Despite assurances from the government and from Northern Rock that the company was still solvent and financially sound savers flocked to the branches of the bank for days, queuing to take out their money, with billions being withdrawn by many of its 1.5 million savers. Share prices also plummeted leaving the future looking very bleak for the bank.

Earlier this week the Treasury decided to step in, and in addition to assuring consumers that it would not have considered lending money to a company that was not financially viable and stable, it also offered guarantees to savers to try and reduce the number of people hastily withdrawing their money from the bank amidst fears that Northern Rock would go bust.

The Treasury has now elaborated on its guarantee to ensure that consumers in the UK are clear with regards to who is covered and who is not. For those covered the government has guaranteed the safety of every penny of their savings. Bank accounts that were open as at midnight on 19th September, and any accounts that were closed and are now re-opened will be guaranteed. However, new accounts opened after this time will not be under the guarantee.

Officials stated: “This guarantee covers future interest payments, movements of funds between existing accounts, and new deposits into existing accounts. Since it would otherwise be unfair to other banks and building societies, the arrangements would not cover any new accounts set up after 19 September.”

Tom Smith
17th October 2007

Tags: treasury, cover, northern, guarantee, bank, savings, rock, accounts, personal, england

Bank charge test case may be dropped

According to a recent report the Office of Fair Trading is considering dropping the test case over bank charges, which was planned for next year.

The test case was designed to make a final determination over bank charges following months of controversy and rows between banks and consumers. The battle started after campaigners and regulators branded the charges, applied for exceeding overdraft limits, bounding cheques, and returned direct debits, unlawful and unfair.

Officials from the Office of Fair Trading have confirmed that there is a chance that the test case will be dropped, but this will only happen if it is in the best interests of the consumer.

Officials stated that they may consider dropping the test case if banks decide to cut their charges to a level that makes them fair to consumers. Lloyds TSB has already cut its charges, but many experts state that it has not cut them enough.

One OFT official stated: “If we do our own financial analysis, and they come in with a number that is lower than our analysis would suggest is an unfair charge, there is no need for the court case to go forward. We will be looking out for what is the best outcome for the consumer.”

However, the banks are arguing that their bank charges have nothing to do with the OFT, and that officials have no power over their bank charges. The OFT is due to review charges to come up with a figure that it believes is fair.

If the test case does go ahead, many experts think that free banking could come to an end in the UK and that banks will start charging monthly fees for having a current account to recoup losses from bank charges.

Tom Smith
16th October 2007

Tags: court, charges, fees, drop, oft, case, legal, trading

Predictions of further interest rate rises fall

Earlier this year, following July’s 0.25% interest rate rise in the UK, many economists and analysts in the UK predicted that there would be another interest rate rise before the end of the year.

Interest rates have gone up five times since August of last year, with the series of 0.25% interest rate rises taking the base rate from 4.5% to 5.75%. Another 0.25% rise, as predicted by these industry experts, would have taken the base rate to 6% – it is already at its highest in over six years.

However, many industry experts appear to have changed their minds in light of the current turmoil that is hitting the mortgage markets, and following the credit crunch that is having global repercussions the number of analysts predicting a further interest rate rise has fallen. According to reports only one fifth of economists and analysts now believe that the interest rates will rise again this year.

The drop in the number of experts predicting another rise is in part the result of a recent statement that was released by the Monetary Policy Committee following its last meeting early in September, where it was decided that interest rates would remain on hold. The MPC claimed in its statement that its two main reasons for leaving interest rates on hold were that CPI inflation was now within government targets, and also because of the effect that the credit crunch could have upon the industry.

Howard Archer, an economist at Global Insight, stated: “We now no longer expect interest rates to rise to 6 percent in the fourth quarter, but instead anticipate that the Bank of England will sit tight for an extended period. We suspect that growth will lose momentum over the coming months, and that underlying inflationary pressures will gradually abate. This will become even more likely the longer that the current financial market turmoil continues.”

Tom Smith
16th October 2007

Tags: monetary, bank, rates, england, policy, committee, fall

Fraudsters using bank charges to commit crimes

A warning has recently been issued by the Office of Fair Trading after it was discovered that some fraudsters are using the bank charges situation in order to try and obtain personal details from vulnerable and naïve consumers and then commit a crime through the use of these details.

The fraudsters are actually pretending to be officials from the Office of Fair Trading when they call consumers and try and obtain their details.

According to recent reports the fraudsters are calling consumers and stating that they intend to help them to reclaim their bank charges. They are then asking for account and card information stating that this is necessary, and in some cases have managed to retrieve this from the consumer. This information is then used to fraudulently order items, steal, or commit other crimes.

Officials from the Office of Fair Trading have confirmed that this is a scam, and that no official from the agency would ever phone and ask for personal details in this way. Consumers are warned never to give out card or account information to anyone on the phone unless the call was initiated by themselves. Such sensitive information should not be given in response to an email either, and consumers should avoid accessing what looks to be their bank’s website via an email link.

Officials have urged consumers that receive such phone calls to avoid passing on any details, to treat the call with suspicion, and to contact the OFT and report details of the call. This appears to be the latest scam used by fraudsters across the UK due to the OFT’s involvement with the controversy over bank charges, which has erupted over the last year or so.

Tom Smith
9th October 2007

Tags: crime, calls, charges, fraud, consumers, telephone, officials

Many first time buyers taking a ‘wait and see’ stance

Over the past couple of years things have been extremely difficult for first time buyers in the UK.

Firstly there were problems being able to raise the money needed to purchase a property, with house prices soaring in the UK requiring buyers to obtain larger mortgages.

For first time buyers there is not equity from a previous property to rely on, which means that they have to take out a loan for all or the majority of the value of the property they wish to purchase. In order to address this problem many lenders have started offering increased income multiples and longer repayment periods on mortgages for first time buyers.

However, there is now a fresh problem for first time buyers to consider. Rising interest rates mean that in addition to having to take out a huge mortgage in order to buy a property these buyers also have to deal with huge repayments because of the increased interest rates, which have shot up by 1.25% in the past year.

Even those starting out on fixed rate mortgages have to put up with a high fixed rate, and will therefore be stuck with this high rate for a fixed period even if interest rates start to fall again in the near future.

Rumours of house prices falling towards the end of the year, combined with predictions of further interest rate rises, has now seen many first time buyers take a step back, with many deciding to rent and wait it out to see what happens before rushing to get onto the property ladder in the current economic climate.

One first time buyer stated: “I am desperate to get onto the property ladder, because I feel that the chances of ever getting my own place are getting slimmer and slimmer. But with all of these rumours about decreasing house prices and rising interest rates I want to see what happens before I make any long term commitment.”

Tom Smith
6th October 2007

Tags: buyer, first, bank, rise, increase, rates, Mortgages, time

Worries over interest rates from 40% of consumers

According to a recent report around 40% of consumers in the UK are concerned about further rises in interest rates, with many already having been hit hard by rising repayments on their variable rate mortgage.

Interest rates have already risen five times since last August with a rise of 0.25% each time, taking the base rate from 4.5% last August to 5.75%, and reflecting a total rise of 1.25% within the period of a year.

Although inflation has come down to within the government’s target of 2% recently, many consumers fear that the next Monetary Policy Committee meeting will result in yet another interest rate rise, which could make matters even worse for those that are already struggling to keep up with repayments.

The rising interest rates have affected many financial areas, including resulting in an increase in repossessions as the result of many consumers being unable to keep up with repayments on their mortgages. Fixed rate mortgages have been taken up by many consumers to try and combat the problem of rising interest rates, and the Council of Mortgage Lenders stated that a record number of fixed rate mortgages were taken out in June of this year.

The recent survey was carried out by Intelligent Finance. According to the research four out of every ten consumers are very concerned about a further rise in interest rates, as they feel that they are not covered or prepared for yet another rise in repayments. Officials from Intelligent Finance state that consumers must take preventative action to try and ease the pressure of another interest rate rise by tightening the purse strings where necessary, and making every penny count.

One official from Intelligent Finance stated: “With interest rates on the rise and purse strings tightening, it’s important to make every penny work as hard as possible.”

Tom Smith
6th October 2007

Tags: rate, fixed, monetary, cost, increase, committee, england, rise

Students protest against HSBC

Students in the UK have launched a protest against one of the UK’s leading banks, HSBC, and the protest has been quickly gaining popularity through the Facebook website.

Students are now threatening to boycott HSBC over new regulations that will mean the end of the hugely popular three year interest free overdraft facility on graduate accounts with the bank.

Many graduates have benefited from this three year interest free overdraft facility with the HSBC over recent years, enabling them to enjoy a financial lifeline without paying interest between leaving university and starting work.

However, the bank has stated that many of these accounts were abused, and this combined with high levels of bad debt have resulted in the bank having to make a commercial decision to scrap the three year interest free overdraft facility.

However, students are arguing that the reason they joined the bank in the first place was to be able to take advantage of these popular graduate accounts. The protest comes at a bad time for the bank, which along with other banks in the UK, is now vying for the business of new students that are starting university as the academic year kicks off.

One student stated: “They’ve shot themselves in the foot to be quite honest. Why would they want to alienate themselves from graduates who’ll be earning high salaries in years to come?”

Another stated: “I am so disgusted with HSBC right now – it actually makes my blood boil… Never before have I lost so much faith in an organisation. As soon as I can I am closing my account, moving my ISA and finding a new decent bank.”

Tom Smith
6th October 2007

Tags: graduates, free, debt, interest, bank, accounts, bad

Banking ’smart’ could make a big difference to your love life

The right choice as to where to do your banking and in which accounts could even affect your love life, according to research from Abbey.

In a survey conducted among its current account holders it was revealed that arguments over how much money is spent on gifts had actually caused three quarters of a million of them to split up with their partners.

Some 5.9 million savers complained their partners did not spend enough on them and Abbey argues that banking with an account paying more interest could keep couples together, as it would enable them to buy each other more gifts.

Steve Shore, head of banking at Abbey, said: “Love doesn’t come cheap … we estimate it costs over £1,500 a year to be in a relationship.”

Its data shows average amount spent on presents for a partner is £95 on birthdays, £133 at Christmas and £97 on other gifts through the year.

Day to day expenses such as drinking and eating (£1,044) both in and outside the house and entertainment such as going to the cinema (£224) also eat into savings, according to the report.

Tags: cheap, account, research, amount, right choice

Bank to waive mortgage fees until end of September

One of the UK’s leading high street banks, HSBC, has announced earlier this month that it plans to waiver all mortgage fees for new and existing customers until the end of September.

The bank has already agreed that it will be axing mortgage exit fees, as have many other lenders, following a call for action from UK regulators and campaigners who stated that mortgage exit fees has rocketed for no apparent reason over the past few years.

According to reports the mortgages offered by HSBC will be totally fee free for existing and new customers until the end of September. However, the bank is offering its best rates as mortgage specials, and for these customers will still need to pay arrangement fees. According to some officials, the bank has set rates higher than many of its competitors, and this, along with the arrangement fee charged on the best deals, could mean that customers could still be better off going elsewhere despite the fee free offer.

One official from HSBC stated: ‘With some lenders recently bowing to pressure to scrap their exit fees, HSBC has decided to stay one step ahead by removing all fees on its standard mortgage range until the end of September. This will enhance HSBC’s reputation for providing transparently priced mortgages which offer real long-term value. Sadly some lenders will simply look to rename their exit charge or bump up fees elsewhere, however HSBC customers can rest assured, the rate they see is all they will pay.’

The bank does offer a range of mortgages, but consumers are urged to do some research and compare rates from other lenders, as even if they have to pay a fee with another lender it could still work out cheaper due to the lower rates of interest offered.

Tom Smith
28th September 2007

Tags: exit, hsbc, Mortgages, rate, consumers, bank, cost, fees

Over 50s could enjoy great deal on their savings

Over recent weeks a number of high interest savings accounts have come to light, with many experts urging apathetic consumers to make the effort and switch from a lower interest account to one of the higher interest ones, including Icesave, ICICI, and Sainsbury’s Internet savings accounts.

A new player has now entered the field of higher interest savings accounts, this time targeting the over 50s. The account is being made available from Saga, and is offering 6.2% before tax on deposits of £1 and over.

The account will pay a minimum of the base rate plus 0.45% for the first year, and then for the second year will pay a minimum of the base rate. After year two the account promises to pay at least the base rate minus 0.25%. Any base rate changes will also be passed on to savers within two days, which will be refreshing news for many savers that have been left waiting following base rate rises whilst banks quickly act upon pushing up the rates on borrowing and then dawdle over putting up interest rates for savers.

Savers in the UK have been urged by industry professionals to start taking action in order to make the most of their savings, as it was found that many had left their savings stagnating in low interest accounts where the banks had failed to pass on all of sometimes any of the interest rate rises. Although the savings such as those from Sainsbury’s and IceSave are still recommended for the under 50s according to This is Money, the new Saga account could prove invaluable for savers over the age of 50.

Tom Smith
27th September 2007

Tags: interest, earn, savings, building society, bank, accounts

Don’t rush in to long term fixed rate deal

Gordon Brown’s new cabinet has been pushing the issue of longer term fixed rate mortgages in the light of decreased affordability across the housing sector in the UK, and in response to this a number of lenders have started to offer longer term fixed rate deals, with many fixed for as long as 25 years.

The latest to offer these extended fixed term deals is the Halifax, which is offering a 25 year fixed rate mortgage set at 6.39%. The Nationwide also offered a 25 year fixed rate deal on the same rate following the government’s call for longer fixed terms.

However, consumers are being urged to think very carefully before jumping into a fixed rate deal for such a long period. The Halifax and Nationwide mortgages both charge an arrangement fee of £599 and also penalties for early repayment for the first ten years of the mortgage. Consumers are being urged to ask themselves whether they want to face the tough decision of either sticking with the same mortgage for at least a decade or paying potentially extortionate penalties for attempting to switch lenders by paying off the mortgage early.

Of course there are benefits to these longer term fixed rates, the main one being that borrowers can enjoy stable repayments and interest rates throughout the term of their mortgage without having to worry about the effects of rising interest rates. However, should interest rates fall these borrowers will be stuck with a very high interest rate throughout the term of their mortgage, or at least until they can switch mortgages without being hit by early repayment fees.

One official stated: ‘At first glance the option of a 25 year mortgage might seem attractive. Interest rates are rocketing and the cost of living is increasing, making money tighter than it has been for years. So you might be forgiven for thinking that Halifax is offering you a quarter of a century’s peace of mind. The reality of course is that rates go down as well as up – true, rates were as high as 14% 25 years ago, but they also went as low as 3.5% when the going was good.’

Tom Smith
27th September 2007

Tags: bank, england, long, fixed, term, interest, deals, Mortgages, rate, increase

Rush on remortgages amidst fear of rate rises

July of this year saw over a billion pounds worth of mortgages being taken out each day with many homeowners deciding to remortgage amidst fears that that interest rates would continue to rise following five interest rate hikes in the space of a year.

The highest in over six years the base rate currently stands at 5.75%, following five rate hikes of 0.25% each since August of last year. Many homeowners have had to cope with rising repayments as their mortgage repayments have soared along with interest rates.

According to figures from the Council of Mortgage Lenders nearly £35 billion was borrowed in the month of July on mortgages, which reflects a 13% rise on the amount that was borrowed in July of last year. According to the CML this increased figures result from the surge of homeowners that have decided to remortgage in order to try and get a better deal on their mortgage in the light of the series of interest rate rises that have taken place – and the threat of further interest rate rises that may yet take place.

A spokesman from the British Bankers Association stated: ‘Longer-term trends in mortgage lending are little changed but July’s strong rise was surprising, given the expected cumulative impact of higher interest rates. The resilience shows the popularity of home ownership and also reflects more remortgaging activity.’

 An official from the Building Societies Association stated: ‘As mortgage payments increase, household finances are likely to be squeezed further. Even if interest rates are near their peak, potential borrowers need to think about all their outgoings to make sure they do not overstretch themselves financially.’

Tom Smith
21st September 2007

Tags: base, rise, remortgages, bank, england, rate, increase

Britain gets saving

According to recent report there are now more people in Britain saving up their hard earned cash than there were at the same time last year.

The research was carried out by Birmingham Midshires, which showed that the number of people putting their money into savings had risen compare to a year ago. However, the research also showed that the amount of money that was being put aside in savings was actually down by a third compared to the same time last year.

Although the rise in the number of people putting money into savings is encouraging, showing that more people are realizing the importance of putting money aside, the level by which the amount of money being saved has fallen does not make for very encouraging reading. Around 67% of consumers are now putting money aside into savings accounts compared with 62% this time last year.

Some officials think that the rise in interest rates has shocked many people into putting aside money for emergencies rather than spending it frivolously, but for the same reason Brits are not able to put aside as much as they were last year because rates have risen five times since then and therefore mortgage repayments are way higher than they were in August of last year.

One official from Birmingham Midshires stated that putting money aside is a good idea. He stated: “It’s easier said than done but it’s recommended that people have three months’ salary put aside in case of financial emergencies – this equates to £5,899 for those on an average income.” However, with another interest rate rise on the cards many people cannot afford to put as much away as they might have done a year ago, with many struggling to keep up with their repayments.

Tom Smith
21st September 2007

Tags: earn, Banking, compound, account, grow, interest, savings, bank

Popularity of Internet banking results in bank closures

The UK has seen a massive rise in the popularity of Internet banking over recent years. Although there have been concerns about security and the risk of banking fraud, the rise in the number of people using Internet banking these days has reflected consumer confidence in this type of service.

Consumers are able to conduct transactions from the comfort of their own home at any time of the day or night, and can do anything from transfer money or make a one off payment to set up direct debits or simply view statements.

However, although Internet banking is both convenient and simple, it is not all good news. It seems that the huge popularity of Internet banking is now taking its toll on high street banking, and as a result of this some high street branches are going to have to close due to lack of business. The C&G has recently announced that as a result of so many people using Internet banking it will have to close a number of its branches across the UK.

C&G officials have announced that thirty one branches across the UK will be closing, which will mean job losses in excess of 315. There are 195 C&G branches in the UK in total, and the company is a part of the Lloyds TSB group. One spokesman stated that there were fewer people using the branches that were to be closed, and much of this had been put down to the popularity of Internet banking.

He stated: “Closing branches is never a decision that we take lightly. But with more customers taking advantage of technology, the number of customers coming through the doors in these particular branches has fallen. By closing these branches where customer use has dropped, we can invest in the branches that customers do use.”

Tom Smith
21st September 2007

Tags: branches, accounts, close, online, business, grow

Overdraft warnings will be displayed to HSBC customers

In a recent announcement the HSBC bank has revealed that its customers will now receive a warning if they try and withdraw money from one of its cash machines and the withdrawal could take them over their overdraft limit.

The machines will display the warning to customers that risk going overdrawn as the result of taking out the cash, which will offer additional protection and help to safeguard the customers from being hit by expensive bank charges.

The bank has warned that this facility will only be available to its own customers and not to customers of other banks that are using the cash machines, and this is because the bank has no access to the overdraft details of customers of other banks even if they are using HSBC cash machines. Over 3500 machines will have the facility to display this message, and the scheme is due to come into force at the beginning of October.

Although the precise wording that will appear to customers has not yet been confirmed HSBC officials state that this will help to make its charges more transparent and help customers to avoid having to pay the charged at all by enabling them to stay within their limits. The bank has also stated that if unauthorised borrowing amounts to under £10 per day no charge will be made. This will also be the case if money is paid back into the account by the end of the day to cover the amount of the money withdrawn or if the customer has not exceeded his or her limit in the past six months prior to going over the limit.

One HSBC official stated: “More than 95% of HSBC cash withdrawals are now made at ATMs and while you can already check your account balance before you make a withdrawal, few people do. We believe that alerting customers at this point will enable them to make an informed choice about whether to proceed.”

Tom Smith
20th September 2007

Tags: limit, interest, cost, warnings, overdraft, savings

Interest rate rises result in increase in repossessions

The five interest rate rises that have been enforced by the Bank of England over the past twelve months have taken their toll on the finances of many consumers, and there are many households that are now struggling to keep up with repayments.

A number of experts have been predicting that an increasing number of people will find it extremely difficult to keep up with repayments due to the rising interest rates, and recent figures indicate that this has already started to take effect.

Interest rates in the UK have shot up from 4.5% to 5.75% in the past year, after a series of five interest rate hikes, each of 0.25%. Homeowners have seen their repayment shoot up considerably over this time, and those with already steep mortgage repayments have had to find hundreds of pounds more in some cases as interest rates have risen. Those that went on fixed rates several years ago are now finding themselves in hot water too, as the fixed rate period ends and their interest rates shoot up to today’s base rate.

The predictions of many experts is already coming true as the first half of this year has seen home repossession resulting from bad debts hit an eight year high. Interest rates at the moment are at their highest in six years, and struggling homeowners are risking their homes because of difficulties in making repayments on their mortgages. Around 77 homes per day are currently being repossessed.

One official from the Royal Institute of Chartered Surveyors stated: “With the housing market slowing into 2008 and interest rates expected to hit 6 percent, homeowners slipping behind with their repayments may be left stranded, unable to sell their way out of trouble.”

Tom Smith
17th September 2007

Tags: rise, bank, payments, Mortgages, increase, england, rate, base, interest

UK’s top banks revealed

Nationwide has been ranked as the best bank for customer service, according to a new survey.

The banks scored 742 points out of 1,000 while second place went to Royal Bank of Scotland with 689.

Alliance & Leicester (667), HSBC (660) and Halifax and NatWest (659 each) followed next in the list, compiled by JD Power for its 2007 UK retail banking customer satisfaction study.

Recommendations by family members outstripped the performance of offers and the latest mobile and internet banking services, according to the study’s fundings.

Caspar Tearle at JD Power and Associates said: “Despite growing public scrutiny of banks for overcharging practices and account fees, it’s interesting to note that nearly 75 per cent of customers would still recommend their bank to others.”

Figures showed that 45 per cent of these customers had recommended their bank in the past 12 months, he added.

A recent This is Money poll revealed that 65 per cent of respondents said that they were happy with their bank.

Tags: new survey, best bank, uk, power, place

Lloyds TSB’s shameful behaviour over bank charge refunds

Lloyds TSB is the only bank so far that has managed to win two cases with regards to the refunding of bank charges – a row that has been going on for many months between consumers and banks.

In most cases banks have paid up, albeit reluctantly, after consumers made a claim for the return of unlawful and unfair banks charges for exceeding their overdraft limits and also for returned cheques and direct debits. However, in two cases the judge ruled in favour of Lloyds TSB in these cases.

However, Lloyds TSB has also been using its own tactics to try and get out of making payment according to a recent report, which has highlighted some of the tricks that the bank has been using in order to avoid having to return customers’ bank charges. The banking giant has issued staff with guidelines on how to deal with claims, after being accused of netting £300 million a year from overcharging customers. The training pack consists of sixteen pages of guidelines, which have been described as dirty tricks by some experts.

Amongst the guidelines issues to staff at Lloyds TSB are to reject first time claims even in cases where the consumer is in the right, not to offer a payout of more than £750 in any claim, and only to offer an immediate settlement to critically ill or dying customers. A special team has had to be set up by the banking giant in order to deal with the flood of claims it has received since the row over bank charges erupted last year.

One staff member dealing with complaints brought the training pack to the attention of a national newspaper, stating: ‘Cynical does not even begin to describe it. I was placed by a recruitment agency, working from 5pm until 1am for about £200 a day to work in this nondescript building on the outskirts of Andover. I was one of about 50 people just dealing with complaints about service charges – we were told the bank was receiving more than 500 a day. This training pack was given to me on my first morning and I was told I had to adhere to it as this was the company policy – no deviating. The booklet was telling us to reject customers asking for refunds, then to palm the more persistent ones off with nuisance money.’

Tom Smith
14th September 2007

Tags: court, bank, tsb, charge, fees

One consumer may be down nearly £200,000

As the government and the banking industry step up the search for consumers that have lost track of their savings over the years one account has been discovered lying dormant for nearly two decades, and has a balance of over £180,000.

This spears to be the largest dormant account found so far. The banking industry and government are already launching a campaign to try and find the owners of lost accounts, where the money is lying dormant.

A dormant account is being classed as an account that has not been touched for fifteen years or longer. Some of the accounts that have been discovered by the banking industry date back to the 1800s, and in some cases the accounts may have clocked up a fair amount in interest over the years, even where the amount deposited was a relatively small one. The British Bankers’ Association is urging those wishing to make a claim on their lost account to contact them via the website or by phone.

The account that has been lying dormant with over £180,000 has been untouched since 1990. The owner last made a transaction in 1990, and the account has not been touched since that time. The government and the banking industry now want to take steps to help as many people as possible to trace their dormant and lost accounts. In many cases it is thought that the consumer may have lost track of the account after moving home and failing to advise the bank about their new address.

In the meantime the government is planning to use the money from these dormant accounts to fund a variety of youth and community projects in the UK, and a committee has been set up to oversee this. However, experts state that this will not affect the consumers’ right to claim at any time, and there is no time limit placed on when a claim must be made by.

Tom Smith
14th September 2007

Tags: accounts, bank, touched, dormant, address, charity, holders

Banks have paid out £200 million this year

According to the latest statistics banks in the UK have already paid out over £200 million this year in the form of repaid bank charges to customers that have made claims for any charged imposed over the past six years.

The study shows that over £200 million has been paid out in just the past seven months alone reflecting the financial problems that have resulted for banks as a result of these bank charges.

The report was put together by Credit Suisse, and suggests that around 1% of the profits of the major groups will be lost as a result of repaying these bank charges, which have been dominating the financial headlines in the UK over recent months. In addition to having to repay these charges, which have amounted to thousands of pounds for some customers, banks have also had to take on extra staff to deal with the flood of claims, which has cost even more.

Although banks have been doing their best to get out of having to pay these charges back to customers, they have also been unable to justify the charges to courts and regulatory authorities. Banks have traditionally charged up to around £35 for exceeding an overdraft limit and for returned cheques and direct debits. However, the cost actually incurred by the bank is though to be around £2-£5, which means that the banks have been making hefty profits from the charges.

A decision with regards to bank charges, and what can be classed as a fair fee, is expected at the end of the year. It was expected earlier but was postponed so that further reviews could be carried out following concerns that free banking in the UK could come to an end as a result of these bank charge claims.

Tom Smith
13th September 2007

Tags: reclaim, court, fee, high, charges, claims, lost, bank

Beware the bullying banks

The row over bank charges has been dominating the financial news in the UK over recent months, with thousands of customers attempting to reclaims charges for exceeding the overdraft limit on their bank accounts after UK regulators deemed the fees as unfair and unlawful.

However, although many people have managed to reclaim their money back, going back up to six years, it has not been a smooth or easy process for many, and banks have been using a range of underhand tactics to try and discourage consumers from reclaiming these fees.

A recent study that was conducted by This is Money has shown the extent of the bullying tactics that banks have used to try and stop people from reclaiming their bank charges. According to the study banks have breaching industry guidelines on a frequent basis by threatening thousands of customers with account closure in the event that they make a claim for their charges. Many vulnerable customers are being targeted by some of the leading banks, and these tactics are pushing many into avoiding claiming their charges for fear of losing banking facilities.

The report showed that over one in eight customers that have tried to reclaim their bank charged have been threatened with closure of their accounts, which is in direct breach of industry guidelines in accordance with the Banking Code. A spokesman from the Banking Code Standards Board stated: ‘Banks are allowed to close down accounts for commercial reasons. But they must also treat fairly any customers who are experiencing financial difficulties.’

Experts state that consumers should not let themselves be bullied in this way, and that any threats such as this should be directed to the Financial Ombudsman Service.

Tom Smith
13th September 2007

Tags: charges, bank, interest, fees, claim, bully, stron, court

Bank holds interest rates

The Bank of England’s monetary policy committee (MPC) has decided to keep interest rates at 5.75 per cent for at least the next month.

Although rates have not risen since July, that was the fifth rise within 12 months and there were concerns earlier in the year that rates would hit six per cent before the end of 2007.

However the inflation rate currently sits at 1.9 per cent, below its target level of two per cent and the current problems in the financial markets are making further rises less likely.

In a statement that accompanied the decision, the MPC said that it had considered carefully the effects that recent credit market problems, brought about by the collapse of the US sub-prime borrowing market, could have on the inflation rate.

Responding to the news, the Council of Mortgage Lenders (CML) welcomed the bank’s decision to hold rates steady at 5.75 per cent.

Micheal Coogan, director general of the CML, said: “Credit conditions have tightened since the rate went up in July, and a further increase would have added to the liquidity problems we are already seeing in some sections of the market.

“At the same time, there is now much clearer evidence that the cumulative effect of five rate rises since last August is slowing activity in the housing market.”

Tags: bank, bank's decision, evidence, cml, US, time, interest

Mortgage holders in for a ‘rate shock’

Mortgage provider Nationwide has warned homeowners coming off of two year fixed rate deals this autumn that they could be in for a nasty shock as their monthly repayments jump up by £200.

Two years ago, the average fixed rate for a homeowner loan was just 4.56 per cent, but 250,000 homeowners will be seeing their mortgage revert to standard variable rate, which now is an average of 7.65 per cent, more than three per cent what they are currently paying.

Although Nationwide is urging customers to negotiate a remortgage as soon as possible and preferably before their existing deal expires, the average fixed rate is also a lot higher today than it was in 2005. In fact, the increase from 4.56 per cent to 6.41 per cent will still cost customers £110 a month on a £100,000 loan.

“For some borrowers it will come as quite a fright to see their mortgage payments increase dramatically,” said Matthew Carter, director of mortgages at Nationwide. To absorb some of this shock, borrowers need to consider remortgaging as soon as their deal ends, or beforehand if their lender allows it.”

He also noted that there has been growing interest in the bank’s 25 year fixed rate mortgage since the last Bank of England base rate rise.

According to a recent survey by Abbey Mortgages however, less than one in four Britons would consider taking out a 25 year fixed rate homeowner loan.

Tags: finance, bank, UK mortgage terminology, today, monthly repayments, average fixed rate, average

Have you lost track of your account?

The government and the British Banker’s Association are working together to try and deal with the issue of dormant bank accounts, where banks are unable to trace the owners of account, which have been left dormant for years with no transactions being made on them.

Accounts that have not bee touched for three years or more are generally classed as dormant, and both the government and the BBA have been looking at ways to try and deal with this issue.

The priority is to try and reunite these dormant bank accounts with the account holders, as even though the account is classed as dormant the money in it is still the account holders. Many accounts have just a few pounds in them, and there are also many dating back ten years or more when many people were opening a number of accounts with £100 deposit in order to cash in with a windfall in the event that the building society became a bank or there was some sort of merger.

So far a number of accountholders have been successfully reunited with their lost accounts. One BBA spokesperson stated: ‘Already this year, we’ve processed 6,000 claims. This compares with 7,000 for the whole of last year.’ Those that think that they have a dormant account are being encouraged to contact the British Bankers Association for further information and to make a claim to the account either by phone or via the BBA website, which is www.bba.org.uk

The government is also looking into options for the use of money from accounts that are not claimed by any consumer. A commission was set up 18 months ago to deal with this, and it is likely that monies from unclaimed accounts will be used towards a number of worthy causes.

Tom Smith
27th August 2007

Tags: costs, personal, charges, interest, claim, uk

Many people permanently in the red with overdrafts

A recent report has highlighted that by the 20th of each month many Brits find themselves running out of cash and having to rely on their overdrafts to see them through the rest of the month until payday.

In some cases, once payday comes around, Brits are able to slide back into the black for several weeks. However, there are also many Brits that will go straight back into the red, even after their salary has been paid in, because their accounts are permanently overdrawn.

Around two million consumers in the UK are always in the red, unable to pull themselves out of their overdraft debt and therefore having to rely heavily on their overdraft facility. In the past year, according to research, around ten million people in the UK have used their overdraft on at least one occasion. Rising interest rates and repayments may have contributed to this figure, with more and more people having to dip into their overdrafts in order to stay afloat due to rising repayments.

One industry professional stated: ‘It’s no surprise so many people are permanently in the red – with interest rates having risen five times in the past year consumers are not doubt feeling the squeeze. People often dipping into their overdraft need to watch the Effective Annual Rate as some can be punitive and they may find they are better off spending on a 0% credit card in the future.’

Those aged 55 years and over were found to be the best at staying out of the red, with an impressive 64% in this age group managing to stay in the black. This compared to 40% of 18-24 year olds. In the 45-54 age group 5% were permanently in the red.

Tom Smith
31st July 2007

Tags: card, credit, purchases, red, accounts, savings, current, debt

House price growth slows down due to interest rate hikes

According to recent reports there has been a slow down in the growth of house prices in most areas of the UK following further interest rate rises in the first half of the year. Exceptions to the rule are Scotland, Wales, and the West Midlands in England. However, in most regions house price growth has slowed down by around 50%, and it is thought that this is due to lower demand for properties as a result of rising interest rates.

The data comes from the monthly report from the Royal Institute of Chartered Surveyors, and this report is the second one in a row that indicates a slow down in the rate of house price growth in most parts of the UK. According to the figures just 10.6% more members from the RICS reported a rise in house price growth rather than a fall last month, and this compared to 22.5% in the previous month.

The report also indicated that the number of enquiries from new buyers had fallen at the fastest pace since February of last year, reflecting the lower demand for properties. According to the RICS the five interest rate rises over the past year – and in particular the last two interest rate rises – have taken their toll when it comes to buyer demand, with many people having to reconsider property purchase because of the higher interest rates and sky high repayments.

One spokesman from RICS stated: ‘House prices have finally started to cool significantly for the first time since the recent mini boom in the housing market got under way in 2006. Interest rates hikes have begun to affect the psychology of the market with potential new buyers starting to think twice before buying a home. The July rate increase may not mark the peak of the current interest rate cycle and earlier rate rises have yet to fully filter through. A softer landing for the housing market is in store as we move into the autumn.’

Tom Smith
31st July 2007

Tags: Mortgages, fixed, rises, increase, rate, repayments, england, bank

Further disappointment for ING Direct customers

ING Direct customers are facing increased disappointment when it comes to their savings, with ING once again failing to pass on the interest rate rise that was applied by the Bank of England.

The online savings account from ING Direct now pays 5% to savers, which is well below the best rate savings account and stands at 0.75% less than the base interest rate. The account initially attracted over a million customers when it advertised its impressive interest rates in 2003, but since then ING has come under fire for leaving interest rates to stagnate despite a series of rate rises.

The Websaver account from ING will also see interest rates remain static, at 5.5%. The rate on this savings account was actually higher than this initially, opening at 5.65%, but was cur to 5.5% before the interest rate rise in May of this year. Since this time the interest rate has not gone up, despite Bank of England rises of 0.25% in both May and July. ING Direct was hugely popular amongst savers previously, but has lately received a great deal of negative press over its refusal to pass on interest rate rises.

According to recent figures customers of ING Direct have taken over £3 billion worth of savings from their accounts and placed the money with other banks as a result of poor interest rates based on the current base rate. Although interest rates in the UK have gone from 4.5% to 5.75% in the past year through a series of five interest rate rises, the interest rate on the ING Direct savings account has risen by only 0.5% in this time.

According to ING Direct other banks get around this by offering lower rates on other accounts. One official stated: ‘If these savings providers had to pay all of their customers our 5% it would cost them a fortune and they wouldn’t be able to afford to keep offering their headline grabbing accounts.’

Tom Smith
26th July 2007

Tags: accounts, england, Banking, rises, interest. lower, cost, bank

Online banking offers greater flexibility, according to BBA

A top banking association has hailed the advance of internet banking as providing greater flexibility and convenience for customers.

According to the British Bankers’ Association (BBA), which represents around 200 banks across the UK, the service is especially liked by holidaymakers, who can access their accounts just by going online without needing to be near a branch of the bank.

According to communications director at the BBA Lesley McLeod, “you can do it from an internet cafe when you’re sitting in Rome so people like that flexibility.

“People who travel a lot like [online banking] as it gives them access without having to bother whether they can get to their branch and people quite like that aspect of it.”

Ms McLeod said that the company detected an overall bias towards the under-50s to the online service, although it was by no means exclusively used by the young.

Figures from Apacs payment association testify to the popularity of internet banking, showing that 24 million adults used the service in 2006. It predicts that two in three adults will use remote banking by 2014.

Tags: Association, bank, BBA Lesley McLeod, banking association, director, access, 50s

House Tipping Point On The Way

Figures from HM Revenue and Customs have indicated that the number of properties sold in England, Wales and Northern Ireland was at its highest point since the late eighties.

During 2006-7 the number of properties being exchanged was 1,859,000. The number of sales was up by 11% compared with then figure for the previous twelve months. House prices went up by the same percentage and are growing at more than their average rate over the long term.

The number of homes sold at the last peak in 1988 was 2,148,000 for England and Wales. In 1989 sales of property slumped by 25% and the house price boom that had run for six years fizzled out after the Bank’s base rate was pushed up and mortgage rates followed suit.

That crash in house prices in 1989 came as a shock to most of the nation who had seen house prices only going upwards for the previous thirty years. The Nationwide BS House Price Index showed that average house prices in the UK had gone up every year from 1955. But 1989 changed all that and house prices fell by 11% and it was 1998 before house prices reached the same levels as 1989.

The early nineties became the period of negative equity for many people, with many houses worth less than the mortgages owed on them. Unemployment went up and the recession bit. With homeowners finding it difficult to make their mortgage repayments, many fell into arrears and there was a rise in repossessions. Mortgage lenders had a glut of properties under their ownership and off they went at auction at bargain prices. Between 1991 and 1998 over 400,000 homes were repossessed and a million people were left without a home.

A lot of the sequence of events that led up to the 1989 house-price crash are being repeated in the current situation. The parallels are undeniable: house prices are out of reach of first-time buyers; house prices seems to be going upwards for ever; interest rates are on the increase; and mortgage rates are on the rise too. Also, the ratio of house prices to incomes is now at its record level, and customer debt is an ever-growing problem in this country. The noises coming out of the Bank of England suggest strongly that interest rate rises have not finished yet – there’s almost been a promise that there will be another quarter point rise in July. And, most strikingly of all, repossessions have started to rise again.

Property prices on average are still on the up and have been for eleven years, but it sure looks unsustainable. Many experts are still saying that they do not believe there will be a house price crash, but more of a gentle deflation. There is so much talk of the possibility, however, that it’s hard to see people continuing to fork out large sums for houses and the repayments at such high levels, when a downturn may indeed be just around the corner. The tipping point must be in sight. It’s just a question of how steep the drop is going to be on the other side.

Tom Smith
17th July 2007

Tags: increase, equity, boom, england, prices

Actions To Ease The Mortgage Pain

There have already been several interest rate rises since August 2006, taking the Bank of England’s base rate from 4.5% to 5.75%. Read more

Tags: interest, savings, payments, offset, rates, bank, england, Mortgages

Interest Rates Up To 5.75%

The Bank of England has increased interest rates by another quarter point in July, to 5.75%, the highest level since March 2001.

Only twelve months ago interest rates were down at 4.5%. The last year has seen hundreds of pounds added to mortgage repayments of householders. On an average £200,000 loan, there will be another rise in payments of £33 to add to the £127 since August 2006.

There are also more than a million homeowners with fixed rate deals from two years ago which are around the 4-4.5% level, who will soon have to look for a new mortgage deal and they are going to be faced with rates of over 7.5% on the lender’s standard variable rate (SVR). That could mean crippling increase of £215 per month. Even with a new deal, they are looking at two-year fixed rates of 5.5% and a rise of nearly £100 per month, plus the fees on top.

Many experts think interest rates will go up again. A rate of 6% has been forecast, and Mervyn King was unhappy at the rate being held at 5.5% in June. He warned a higher peak might be needed in the future. That sounded like a threat of 6% to come.

The Bank has been striving to keep inflation and house prices under control, but the signs that they have started to do this since the last rate rise in May, they didn’t come soon enough to head off July’s rise.

Consumer Price Index (CPI), the government’s measure of inflation, reached 3.1% in March and has come down to 2.5% in the most recent figures. Nevertheless, this is still above the government target of 2%, and the MPC may still feel that more action will be needed. Lower gas and electricity prices should help CPI fall again soon. The MPC said: “Although pay pressures remain muted, the margin of spare capacity in businesses appears limited and most indicators of pricing pressure remain elevated. The committee judged that, relative to the 2% target, the balance of risks to the outlook for inflation in the medium term continued to lie to the upside. Against that background, it further judged that an increase in Bank Rate of 0.25 percentage points to 5.75% was necessary to meet the 2% target for CPI inflation in the medium term.”

Higher rates have begun to slow down the housing market. The Halifax, the UK’s biggest mortgage lender, has reported that house price inflation has cooled in the last quarter, lower than the first quarter of the year and the last quarter of 2006.

New Prime Minister Gordon Brown and his new Chancellor Alistair Darling will be frustrated by the rate rise, fresh as they are in their new roles. Mr Brown was always very please with the way his prudent monetary policies worked, but he may have to revise his comments if rates hit 6%, the level they were at when Labour came to power in 1997.

The UK has a big debt problem and these are becoming a bigger burden as interest rates continue to rise. PricewaterhouseCoopers suggest that 19% of an average household’s income goes towards paying debts which is a record level and beats that of 1990 when interest rates stood at 15%.

Tom Smith
15th July 2007

Tags: bank, house, england, home, rates, interest

Yorkshire Bank faces tough decision

The Yorkshire Bank is facing a tough decision over its overdraft charges following an order made by a judge in Hull.

Over 40 cases were due to be heard last month by the judge, and these related to unfair charges that were applied to customers’ accounts as a result of exceeding their overdraft limit and for bounced cheques or returned direct debits. According to campaigners the cost of administration for this type of oversight is between £2 and £5 for the bank, but often customers were being charged up to £40 per fee.

Of the 44 cases that were due to be heard the majority were settled by the bank before being heard in court. However, seven of the cases were heard at Hull County Court with judge Iain Besford residing.

When hearing the cases the judge made a decision that means the bank will either have to settle all of the pending claims in full or will have to attend an open court and explain its charging structure in detail, explaining why customers are charged so much if it is not for profit.

The disclosure order that the judge agreed to means that the bank now has until the end of September to make its decision with regards to whether to settle the claims or whether to justify its charges in court.

Banks do not generally turn up to these court hearings, as most tend to settle the claims just prior to the case being heard in court. Lloyds TSB, however, has won two cases filed against it for repayment of bank charges.

Originally the judge had considered striking out the bank charge cases altogether following a decision by a Birmingham judge to rule in favour of Lloyds TSB earlier this year. However, having heard the cases he has now informed the bank that it must pay up or explain and justify its charges.

Tom Smith
13th July 2007

Tags: cases, hull, win, charges, county

UK banks asked to ’share branches’ to help rural customers

Banks in the UK are being urged to share their branches in an effort to provide the required financial services to those in rural parts of the country.

It has been claimed that sharing branches would allow banks to significantly reduce costs and therefore enable them to provide essential services to rural communities without having to run them at a loss.

According to Derek French, director of the Campaign for Community Banking Services lobby group, as much as £500 million could be saved every year by banks if they shared their branches in more remote parts of the country.

The government is putting increasing pressure on banks not to close their rural services because of the damage this will do to village economies. However, many banks are concerned that their current arrangements in rural parts of Britain are causing them to lose money because there are simply not enough people to support the services on offer.

Although Mr French admitted that banks have in the past been against such proposals, his organisation believes that the pressure now being placed on banks from the government could mean that they are reconsidering these schemes.

Unless something is done soon, Mr French warned that banks could disappear from rural communities within five years.

Tags: lobby group, derek french, bank, lobby, government, country.The government, something, State Bank of India

Bank may have equipment seized

A branch of the Abbey bank in Chorley, Manchester, has been threatened by bailiffs following its failure to adhere to a court order and repay past overdraft charges to a customer that took it to court.

Sam Umaar sued the Abbey over the repayment of illegal bank charges amounting to nearly £3000. However, despite a court order instructing the bank to make payment to the customer no action was taken.

Sam Umaar sued the Abbey over bank charges that amounted to £2493. These were charges that the bank had applied to his account for exceeding his overdraft limit – charges that have now been described as unlawful and unfair by financial regulators in the UK. Mr Umaar’s case went to court in June, and because the Abbey did not show up to defend itself the judge granted an additional £276 to Mr Umaar, bringing the total judgement to £2769.

However, despite the court order the Abbey still did not pay up, and now bailiffs have visited the branch and given officials seven days to pay up. If this is not done the bailiffs state that they will seize equipment to the value of the sum owed. This has been done in the past with other banks, where equipment such as computers, faxes, printers, and other office and banking equipment has been taken in order to make the bank pay up in accordance with the court order.

Mr Umaar stated: “It’s ludicrous that the Abbey haven’t paid up when they know they have to.”

He added: “The bailiff says I will get my money – it is just a matter of when.” Officials from the Abbey have stated that the cheque has now been issued to Mr Umaar, and that bailiffs have been notified of this.

Tom Smith
11th July 2007

Tags: unpaid, judge, abbey, bailiffs, bank, fees, costs

BOE governor warns on borrowing and lending

The Governor of the Bank of England, Mervyn King, has stressed the importance of consumers being careful not to borrow money that they cannot afford, and lenders being more careful about who they lend money to.

Mr King stated that consumer debt levels in the UK could lead to a major debt crisis. And with another interest rate rise due in July – which will be the fifth interest rate rise since last August – many more people in the UK could find themselves struggling with unmanageable debt.

Speaking at the Mansion House Banquet in London, Mr King addressed families and individuals, stating: ‘be cautious about how much you borrow’.

He also addressed lenders stating: ‘be cautious about how much you lend’.

At last month’s Monetary Policy Committee meeting Mr King actually voted for a quarter percent rise in interest rates, but the majority vote was to keep interest rates stable in June. However, this month’s meeting is likely to see a different result, and a further quarter percent rise is widely predicted.

At the dinner – also attended by new Prime Minister Gordon Brown – Mr King stated: ‘Be cautious about how much you borrow is not a bad maxim for each and every one of us here tonight.’

He also addressed lenders, adding: ‘Excessive leverage is the common theme of many financial crises of the past. Are we really so much cleverer than the financiers of the past?’

One LibDem spokesman said: ‘A combination of an economic slowdown and higher interest rates could spell disaster for large numbers of heavily-indebted families. If interest rates rise further, many home owners will simply not be able to pay.’

And the Shadow Chancellor added: ‘Millions of people are struggling as the cost of living is rising faster than their incomes.’

Tom Smith
9th July 2007

Tags: loan, lender, interest, bank, rise, rates, england, borrow, pay, afford

Housing Market Cools

It seems that the UK property market may be cooling at last, as estate agents are reporting that there has been an increase in properties coming up for sale. In the last few months that number of sellers has increased, but interest from buyers has taken a downward turn.

One online agency reported that the number of properties for sale has risen by over 13% in April, far above expectations. Another internet agency said that it had seen an increase in properties on the market by nearly 20% compared with the same time a year before. The trend appears to be the same across the market.

Although the time of year does see an increase in properties on the market, this time the numbers seem higher than usual. The shortage of housing stock that has had an influence on the way the market has risen seems to be reducing. The sellers’ market looks as though it is coming to an end, and the market may be close to its peak.

It seems that properties in the £150,000-£350,000 price bracket are having the toughest time, where affordability is tight and the slowdown is likely to bite hardest. First-time buyers are finding it extremely difficult to get into the market as property has been pushed further beyond their reach.

Another influence on the number of properties coming to market has been the wish to avoid the need for Home Information Packs (HIPs) in the lead up to their planned introduction of 1 June, and again in the lead up to the new date of 1 August.

Bank of England mortgage figure approval figures reached a twelve-month low in April at 107,000.

The Royal Institution of Chartered Surveyors believed that the HIPS, the continued increase in house prices and the increase in interest rates have combined to lead bring about a cooling of the market.

Estate agents believe that HIPs are single biggest reason for the increase in properties coming to market. These look to be extremely unpopular with sellers who will have to go to more trouble than before and, of course, pay for the packs.

Buyers, however, will see benefits with all the information they need in a single accessible pack. The uncertainty surrounding the introduction of HIPs has led to confusion, especially with the change in emphasis by the government, who said that the Packs would only be applicable to homes with four or bedrooms when the new date was announced.

Since then there has been even more confusion with a recent comment that there will be enough trained energy assessors by 1 August to encompass three bedroom houses. The government maintain that they announced that houses of smaller size will be included in the scheme as soon as enough assessors are available. If that happens by 1 August then three-bedrooms homes are likely to be included.

The general economy remains strong and interest in property is liable to remain so too. When confusion over HIPs dies down in the coming months, we are likely to see a return to normal trends.

Tom Smith
8th July 2007

Tags: increase, england, rise, decrease, housing, hips, down

Variable rate borrowers could be heading for a fall

Industry professionals are warning consumers that they could be heading for a fall if they have high levels of variable rate debts, from mortgages and secured loans to credit cards.

With four interest rate rises over the past year the Bank of England base rate has gone from 4.5 percent to 5.5 percent between last August and this May, and further interest rate rises have been predicted by experts before the year is out.

Many borrowers with variable rate loans and cards have seen their interest rates rise, and for many this has resulted in real financial difficulties when it comes to making repayments. Many consumers seem to have been banking on interest rates remaining stable in order to comfortably afford repayments on their borrowing, and the four interest rate rises since last August have really taken their toll.

The Governor of the Bank of England stated: ‘Anyone who borrows at a variable rate should recognise that the interest rate they will pay in the future may vary. It is unwise to borrow so much that the repayments are affordable only if interest rates remain at their initial levels.’

To many, this is something of a warning that further interest rates are indeed on the way, and those planning to take on more debt should be very careful as they may not be able to afford repayments should the interest rates continue to rise.

One economist stated: ‘Rates are going to go higher. A base rate of 6% is not necessarily the top. Borrowers should brace themselves for another increase. I would be surprised if base rate hit 7%, but not if it reached 6.5%.’

An official from the London School of Economics stated: ‘Base rate will peak towards the end of the year at or close to 6%. As long as inflation is under control, it could come down in a couple of years.’

Tom Smith
7th July 2007

Tags: cost, increase, fixed, borrow, england, bank

Good news for savers with Sainsbury’s

Those with Internet savings accounts with Sainsbury’s are in for some good news, as the supermarket giant and bank has now raised the interest rate on its Internet savings account to 6%, a rise of 0.25% from its previous interest rate of 5.75%.

According to This is Money this makes the Internet savings account from Sainsbury’s one of the best savings accounts to have. Prior to the interest rate rise the top savings account according to This is Money was with Icesave, which offered a rate of almost 6 percent.

Last week the Bank of England opted to leave the interest rates stable at 5.5 percent. Interest rate rises have taken place four times within the last year, rising each time by 0.25 percent.

However, in many cases savings accounts operators have been very slow to apply any interest rate rise to savings accounts, and in some cases have failed to pass on all or any of the rises to savers.

One the other hand they have been quick to apply to interest rate rise on borrowing, which means that those that have borrowed money have to repay more and those that are saving money get lower returns.

Sainsbury’s, on the other hand, has decided to raise the interest rate on the Internet savings account by 0.25 percent, even though there was no interest rate applied by the Bank of England last week.

The account does no require any notice and does not have any penalties attached to making any withdrawals. There is also no minimum deposit with the Internet savings account.

One spokesperson from Sainsbury’s stated: ‘With so many accounts in the market, savers need to think about which savings account best suits their needs, whether that’s benefiting from a short term bonus or being able to access their funds without any penalties. Our Internet Saver is ideal for those savers who want to receive a great rate but also want to have regular access to their cash without any restrictions.’

Tom Smith
5th July 2007

Tags: earn, bank, interest, accounts, increase, rate, saver

Woman furious over overdraft fees

A twenty year old university student recently expressed her anger over her building society’s failure to contact her about a tiny overdraft balance that went on to accrue months of expensive fees.

The woman stated that her account with the Nationwide Building Society was just 95p overdrawn after she wrote a cheque. However, whilst she was away studying at university the building society added charges to the overdraft on a monthly basis. When she arrived back from university some months later, the customer stated that she discovered that £250 in fees had been added to her student account.

According to the customer the Nationwide had been adding £20 each month to the account because of the outstanding 95 pence, but had made no attempt to contact her to let her know the situation.

She stated: ‘I had no idea the account, which I had not used in ages, was overdrawn. I was away at university for long periods of time.’

She added:  ‘When I returned I found a massive pile of letters from the Nationwide waiting for me and an overall overdraft of almost £250. I was pretty angry with them because they had not tried to contact me by phone and it was quite obvious the account was not being used. They said my credit rating could have been affected which would have been bad so I decided to do something about it.’

The customer stated that she contacted Nationwide regarding the fees, but the building society said it was only prepared to waive fifty percent of the fees that had been charged. The customer then went to her local MP about the situation, and as a result of this the total fee was finally waived but the building society also closed her account.

Tom Smith
4th July 2007

Tags: charge, fee, overdrawn, bank, tiny, building

Base rate set to increase to 5.75 per cent?

The Bank of England’s monetary policy committee may be tempted to increase the base rate to 5.75 per cent at this week’s monthly meeting on Thursday, many commentators believe.

Howard Archer, chief economist at the Global Insight consultancy, claims that the committee will experience a “very tight vote again”.

At last month’s meeting, the governor of the Bank of England Mervyn King’s desire to increase rates for a fifth time since August 2006 was blocked by MPC members for the first time since the bank gained independence ten years ago.

Mr Archer said that only one of the five who voted to hold rates at 5.50 per cent last month would have to change their vote to effect a rate rise.

Last month, Mr King said that Britons should expect a further interest rate increase to cope with an over-heating economy and increasing inflationary pressures.

Despite UK inflation falling to 2.5 per cent in May, this was still some way below the government’s two per cent target.

Tags: mr archer, britons, inflationary pressures, time, governor, economy, month, bank

Banks may be acting illegally over bank charges

Over recent months there has been a battle raging between banks, campaigners, and consumers, with the banks standing firmly on one side, and consumers and campaigners fighting in unity on the other side with regards to unfair bank charges.

Campaigners have been urging consumes to fight back against the banks and reclaim bank charges that were deemed unlawful and unfair by UK financial regulators last year, and many consumers have already done this, with some receiving thousands in backdated charges that go back up to six years.

However, although the banks have been paying up, albeit with some pressure in some cases, this is something they have been doing reluctantly. And in the latest move to try and put consumers off from making claims for the refund of charges, banks have been sending out threatening letters.

According to recent reports some banks have been contacting customers that have already been awarded refunds on their banks charges, and have been informing them that if they try to claim again in the future their bank accounts may be closed. However, officials claim that this is a move that could be classed as illegal.

The Royal Bank of Scotland has sent out letters of this nature, and the letter reads: ‘Any charges that properly accrue in the future will be applied to your account in line with our published tariff and in accordance with your agreement with the bank. Should you be unwilling to accept any such charges, then we may need to consider if we are prepared to continue to provide you with your existing banking facilities. Instead, we may offer you a simple account that does not offer borrowing facilities or other services that can result in charges.’

A spokesman for RBS stated: ‘If a customer is unwilling or unable to pay the charges for the services we provide or is considered a particular credit risk, then it is wholly appropriate for us to consider whether their existing account is best suited to their needs. As a responsible lender it may be appropriate to provide them with a more suitable account.’

Tom Smith
1st July 2007

Tags: customer, royal, letter, cost, bank, account, illegal, facilities, scotland, fees

Bank charge court claims need to be watertight

Experts have warned that consumers that are trying to reclaim bank charges from their banks through the courts need to make sure that the case they are putting forward is solid and watertight in order to increase their chances of successfully reclaiming back the cash from the bank.

Apparently a number of claimants are failing to provide the right documentation or are failing to put forward their case properly, and this can increase the chances of the judge ruling in the bank’s favour.

Judges are becoming impatient with these cases, as there are many pending and blocking up the court system, and banks fail to turn up to defend themselves, which means that the claimant wins the case by default.

Experts claim that judges are now looking to get rid of what they describe as frivolous claims, and this could affect those that do not put forward a strong enough case or provide the necessary paperwork and documentation to support their claim.

Lloyds TSB has already won two cases, where the judges ruled in the bank’s favour rather than that of the claimant. A judge in Hull has also stated that he may strike out twenty claims against banks. Experts think that all of these lost of struck out cases could be the result of sloppily put together cases and inappropriate or inadequate documentation from the claimant.

Thousands of consumers have been claiming back charges from their banks going back up to six years, and these charges were applied for exceeding the overdraft limit on the account, as well as for returned direct debits and cheques. However, where banks have reduced to repay the full amount many have decided to file a small claim against the bank through the courts.

Tom Smith
30th June 2007

Tags: bank, cases, paperwork, judge, defend

Do your kids have the right savings account?

Banks and building societies have come under fire on many occasions over the past year due to the failure of many to pass on the full level of interest rate rises onto savers whilst applying the full amount and sometimes more besides on borrowing.

And it seems that it is not only the adults savers of the UK that are getting a raw deal with some banks – many are paying even less in the way of interest on savings accounts for younger savers, often paying way below the Bank of England interest rates.

According to recent reports some savings accounts for younger savers pay under 4 percent in interest, which is over 1.5 percent less than the current base rate. Amongst those paying considerably less than the base rate on children’s savings accounts are C&G, Royal Bank of Scotland, Birmingham Midshires, the Woolwich, and Barclays. Even where balances on the accounts are close to one thousand pounds, many of these banks and building societies pay poor interest rates compared to the current base rate in the UK.

On the other hand there is a great deal on children’s savings account with the Nationwide. The interest rate on the Smart Account with Nationwide has been hiked up to 5.78 percent before tax, and in addition to this the Nationwide has pledged to pay at least 0.25 percent more than the base rate until 2010. This savings account is available to those up to the age of eighteen, and with this impressive interest rate and guarantee younger savers can look forward to seeing healthy returns on their savings.

A number of other banks and building societies are offering some impressive deals on savings, and consumers with kids that are getting a raw deal on their savings should look around and compare different accounts to see whether there is something more suitable available

Tom Smith
29th June 200

Tags: payments, bank, account, accrue, earn, Banking, kids, savings

The cash machine turns 40

On June 27th 1967 personal banking changed for ever with the opening of the world’s first cash machine in Enfield, North London.

The Barclays branch opened the first ever ATM so that customers could access cash outside of the bank’s normal opening hours.

Actor Reg Varney, star of popular sitcom On the Buses, christened the cash point and will always be remembered as the first person ever to withdraw money from a hole in the wall.

In those days, customers needed to feed a special voucher into the machine and enter a unique four digit code in order to gain access to a £10 note.

Principally, ATMs have not changed too much over the last 40 years but their popularity has soared.

By the end of the 1960s the UK had 595 cash points, while the world contained 781. By the end of 2006 there were 60,642 in the UK and 1.64 million across the globe.

“The cash machine, more than any other banking innovation, has had a major impact on the way we all conduct our lives, not just our banking,” said John Warren, head of cash machines for Barclays.

“Forty years ago cash was only available from 9-3 pm Monday to Friday and Saturdays from 9 -12.30 pm and, as cash was king, queues outside branches on a Saturday morning to get weekend money were common. Now you can get money any time, anywhere.”

The cash machine was invented by John Shepherd-Barron who had the idea while taking a bath after he had been prevented from getting his weekend money because he was late to the bank.

Tags: time, code, order, barclays, business

Consumers outraged by judge’s bank charge decision

A number of consumers in the UK are outraged at the decision of a judge in Hull who plans to dismiss their court cases against a number of banks.

Around twenty customers who have taken their banks to court over reclaiming bank charges have been told that the cases are likely to be dismissed as a result of the recent case won by Lloyds TSB. Lloyds was the first bank to win a case, when the Birmingham judge ruled in the banks favour rather than in favour of the plaintiff, Kevin Berwick, who was seeking over £2500.

Despite officials from the Financial Ombudsman Service stating that the Lloyds TSB case is not a definitive one, the judge from Hull, Ian Besford, has cited this case in his decision to dismiss the cases against Lloyds TSB, Barclays, and HSBC. The cases are due to be heard on July 4th. A number of the consumers concerned have contacted the BBC with regards to the issue.

A spokesperson from Consumer Action Group stated: ‘Kevin Berwick lost in his case in Birmingham because he didn’t supply enough evidence. This judge in Hull seems to be striking out the claims before he has even seen the detailed evidence of each claimant.’

However, the judge has stated that he plans to dismiss the cases because there appears to be ‘no reasonable prospect of success in the light of the recent decision’ regarding the Lloyds TSB case.

This is the first judge to have referred to the Birmingham Lloyds TSB case in his decision. A court official from Hull stated: ‘It is entirely up to each judge to decide for himself if the Birmingham judgement is an interpretation of the law he agrees with.’

Tom Smith
12th June 2007

Tags: judge, penalties, costs, claim, charges, ruling

An exercise regime for your finances

Many of us could do with giving our finances a good workout, just like we do when trying to get our bodies into shape.

The British Bankers’ Association (BBA) says that we can keep our finances looking fit just as we can begin living a healthier lifestyle.

We are being advised to review our finances and speak to our banks and financial advisors, much like how you might consult a gym for a fitness check.

Although many people find banking to be daunting and something of a chore, the BBA points out that getting your finances in order means you are better prepared for any future changes to your circumstances.

“The British Bankers’ Association is recommending customers take a little time to plan their financial needs just as you would consider your physical health,” said Angela Knight, chief executive of the BBA.

“That way you can ensure your finances are in good shape and you have the right banking and borrowing services in place.

“You can go to your bank and talk through your specific needs just as you would go to a personal trainer and talk through an exercise routine. It is vital that you set aside some time every month to review your bank statement,” she added.

The BBA has compiled a ‘Fit for Finance’ checklist and says that anyone considering visiting a financial advisor should run through the list and get a good idea of how they are doing.

The list asks: Do you pay your credit card balance in full every month? What plan do you have in place to repay a debt? And are you always struggling to cover debt repayments?

Tags: bank, circumstances, finances, debt repayments, regime, healthier lifestyle, card

Online banking is booming

Ten years ago the Nationwide Building Society started the huge phenomenon that has become online banking.

And as we reach a decade of banking via the Internet it seems that this method of dealing with finances and applying for banking services has become more popular than ever. There have been some concerns over the ease of banking fraud via the Internet, but with increasingly stringent safety measures in place and customers becoming savvier than ever when it comes to security, online banking continues to thrive.

One of the UK’s leading banks, HSBC, as reported an increase of fifty five percent in terms of its online business. According to recent figures around eighteen million people in the UK now use the Internet to deal with their finances and manage their bank accounts, and HSBC alone has received nearly two billion visits.

At a recent Annual General Meeting the chief executive of HSBC stated: “More and more of our personal and commercial customers are seeing the benefits of buying online. Our websites handled 1.8 billion visits last year and online sales increased by 55 per cent.”

He also stated that the bank was starting to move more towards interaction with customers through the Internet rather than through the branch.

A number of banks that are trying to encourage customers to deal with them online have offered various incentives and rewards such as increased interest rates on savings and bonuses – this is because it is easier, faster, and more time effective for banks to deal with customers in this way rather than through a branch.

When banking online customers can make bill payments, transfer cash, check balances, apply for services such as credit cards and loans, set up and cancel direct debits and standing order, and more.

Tom Smith
11th June 2007

Tags: payments, bills, online, rewards, interest

Bank Considers Latest Rate Decision

Since the last announcement on 10 May when rates increase by a quarter of a percent to 5.5% there has been a lot of speculation about the way interest rates may go in June.

The latest forecast is for rates to remain unchanged, but another quarter percent rise is still possible. At 5.5% in May rates went up to their highest level since February 2001. Read more

Tags: house, rates, home, repayments, increase, deals, Mortgages

Consider financial ombudsman over bank charges

In the ongoing disputes relating to bank charges Lloyds TSB recently became the first bank to win a court case against a customer that was trying to reclaim bank charges that had been imposed for exceeding the overdraft limit on the account, and for returned cheques and direct debits.

And is seems that this unprecedented case has started to put some consumers off from trying to reclaim charges from their banks. However, experts advise that there is another route available.

This is Money has advised consumers that if they don’t feel confident about taking their bank to court of reclaiming bank charged they can simply go through the Financial Ombudsman Service. This is a free service, so consumers will have nothing to lose by taking their complaints to the ombudsman. And if, at the end of the day, the consumer does not agree with the financial ombudsman’s decision he or she can still take the case to court.

This is Money also warns that this cannot be done the other way around. So if a consumer takes the bank to court, and the judge rules in favour of the bank, the consumer cannot then take the complaint to the financial ombudsman because the judge’s ruling has to be the final one. So, anyone having trouble getting bank charges back from their bank should consider complaining to the FOS before taking the case to court.

Even banks are now using the Lloyds RSB case to try and make consumers feel as though this is a definitive decision, but this is not the case.

One FOS spokesman stated: ‘We are seeing letters from banks suggesting the Birmingham case is definitive. This is usually happening at local branch level. Often when we raise it at a senior level, head office agrees that the letters are wrong and stop any more going out.’

Tom Smith
10th June 2007

Tags: fees, financial, ombudsman, fines, claim, judge, ruling, case, court, charges

Brits losing a fortune by failing to put their cash in savings accounts

In the olden days stashing your money in various cunning locations around the house seemed to be the norm, as many people did not have access to savings accounts as they do today.

However, according to a recent survey there are still an alarming number of Brits that insist on keeping their cash in the house, which not only raises security issues but also means that collectively Brits could be losing out on millions of pounds worth of interest from banks and building societies each and every year.

A recent survey was carried out by Virgin Money, and according to the result of the survey around one in every six adults in Britain are still keeping cash in the home rather than opting to place it in a savings account. The results indicate that if these people were to put the cash that they have kept in the house into an average Internet savings account they could be accruing around £174 million each year in interest collectively. Instead, this money simply sits around earning nothing for them, and increased the risk of financial losses through theft in the event that the cash is stolen by a visitor or the house is burgled.

The survey showed that one percent of Brits that were surveyed admitted to having up to one thousand pounds in the home, whereas two percent of Brits stated that they had up to five thousand stashed in the home. Experts warn that since inflation has been on the rise, and the money is simply lying around failing to accrue any interest, it is in danger of losing its purchasing power, so consumers are doing nothing to help themselves by leaving it in the home.

Industry professional add that there is around three and a half billion pounds in total that is lying around the homes of Brits rather than being placed into savings account, and that this amount could depreciate by two hundred million pounds within the next three years.

Tom Smith
10th June 2007

Tags: cash, safe, savings, spend, inflation

Three billion in savings pulled from ING

Annoyed savers with money saved with ING Direct have pulled three billion pounds in savings from the bank.

Many customers have been outraged by the bank’s failure to pass on interest rate rises to savers, and as a result many have pulled large sums of cash that they were savings with ING. According to bank officials there are a number of customers that have removed large balances from the bank to try and find a better interest rate elsewhere, but the bank also stated that overall customer numbers hadn’t been affected.

According to bank officials ING is not prepared to compromise on services for other customers in order to try and get better rates for others. Launched in 2003, ING Direct has boasted a reputation as a bank that offers competitive rates of interest as well as good customer service. However, the interest rates on savings accounts with ING Direct have been stuck at 4.75% for some time.

The Bank of England has raised interest rates four times in the past year, with interest rate rises in August 2006, November 2006, January 2007, and May 2007. Customers are angry because ING has failed to pass on the interest rates that were applied by the Bank of England in November 2006 and January 2007. However, bank officials state that the latest interest rate, which was announced in May, will be applied to savings account in June.

One ING official stated: ‘The vast majority of customers are still with ING but those customers with higher balances who are rate conscious are people who are constantly looking for best rates in the market. Are there better rates out there? Yes there are. Do those companies pay all their customers the same rate? No they do not. We are trying to be consistently fair with all our customers so 5% is the highest and the lowest interest rate they will receive.’

Tom Smith
4th June 200

Tags: england, bank, customers, rate, accounts

Holidays put Brits in debt

Millions of Brits are happy to put themselves in debt in order to go on holiday.

New research shows that as many as 12 million people borrow money in order to take a break abroad and they end up paying for it well after returning.

CreditExpert.co.uk, an online credit monitoring service, carried out research which found that credit cards, loans and overdrafts are the most popular ways of getting together the money for a trip.

Shockingly, six per cent of respondents admitted to going into debt most or every time they go on holiday, with 18 per cent believing that an annual holiday is so important that they do not think about the money until they return.

Once on holiday things do not get any better, with 22 per cent revealing that they lose track of how much they are spending.

“It’s worrying that, as a nation, many of us have a ‘me now, debt later’ attitude to our finances. Most of us work hard and need a well-earned break, but it’s important that we plan ahead and ensure our bank balance can handle the large outgoings that holidays and other expenses entail,” said Jim Hodgkins, managing director at CreditExpert.co.uk.

“Keeping a budget for the cost of the vacation as well as day-to-day holiday expenses will help you avoid going into debt.

“Missed credit repayments are likely to have a negative impact on your credit report, which means lenders may not want to offer you credit in future,” he added.

People aged between 25 and 34 are most likely to lose track of their holiday spending and 37 per cent say that this is the cause of their debt.

Tags: budget, CreditExpert, order, bank, vacation, money, online, CreditExpert.co.uk

Banks warned by judge over unreasonable behaviour

A judge in the UK has issued a warning to banks in relation to unreasonable behaviour in cases where consumers try to claim back charges that have been deemed unlawful and unfair.

Many consumers in the UK have made claims for bank charges going back up to six years, and although in all cases but one the claims have been successful a number of banks have been acting in a manner deemed unreasonable, using retaliatory measured such as account closures to get back at the consumer.

And another tactic being used by some banks is the pretence that they will be defending claims in court, when in actual fact they have no intention of doing this at all.

It is this tactic that is being objected to by the High Court judge, David Mackie, who claims that the banks are wasting court time and resources with this pretence. He further stated that he was looking into awarding damages against the banks if they continued to do this in instances where a consumer has filed a claim in court.

The London Mercantile Court has had hundreds of these bank charge cases referred through lower courts this year, and the hope is that at some point one of the cases will be heard, producing a test decision.

Judge Mackie stated: “If the banks had won, many fewer customers would have sued. If the banks had lost, the claims would have been much easier to sort out than they are now.”

With banks deciding to settle the claim at the last minute before a case is heard, the likelihood of a test decision is a slim one.

Judge Mackie added: “On the face of things each case raises serious issues which the court would permit to proceed to trial. But this is fantasy because, at least for the moment, we all know that there will be no trial.”

Tom Smith
30th May 2007

Tags: challenge, case, penalties, bank, charges, trial, claim

Savers could benefit from another interest rate rise

Over the past year the UK has seen interest rates rise three times, shooting up from 4.5% in August last year to 5.25% by January of this year.

And with experts predicting that another rise of at least 0.25% will be enforced in May, and possible a further rise in the summer, borrowers on variable interest rates are dreading dealing with their finances, as this means that repayments will go up yet again. However, for some savers the story is quite different.

According to information from Moneyfacts interest rates on fixed rate savings accounts have been climbing, and another interest rate rise could spell good news for savers. According to one expert from Moneyfacts a number of banks and building societies have been raising fixed rate interest rates by up to 0.55%. This has created stiff competition between those offering these savings accounts, and at present the Nottingham Building Society offers the highest rate at 6.2%.

According to Moneyfacts’ Rachel Thrussell: “While rates in excess of six percent are currently very competitive, instant access rates are not far short of this mark, making the reward for tying up your money relatively low. So while these rates will offer a great return and piece of mind, perhaps the market has not yet reached its peak and better rates may still be yet to come.”

In a related report from Sainsbury’s Bank, some experts were concerned that savers were being short-changed in terms on interest on their savings, with many account failing to keep up with inflation and interest rate rises. Consumers that are saving in a low interest account are urged to shop around and look for an account that offers a higher rate of interest, as this could really bump up the amount if interest earned each year.

Tom Smith
28th May 2007

More Information:

• Savings Accounts – Are They Worth It?
• Internet Bank Accounts – The Benefits and Drawbacks

Tags: society, bank, interest, tax, building, amount, fixed, earn, increase, accounts

What the recent interest rate rise means for your mortgage repayments

On 11th May the Bank of England increased its rates by another 0.25% to 5.5%, meaning that six million homeowners in Britain will face bigger monthly payments for their mortgages. Read more

Tags: cost, consecutive, england, rates, bank, surveyors

Over one fifth of Brits do not save

Over twenty percent of Brits do not put aside any money in the form of savings according to a recent report. Research has shown that twenty one percent of Brits fail to put aside any money in savings.

The savings survey was carried out by Nationwide in a bid to try and determine how best to tempt consumers into opening and running a savings account. The survey also showed other facts and figures relating to Brits and the way that they save – if at all.

According to the survey, over one in five Brits saved nothing at all. However, the results also showed that thirty five percent of Brits do save money on a regular basis. In addition to this the survey revealed that nearly forty five percent of Brits tended to save on an ‘as and when’ basis, putting money aside into savings whenever they had some spare but otherwise using it for day to day cost of living.

Seventy seven percent of those interviewed as part of the survey stated that their most important consideration when it came to a savings account was a good, long term interest rate. Eight four percent also stated that the account needed to allow withdrawals without any form of penalty being imposed. Nearly sixty percent stated that they would only open a savings account with a well known provider.

Shockingly, the survey also showed that some people still use the most primitive methods of trying to save money, such as stashing their cash in various places around the home – including under the mattress. Those interested in savings accounts are advised to shop around and find an account that offers a good interest rate that reflects the rising interest rate in the UK.

Tom Smith
26th May 2007

Tags: accounts, savings, uk, interest, cash, spend

NS&I pulls out of treasurers accounts

National Savings & Investments has announced that it will no longer be running Treasurer’s Accounts, which are designed for non-profit organizations and charities to make deposits.

The move means that around one thousand organizations and charities will have to find alternative accounts with other companies. No further Treasurer’s Accounts can now be opened with NS&I, and from August 10th no further transactions other than account closure can be made on existing accounts.

Launches in 1996, the number of Treasure’s Accounts and the amount of money invested in them has declined over the years. In 2003 there were 992 of these accounts running with NS&I, with total investments of £67 million. This has now dropped to 932 accounts with total investments of £61.3 million. Officials from NS&I state that it is necessary to make this move, as it is more cost effective for them to now concentrate their efforts on personal savings accounts.

Peter Cornish, director at NS&I, said: ‘The Treasurer’s Account has been in decline for some time which has prompted our decision to close the account. Banks and building societies offer similar accounts for non-profit-making organisations so there are plenty of alternatives available in the market place.’

He added that to continue offering this sort of account a substantial investment would need to be made, and that because of this it was no longer worth the company taking on these accounts.

Amongst those that have Treasurer’s Accounts with NS&I are various charities, and a range of clubs and societies, including youth groups, church groups, and other non-profit organizations. The accounts were thirty day notice accounts, with minimum investment levels of £10,000 and maximum investment levels of £2M.

Tom Smith
26th May 2007

More information: Treasurer’s accounts no longer available

Tags: alternatives, investment, accounts, charity, treasurers, non-profit, bank, closed

Bank charge firms to be investigated

On the back of current investigations that are being carried out into the charges applied to customers’ accounts by banks in the UK by regulatory bodies, a further investigation will now be carried out into the various firms that have sprung up claiming to be able to help consumers to recover these charges – for a fee.

Regulators will now be looking into and scrutinizing these firms amidst fears that many consumers may be wasting their money on paying unnecessary fees for a task that they can carry out themselves free of charge, other than paying for copy statements.

UK regulators have been looking into unfair and unlawful charges that have been charged to customers’ accounts by banks for some months, and as a result of this many consumers have managed to claim back charges and fees going back up to six years, which in some cases has amounted to thousands. However, in light of the increasing number of people attempting to claim back fees from their banks a number of companies have sprung up with offers of assistance in exchange for fees.

These companies will now be investigated by the Ministry of Justice, and amongst the practices that will be looked into by the ministry is cold calling, where company representatives phone up consumers to try and talk them into letting them help claim back charges. However, consumers can just as easily do this themselves for the cost of a duplicate statement, and without having to pay any further charges.

In a recent case Lloyds Bank won a case where a man had tried to make a claim for his charges, and this was the first case to be won by a bank in relation to these charges. In other cases banks have failed to justify the charges, and consumers have been able to reclaim them. 

Tom Smith
24th May 2007

Tags: reclaim, costs, claim, won, fees, penalties, case, bank, regulators, charges

Carry on insuring

With Bank Holiday approaching many people in the UK will be considering a caravan holiday.

Recent research shows that caravanning is quickly reaching popularity levels not seen in the country for decades and is being given an extra injection of cool with a number of high-profile celebrities choosing to spend their holidays this way.

The likes of Kate Moss, Robbie Williams and Jamie Oliver have been spotted enjoying a caravan holiday and the rest of the UK seems to be following suit.

However, Co-operative Insurance (CIS) is warning first-time caravanners to ensure that they have adequate insurance to cover a break of this kind.

“Many people take caravan breaks to escape the pressures of everyday life but it is important that holidaymakers are aware of the potential dangers and keep a watchful eye on their caravan and belongings to ensure that their trip remains stress free,” said David Neave from CIS.

According to the insurance firm, the average caravan claim sits at £1,826, with the most common problem being theft.

This is closely followed by storm damage, a crash, vandalism and accidental damage to contents.

CIS warns carvanners to take precautions such as immobilising the mobile home whenever they stop, fitting an alarm and locking doors and windows.

Tags: belongings, caravan holiday.Recent research, break, country, popularity levels, bank

UK banks investigations widen

Regularity bodies in the UK are set to widen their studies into banking and bank charges after months of investigations into bank charges have already been carried out.

The Office of Fair Trading and other financial regulators in the UK have been looking into the fairness of extortionate charges for exceeding an overdraft, having a returned cheque, or having a returned direct debit. Banks have been charging up to forty pounds or more in some cases in these situations.

The bank charges have been branded unlawful and unfair by regulators, and as a result many consumers have been able to reclaim their charges going back up to six years, and sometimes amounting to thousands of pounds. The OFT is likely to make a decision later this year on what is deemed a fair charge for administration that costs the bank between £2 and £5. In the meantime, consumers continue to try and reclaim their past charges.

Now that the study and review has been extended it is being described as one of the largest investigations into banking ever carried out. As part of the extended investigation regulators will be looking into the costs of banking, how the end of free banking might affect consumers and the economy, and will also continue to assess the fairness of bank charges. It is thought that placing a low ceiling limit on these charges could result in many banks charging all customers a monthly fee for holding a current account.

With regards to extending the investigation one OFT official stated: “This will provide the necessary context for assessing the fairness of unauthorised overdraft and returned item charge before we apply the law in this area.” 

A National Consumer Council official also commented on the situation, stating: “Banks must deliver a fair deal for consumers and stop dragging their customer service reputation further into the mud by waiting for regulatory action.”

Tom Smith
15th May 2007

Tags: costs, investigation, charges, bank, accounts, regulators, oft, fees

Savers may be missing out

The recent 0.25 per cent interest rate rise was bad news for borrowers but was more warmly received by savers.

The Bank of England’s decision to increase the base rate to 5.5 per cent should mean that savers earn more interest on their money.

However, the Post Office is warning that many people are not benefiting because banks and building societies are failing to pass on the new rates.

“It’s easy to become a base rate loser when account providers fail to pass on interest rate rises in full to their customers, leaving people hugely out of pocket,” revealed Richard Norman, head of savings at the Post Office.

“Interest rates have risen sharply over the last year, and many experts believe there are further hikes to come.

“As people tighten their belts due to rising mortgage payments, they should make sure any money they have in savings is working as hard as it can for them,” he added.

The Post Office claims that many of the largest high street banks and building societies are failing their customers in this way and the financial losses can be huge.

The firm points out that a saver with £5,000 in a typical instant access savings account may have lost out on £145 in interest if their bank has not implemented the one per cent rate rise we have witnessed in the past year.

Tags: finance, GBP, base rate loser, bank, Mortgage loan, building society

Over two billion still to be claimed in bank charges

According to figures released by the price comparison website Uswitch, over two billion pounds worth of bank charges are yet to be claimed by consumers that have been hit with hefty and unlawful penalty fees over the past six years.

The topic of bank charges has exploded over recent months, with regulators claiming that the charges imposed for exceeding an overdraft limit and for returned cheques and direct debits are unlawful and unfair. As a result many people have claimed back these charges going back up to six years, but Uswitch officials claim that around £2.12 billion has still yet to be claimed.

The figures from Uswitch suggest that around four billion pounds in charges have been netted by banks that have applied these charges to the accounts of around nineteen million consumers in the UK. So far, over half of that amount has not been reclaimed by consumers.

So many people are now being encouraged to reclaim their fees from banks that there are a number of financial services available that can help consumers to try and reclaim their fees if they are unsure as to what they need to do. However, the clock is ticking, as an impending decision from UK regulators with regards to what is construed as a fair fee may reduce the amount that claimants can file for.

Many consumers have already threatened to take their banks to court for not repaying the fees, and in most cases the banks have paid up on a last minute basis, with no banks actually having gone to court to justify the amount that they charge.

However, it seems that many consumers are frightened of the consequences of making a claim, with a number of banks having threatened to close consumers’ accounts if they try and reclaim their fees.

Tom Smith
10th May 2007

Tags: time, bank, close, uswitch, threats, reclaim

Contactless cards are on their way

The UK banking industry has confirmed that plans are in place to roll out contactless technology for debit and credit cards.

We could see the new system being put in place as early as September of this year, with consumers receiving new cards and retailers getting new receivers.

The UK payments association Apacs has revealed that transactions on the contactless cards will be limited to no more than £10 and users will not need to enter their pin number each time they make a purchase.

Apacs is assuring customers that their cards will remain safe and says that every now and then they will be required to enter their pin number for security reasons.

The cards will initially be introduced in London, spanning from the City to Canary Wharf, with a larger roll out planned across the whole of London and eventually nationally by the end of 2008.

The cards are being touted as an easier and quicker way for consumers to purchase everyday items and the banking industry believes that their introduction will encourage shoppers to use their cards rather than paying for low-value items with cash.

“We are confident that consumers in the United Kingdom will be quick to adopt contactless payments as they are faster and more convenient than cash increasing both the number of cards in issue and, as retailers benefit too, places where they can be used,” commented John Bushby from Mastercard Europe.

Cardholders should wait for correspondence from their card company to see what they need to do to get a contactless card.

Tags: United Kingdom, europe, card, bank, Cardholders, introduction, year

Don’t bodge it yourself (BIY)

Homeowners are being encouraged to avoid partaking in any bodge it yourself (BIY) over the Bank Holiday weekend.

According to Halifax Home Insurance, we spend £607 million on repairing the damage we do to our homes while trying to fix them up.

Traditionally the UK goes DIY mad over the Bank Holiday and this is often when the majority of damage is done.

However, Halifax is warning people not to take on a job which they are not qualified to do as it could end up costing a lot more to fix the job than it would have to have got a professional in originally.

“Whilst well planned and executed home improvements can add significant value to a home, getting it wrong can be a disaster,” commented Vicky Emmott, senior manager of underwriting at Halifax.

“We’d advise anyone planning any major improvements to their home to employ qualified and reputable tradesmen, rather than going it alone.

“Indeed trying to tackle certain areas that you are not qualified for, such as electrics or plumbing, could invalidate your home insurance and leave you liable for the cost of any subsequent damage,” she added.

DIY enthusiasts are encouraged to make sure there house is properly covered before embarking on a project.

Tags: whilst, home improvements, major improvements, holiday, home insurance, majority, homeowners

Bank accused of wasting court’s time

One of the leading UK banks has been accused of wasting time by a judge, and has been ordered to pay the court costs of a woman that sued the bank after trying to reclaim unfair and unlawful charges that the bank had applied to her account for going overdrawn, returned cheques, and unpaid direct debits.

Lloyds TSB will have to pay court costs of £85.41 after the Bristol County Court judge, Andrew Kearney, accused the bank of ‘acting unreasonably’.

The plaintiff, Vivien Lloyd, had tried to reclaim fees that amounted to £655, but wrote to the judge after the bank spent a year wasting time before offering to refund the fees. The judge stated that the bank had no intention of defending its charges in court, and therefore accused the bank of wasting time and ordered it to pay the court costs incurred by the plaintiff.

The plaintiff had initially written to Lloyds TSB in March 2006 to reclaim her charges, many of which had been accrued by her son, Gary.

She stated: “The terrible stress it put me through – it was driving me mad. I’m absolutely ecstatic – it was our living money, our food money.”

She added that the bank had continued to refuse the refund until earlier this year, with just one week to go before the court hearing, at which point Lloyds offered her a full refund of charges. 

A spokesperson for the bank stated:  “We are surprised by this judgement as we firmly believe we have the right to lodge a defense in any legal action brought against us. We have been unable to trace any notification from the court about this application for a further payment of £85 and so did not have an opportunity to challenge it before it was made.”

Tom Smith
4th May 2007

Tags: year, appeal, claim, charges, refund, unfair, legal

RBS customers face new charge

The backlash from the Office of Fair Trading’s (OFT’s) crackdown on bank charges is beginning to be felt.

After the organisation announced that banks should reduce the amount they charge customers when it comes to penalty fees, it became apparent that banks would look for other ways to make their money.

Now Royal Bank of Scotland (RBS) has announced that it is making some changes to the way that it operates.

The bank has revealed that customers who change address must inform RBS before two statements are sent to the previous property or they will be hit with a £12 fine.

In addition, RBS has plans to change the way it treats card purchases of items such as gift vouchers and betting slips.

The bank wants these “cash equivalent products” to be charged in the same way as cash advances, meaning customers will incur a higher rate of interest.

RBS is not the first bank to announce changes to its operations since the OFT crackdown.

A number of firms have increased interest rates, while some are charging customers for failing to use their card on a regular basis.

Tags: bank, way, cash, amount, backlash, banks

Customers could be losing out on savings accounts

Many consumers in the UK like to save some money towards a rainy day, to build a nest egg, or simply for emergencies, but recent data has revealed that an alarming number of savers in the UK are getting really raw deal on their savings and could net much more in interest each year on their savings simply be taking the time to find a savings account that pays a decent rate of interest.

Experts claim that the apathetic attitude of some savers, and even misplaced loyalty to their banks, could mean that many savers are losing out on a small fortune in interest each year.

Recent research was carried out by Sainsbury’s Bank, and according to the information from the research, around forty percent of savers in the UK are earning less on their savings than the rise in inflation.

With inflation working its way up to over three percent according to the Office for National Statistics, it seems that around two in every five savers are earning under the three percent mark on their savings, with around sixteen percent of banks and building societies paying even less than this, at two percent or under.

The Bank of England has increased interest rates three times since August of last year, taking the base rate from 4.5% to 5.25%, and many predict that there will be a further rise of at least 0.25% in may this year, which would take the base rate to 5.5%. However, despite these increases only a fifth of banks and building societies offer savings accounts that have an interest rate of fiver percent or higher.

As an illustration, officials from Sainsbury’s Bank stated that someone with £3000 in a savings account paying 5.5% could earn around £100 more in interest each year than someone with the same amount of money in an account that paid 1.5%. 

Tom Smith
28th April 2007

Tags: england, rate, increase, bank, Banking, earn, savings, accounts, interest

OFT bank charges study welcomed

The announcement by the Office of Fair Trading (OFT) that it will be launching a study into bank charges and the perceived effects of the loss of free banking has been welcomed.

A number of organisations have come forward to welcome the decision which many hope will change the way in which banks treat their customers.

Citizen’s Advice (CAB) has backed it, saying that bank charges for unauthorised overdraft use punish the most vulnerable in society.

“We welcome the further work being done by the OFT concerning bank charges,” said Tony Herbert from CAB.

“Evidence from local bureaux shows that bank charges have a disproportionate effect on people already on low incomes; one charge may be enough to push them into the red and keep them there, incurring more charges that push them further into debt.

“It’s like running up the down escalator – you’ll probably never reach the top,” he added.

The British Bankers’ Association (BBA) has also given its support to the new study, welcoming the OFT’s realisation that the issue of charges is a complex one.

However, the BBA says that it “continues to believe that the fees are legal”.

Tags: british bankers association, tony herbert, local bureaux, organisations, OFT's realisation, Fair Trading, Law Crime, bank

Apology from Lloyds over call centre problems

Lloyds TSB has made an apology over problem with their call centre number, where customers calling the 0845 number were left hanging on the line to listen to a recorded message for up to ten minutes whilst being informed by an automated message that their enquiry would be dealt with as soon as possible.

The calls cost consumers three pence per minute, and around half of the cost of the call goes to the bank, which means that Lloyds was raking in a tidy profit from all the people that were left hanging on the telephone.

Lloyds recently announced that it was looking into systems that would ensure that customers of the bank received a more efficient and faster service, which made this situation all the more embarrassing for the bank. Its Bombay call centre was closed last month, after the bank claimed that the automated system could handle most enquiries. The 0845 number would also enable customer to get the telephone number of their local branch according to Lloyds, which previously customers could not do.

However, according to staff agencies the bank has failed to ensure that there are adequate staffing levels to deal with the new system, and Lloyds TSB has been accused of misleading employees, media, and customer with its claims about the automated service. Angry customers have been left holding on and paying a small fortune each time they call, the bank – which made over three billion in profits last year – has been raking in a fortune from the calls, and staff have been left to deal with the changes with no additional resources.

Over two hundred staff members lost their jobs when the Bombay centre was closed, and Lloyds have claimed that the efficiency of the automated system meant that staff members could be reduced.

Tom Smith
25th April 2007

Tags: bank, centre, line, call, lloyds, telephone, recorded, india, bombay

Delay in bank charges decision from OFT

The Office of Fair Trading has announced a decision to delay the decision with regards to what can be construed as a fair bank charge for those that default on their current accounts. Many experts were expecting a decision from the Office of Fair Trading this month, but the OFT has now stated that the decision will be left until the end of the this year, as further investigation in bank charges is required before any conclusion can be reached.

The decision by the OFT is good news for some people that are waiting to make a claim for unfair and unjustified charges, as it buys them extra time to make their claims without the level of their claim being affected by the OFT decision. The OFT has confirmed that an announcement about the further investigations in to these banks charges will be made around the end of April of this year.

Once a decision has been reached with regards to what is deemed to be a fair charge for those exceeding their overdraft limits and defaulting on their current account in others ways, future claimants will probably only be able to reclaim the difference between what they were originally charged and the amount that is deemed fair by the Office of Fair Trading, so this gives customers extra time to reclaim the full amount for which they were charged. On the other hand, this delay spells bad news for those that were looking to get lower fees from banks in the future.

One thing that has been worrying a number of consumers and experts in the field is the prospect of banks introducing account fees on current accounts if the charges are dramatically reduced in a bid to try and recoup costs.

Tom Smith
23/4/07

Tags: Bad news, consumer protection, prospect, Consumer Direct, delay

Buy-to-let landlords expanding their portfolios

As further evidence of investor confidence in the buy-to-let market, the average number of properties held by buy-to-let landlords has risen to over 11, according to new research.

In November last year, the average landlord owned 10.2 properties, but in February this had risen to an average of 11.1, a study conducted by mortgage lender Paragon has found.

Additionally, the average portfolio has increase in value by seven per cent over the past three months.

“Our buy-to-let index has shown that in recent months rents have been rising faster than house prices,” said Paragon’s managing director John Heron.

“Because of high tenant demand, landlords are able to achieve strong rental incomes and good yields – and are responding by extending their portfolios.”

Such confidence in the sector was mirrored in landlords’ expectations of an eight per cent rise in the size of their portfolios over the next year.

These results suggest that recent interest hikes have not deterred buy-to-let investors from entering the market so far, although they may be tested by next month’s expected quarter-point increase from the Monetary Policy Committee of the Bank of England.

Tags: Renting, buy-to-let investors, Managing director, increase, buy-to-let market, Index, bank

Brits ‘don’t haggle’ over new cars

British car buyers are wasting money on their personal loans by not haggling over the price of the car they are buying, according to a new report.

Research by Sainsbury’s Bank suggests that up to 386,000 people will not haggle on the price of their brand new car between March and August this year, despite allegedly being able to save up to £1,500.

The bank, which claims that around 16 per cent of people looking to buy a new car will use a personal loan as their main source of finance, has found that this overspend could add up to £611 million nationwide.

Steven Baillie, loans manager at Sainsbury’s Bank, said: “Once you have decided which new car you want, you then need to be prepared to haggle over the price you pay and if you are financing the purchase with a loan, you also need to make sure that you shop around to find the right option for you.”

Drivers are also encouraged to shop around for their personal loan in order to get the cheapest deal, meaning they can save money on the cash they borrow to pay for their new motor.

Tags: Insurance, Bargaining, Sainsbury's Bank, Brits, home, bank, brand

BBA supports new dormant account legislation

The banking industry is supporting a government consultation paper on unclaimed assets which is issued today (March 20th).

Officials at the British Bankers’ Association (BBA) have thrown their support behind the proposed approach of dealing with unclaimed assets.

Essentially the proposed legislation will allow unclaimed monies to be invested into community causes while still being reclaimable by the owner after it has been used.

Money can only be used for other purposes once an account has lain dormant for 15 years and the original bank or building society will remain in control of any further customer relations regarding the account.

The purpose of this is to ensure that if the customer does try to claim his or her money back, it will be as easy a process as possible.

“All along our priority has been the protection of the right of customers to reclaim their monies at any time,” commented the BBA’s chief executive Angela Knight.

“A key element of the approach proposed within the consultation paper therefore is that even after the transfer of their ‘unclaimed assets’ individuals will retain the right to reclaim their monies via their bank or building society as at present.”

It may be worth checking to see if you have a dormant account which you have forgotten about and may contain a nice financial surprise.

Tags: customer, business, british bankers association, consultation, owner

Interest rates remain 5.25%

The Bank of England has decided to hold interest rates at 5.25 per cent.

It is good news for those with a mortgage, loan or credit card and will be welcomed by the majority of borrowers.

Many experts had been predicting a continued rise in base rates in the coming months, following a steep increase from 4.5 per cent to 5.25 per cent in five months.

However, a number of factors, namely falls in the stock market, commodity prices and a fall in inflation, have reduced the chances of an imminent rise.

The Bank of England’s Monetary Policy Committee (MPC) changes the base rate to keep inflation as close as possible to the government’s two per cent target.

Recent months have seen inflation running well ahead of this, sparking the quick succession of base rate increases.

Last month the MPC was split in its decision to hold rates and economists are predicting that March’s decision will also be a split one.

That does not bode well for the future, although two MPC members have come out indicated that they are strongly against any future rises.

Tags: interest rates, cent, future, succession, finance, bank

Pay as you go credit card

A prepay credit card is being trialled in Liverpool as the UK tries to tackle the problem of personal debt.

The Bread card, which is provided by Maestro, allows holders to put money onto it in much the same way that you top up a mobile phone.

Purchases can be made on the card, while money can also be withdrawn from ATMs. The key difference, however, is that you cannot get into debt or incur charges because the card will only let you spend what you have topped up.

The card is designed to help those who cannot get a bank account because they have previously handled their finances badly, are foreign nationals or are UK nationals travelling abroad.

“This card will give people the chance to rebuild their credit rating, which is great for those who get into a bit of a mess during their teens and early 20s,” said a spokesman for Bread.

“With such a big focus on Liverpool as the capital of culture, Bread thought the card would be perfect to launch in a city which seems to be growing more rapidly than any other in the UK.”

The scheme is set to begin in March or April and will run for around six months.

Tags: bank, six months, spokesman, foreign nationals, Payment systems, credit rating, personal finance, key difference

Lenders responding well to exit fees ruling

Mortgage lenders have responded positively to a Financial Services Authority (FSA) ruling that borrowers should be told more clearly about the cost of exit fees.

That is according to the ifs School of Finance, which says many lenders have removed or reduced the fees on their mortgages.

A number of banks and building societies have made “encouraging steps” to reduce exit fees since the FSA ruling was made public, with Barclays, Kent Reliance and Portman all named as firms that have announced changes.

The ifs School of Finance also points to a “general willingness” among lenders to ensure that customers are being treated fairly when it comes to exit fees.

This too follows a statement from the FSA which said that some customers are being left in the dark over specific issues with their mortgage.

“Banks and building societies have proved very responsive to the FSA’s recent announcement,” said David Fields, head of banking at the ifs School of Finance.

“However, it remains imperative that customers should consider the overall cost of a mortgage, ie; administration and exit fees as well as the interest repayments, before they make what is likely to be the biggest financial decision of their lives.”

Those of you considering getting a mortgage should make sure that you have done your research and are completely aware of any potential costs which are not immediately apparent.

Tags: bank, ruling, Mortgages, number, overall cost

Bank charge row

The British Bankers’ Association (BBA) has hit out angrily in retaliation to a Which? magazine report that claimed banks are trying to trick their customers.

The publication looked into bank charges and found that many banks are employing “underhand methods” to prevent consumers challenging the charges.

According to the report, those who attempt to challenge the banks can be threatened with account closure and having their details passed onto debt collectors.

“In an attempt to avoid paying consumers what they are due, we have found banks employing increasingly underhand methods,” said Doug Taylor from Which?

“It is important that the exposure of these tricks does not put people off reclaiming their charges, though, as that would be playing into the banks’ hands.”

In response to the claims made by Which?, BBA has launched a scathing counter attack, labelling the report “sensationalist” and “personally insulting”.

BBA says that it is perfectly reasonable for a bank to close a customer’s account when it is clear that the relationship has broken down.

Additionally, the organisation points out that a bank is acting within its rights if it chooses to use a debt collector if it has chased an individual a number of times.

“Which? is clearly trying to exploit its position as a consumer body by sensationalising what could be a useful piece of research,” said Angela Knight from BBA.

“The way in which Which? has approached this is not only sensationalist, it’s also personally insulting to the front line bank staff who do an excellent job serving their customers.”

Another report into bank charges, carried out by the Office of Fair Trading, is due to be published soon.

Tags: banks, relationship, research, british, office of fair trading

First-time buyers taking risks

First-time buyers are prepared to take bigger financial risks to get on the property ladder as house prices continue to rise.

As the third interest rate rise in five months looks set to have just a minor impact on the price of a house, Yorkshire Bank says many consumers feel forced into taking big chances with their future.

According to the bank, three out of five first-time buyers would consider taking out a home loan that was five times their income.

In addition, 80 per cent would also consider getting a mortgage which is paid back over more than 25 years in order to make the monthly payments more manageable.

“With the average house price nearing £200,000, this year may feel like the last chance saloon for first-time buyers already finding it hard to buy,” said Gary Lumby from the bank.

“Saddling themselves with such huge debts isn’t wise as they could still be paying off their mortgage well into their sixties or even seventies.

“They may also face breaking point should interest rates increase again. Unfortunately for some, they feel it is their only option,” he added.

Yorkshire Bank has also found that 28 per cent of first-time buyers are so keen to get onto the property ladder that they are willing to offer above the asking price straight away for a house which they want.

In response to the current housing climate, 15 per cent of parents have started a home fund to help their children buy a house when they are older.

Tags: monthly payments, Real estate, business, property, bank, yorkshire bank, chance

Leave out the banks

Following a stinging attack on banks over penalty charges, consumers are being told that they can avoid contact with banks altogether if they wish.

Zopa, an online market place where people meet to lend and borrow money, says customers need to be made aware that they are no longer limited to simply switching between banks.

During a parliamentary debate on January 16th, many banks were accused of “ripping off” their own customers and penalty charges were labelled “illegal” by Liberal Democrat MP Matthew Taylor.

The people at Zopa say that by borrowing from other members of the public it is possible to get some of the lowest interest rates around.

“There is simply no need for people to continue to suffer at the hands of the big banks anymore,” said James Alexander from Zopa.

“They are no longer restricted to just switching to an apparently less greedy bank either.

“They can cut them all out by borrowing and lending between fellow individuals to get not just a better deal, but also the pleasure of no longer contributing to the banks’ truly staggering profits,” he added.

Tags: online, MP Matthew Taylor, bank, MP, place where people, Matthew Taylor.The people

Rate of inflation to be held?

It appears probable that the Bank of England’s monetary policy committee (MPC) will decide to leave interest rates on hold following its meeting on January 12th.

However, the rates are likely to be raised to 5.25 per cent next month, meaning more bad news for mortgage holders.

The raise has been predicted by economists for some time and it comes after the cost of borrowing was increased twice towards the end of 2006.

Inflation is currently at 2.7 per cent, the highest it has ever been under this Labour government, and policymakers are concerned about inflationary wage deals as a result of living costs.

“A rate hike this week is not out of the question but given we still know nothing about January wage settlements, I think the bank is more likely to wait,” Alan Castle, economist at Lehman Brothers, told Reuters.

A recent poll carried out by Reuters found that 49 out of 50 economists asked expected rates to remain on hold, while almost 50 per cent thought there would be a rise by March.

Tags: money, policymakers, hold, bank, quantitative easing, alan castle, economist

Brits missing out on ‘current account revolution’

The majority of people fail to switch their current account, despite being able to take advantage of better offers.

Research, carried out by Abbey, shows that 60 per cent of Britons have held the same current account for at least ten years, with 18 per cent having never switched.

The bank says this is despite seeing interest rates with some banks soar and is the result of misinformation on the customers’ part.

Abbey looked into the reasons behind the lack of movement and came back with some surprising results.

Of those asked, 65 per cent said that switching account is too much hassle, although research shows that 90 per cent of switchers found it either ‘very easy’ or ‘fairly easy’.

Almost half (49 per cent) said that they thought all current accounts are similar, this is despite the fact that the difference between the best and worst credit interest rates is 5.9 per cent.

Abbey also found that 16 per cent of people think that it is impossible to move your overdraft to a new account. In fact, overdrafts of £5,000 or less can be matched, with some banks offering an interest-free period.

“Myths and misinformation are stopping people from joining the current account revolution,” said Steve Shore, head of banking at Abbey.

“The difference between the best and worst rates is significant, and customers can greatly benefit from switching to a better rate.”

Tags: The majority, hassle, bank, overdrafts, investment, overdraft

Credit card cloning warning

Credit card users in Norfolk have been warned to be on their guard after two reports of cloning in the region.

In both instances, money was removed and cashed in Malaysia, with the card owner none the wiser until their statement arrived.

One victim, Lucy Webster, saw £280 taken from her in four separate transactions and was only made aware when her bank called her.

Mrs Webster insists that she has never disclosed her Pin number to anyone and cannot understand how the money was taken.

“It’s very worrying, and I wanted to warn people to be aware that it’s happening because you never think it will happen to you,” she told website EDP24.

Norfolk police, and other forces around the country, are warning card holders to take special precautions to ensure they do not become a victim of cloning.

Ensuring documents such as balance statements are properly shredded and shielding your hand when entering your Pin are just two handy hints.

Tags: bank, Computer security, EDP, Credit card users, handy hints, card owner, Smart cards, Ensuring

Banks top mortgage lenders table

Banks remained the cheapest mortgage lenders for existing borrowers in 2006.

That is according to a new study by financial research company Defaqto, which also discovered that there was a huge difference between the cheapest and most expensive.

There was a difference of almost £500 between some mortgages, with HSBC being named the cheapest for standard variable rate mortgages or their equivalent.

HSBC was closely followed by Intelligent Finance, while the next three in the top five were building societies (Skipton, Nationwide and Britannia).

“Despite two Bank of England base rate increases last year, on average they did not change significantly from 2005 so it’s not surprising that it cost virtually the same to service a standard variable rate mortgage in 2006 as it did in 2005,” commented David Black, head of banking at Defaqto.

“While it is recognised that standard variable rate mortgages are only one type of mortgage, they can represent an important benchmark in competitiveness.

“This demonstrates why borrowers must take the time to check that they have the most appropriate mortgage,” he added.

The research was based on the amount of gross interest payable on a £50,000 interest-only mortgage and specialist providers, privilege and loyalty rates were not included.

Tags: Defaqto, bank, nationwide, Mortgage loan, banks, Banking

Banks’ January sales scam

Consumers are being warned that banks are trying to fool them with so-called new year sales, says an industry expert.

A number of high street banks have launched special deals this week, claiming to offer consumers attractive rates on a number of products.

However, consumer campaigner and founder of moneysavingexpert.com Martin Lewis says the sales are nothing more than a “great scam”.

“I have not seen anything I would describe as a sale,” said Mr Lewis. “A sale is a period when you get better deals. This is a bank promotion to look like a shop sale.

“What you are actually seeing is the big four high street banks, who are hideously overpriced normally, doing some price reduction so that they are now only over priced.”

Mr Lewis went on to say that consumers should give most of the banks’ sale items a miss and aired his anger at the behaviour of some of the leading banks.

“It is a great scam. You are more expensive than the market place, so you reduce prices and call it a sale,” he added.

Tags: com, january sales, price, behaviour, street, industry expert, consumers attractive rates, bank

Find the right savings account for your holiday savings

As the festive period disappears and Spring approaches many people in the UK start thinking about saving towards their summer holidays. If you are looking to start putting some money aside to fund your annual holiday in 2007, it could really pay to shop around a little and find a savings account that will make your money work harder for you. There are many different savings accounts available these days, and the interest rates on offer can vary dramatically. Depending on how much you will be saving this could make a big difference to the amount that you earn in interest.

The type of saving account that you opt for will depend on a number of factors, such as the initial deposit that you can make, the amount that you intend to put in each month, and the level of access that you require to your savings. You will find a choice of savings accounts, some of which require a certain period of notice in order to make a withdrawal without penalty and others that offer instance access. Some require a minimum initial deposit of just one pound whereas others require more, and some want to see a regular minimum amount going in each month, whereas others will accept deposits as and when you can afford them.

Amongst one of the highest savings account interest rates on offer is the Alliance & Leicester savings account, which offers twelve percent AER on its regular savings account. Choosing the right savings account for regular savings can make a big difference to the amount you make on your deposits, and consumers can quickly and easily compare the different savings accounts available, along with their interest rates and terms by going online. This is the easiest and most convenient way to see at a glance which of the UK’s savings accounts will best suit your needs and give you the best return on your deposits.

Tags: accounts, savings, deposits, aer, return, interest, earn, bonus, online, bank

Will Barclays going to be taken over by Bank of America?

Speculation is rife over whether the Bank of America may be planning to put in a bid for the UK bank Barclays, which is a household name in banking in the UK. Analysts at Merrill Lynch have voiced suspicions that this bid seems imminent based on recent goings on and speculation. By market capitalization, Barclays is the third largest bank in the UK and the Bank of America the second largest in the world.

According to Merrill Lynch: “Bank of America has previously indicated that the next phase of its expansion is to become a leading global commercial and investment bank. In order to achieve that goal, we believe Bank of America is very interested in acquiring Barclays.” The analyst added: “We think Barclays is the perfect fit for Bank of America, given our understanding of Bank of America’s international aspirations.”

So far this appears to be simply speculation, and officials from Barclays and from he Bank of America have refused to make any comment regarding the situation. However, according to Merrill Lynch the recent resignation of the Chief Financial Officer at the Bank of America is a little suspicious: “While we believe de Molina resigned of his own accord to pursue a CEO role at another company, or a more entrepreneurial career, the timing of his resignation is suspect to us.”

Furthermore analysts predict that the takeover could save the Bank of America around one and a half billion pounds due to reduced corporate and staffing costs, as well as increasing chare prices to generate more in the way of profit. The analysts added: “Furthermore, we think the acquisition of Barclays would enhance Bank of America’s long-term growth rate because it would provide numerous avenues for Bank of America to continue to grow on an international scale.”

Tags: accounts, ceo, bank of america, takeover, uk, savings, barclays, Banking, america, bank

Put credit card fraud into perspective

As Christmas approaches many consumers in the UK have started to worry about the risk of Internet fraud, and although buying gifts and other related items online has become hugely popular over the years many are still worried about the possibility of becoming the victims of credit card fraud. This worry is further reinforced through the various warnings that always come out at around this time of year, warning consumers to beware of credit card fraudsters.

However, some new advice has now been issued by a company that works to protect both retailers and consumers from this type of crime. The 3rd Man has advised consumers not to listen to ‘scaremongers’, and has urged retailers to put this type of criminal activity into perspective. The 3rd Man wants more emphasis put on the fact that by and large Internet shopping is safe, and this is because most reputable retailers use secure software to ensure that the consumer’s financial and personal data is not compromised.

Each year billions of pounds is spent on Internet shopping by consumers in the UK, but the many stories about the risk of online shopping and credit card fraud could result in a drop in consumer confidence. The 3rd Man does advise consumers to ensure that the site that they are using is a secure one, and providing that this is the case there should be no need to worry.

The CEO of the company stated: “Every day there is a story about fraudsters cheating their way into our pockets. The introduction of Chip and PIN has made a massive impact on fraud, reducing crime in stores. It has also persuaded many fraudsters to target ‘card not present’ environments such as Internet shopping, but equally many retailers have recognised this and put in place proper systems to combat the criminals. If people wish to shop on the Internet they should be confident that it is fundamentally safe. It is the safest way to shop!”

More Info:

• Identity Theft

Tags: fraud, card, credit, pin, thief, chip

Even more convenience for A&L customers

Following in the footsteps of HSBC and First Direct, the Alliance & Leicester has revealed plans to introduce a new method of banking that will offer consumers even more in the way of convenience and flexibility – mobile banking. Consumers in the UK that have accounts with major banks and building societies can already enjoy the convenience and ease of Internet banking in addition to using the facilities and amenities available at the local branch. It seems that mobile banking could be the next big step for many banking companies.

Through the use of the mobile banking service on offer from the Alliance and Leicester, consumers will be able to quickly and easily check on recent transactions that have been made, will be able to check their balances, and will even be able to top up their mobile phone credit directly from their bank accounts. In the future, according to officials from the Alliance & Leicester, consumers will also be able to make money transfers and pay bills from the account.

For those that want to take advantage of this mobile banking service, registration will be made easy and simple, and can be done via the Internet or via the mobile phone. One spokesperson from the bank stated: ‘There has not been much technical integration and all we need to do is verify the customer and their bank account details, so it has been straightforward.’

One research analyst says that over time consumers will become used to this updated method of banking, as it means that they will have one more valuable facility to help with the smooth-running of their finances and accounts. However, he added: ‘It is taking consumers a while to use their mobile phones for more than voice calls, and it is difficult for a bank to teach people to use them in another way.’

Tags: cost, interest, transfers, online, charge, payments

Homeowners cautioned over the true cost of unsecured personal loans for home improvements

The latest figures released by the British Bankers’ Association (BBA) show that 198,242 mortgages, totaling £21.8 billion were approved in the UK in October, a six percent increase on September’s figures and an eight percent increase on the figures year-on-year.  At £144,200, the average UK residential property mortgage also saw a slight increase during the month.

Nonetheless, while, “the secured lending market undoubtedly remains robust,” according to David Dooks, director of statistics at the BBA, “after discount price growth, lending volumes are not dissimilar to the same time last year” – indicating that the recent base rates increases by the Bank of England mat be having some effect on the demand for UK property borrowing.  A factor echoed by Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, who foresees a slowdown in the UK property borrowing during the course of the next year once the full impact of those Bank of England rate increases filters through and the true higher cost of borrowing starts to be felt.

In the meantime,  a recent report by Money Expert is warning that an increasing number of UK homeowners are now opting to take-out unsecured personal loans to finance their home improvement projects over more cost effective ways of this type of borrowing. 

While this may, itself, not be too alarming, Money Expert’s findings also indicate that UK homeowners are not fully aware of how much their unsecured personal loan borrowing is costing them in extra interest payments.  In some cases, interest repayments on a four year £10,000 unsecured personal loan taken-out for home improvement projects can vary by as much as £2,500 – or 25%.

Sean Garden, chief executive of Money Expert, therefore warns, “Personal loans can vary in price dramatically – you could end up paying back as much as a quarter of the amount you borrowed in extra repayments unless you research the market carefully.”

As such, if you are one of the many new homeowners who have recently been approved a UK home mortgage loan and are now looking to undertaken some DIY home improvements on your new home, make sure you look around and research the many different types of UK unsecured personal loans available in the market to make sure that you get an unsecured loan that meets your needs without breaking the bank in extra interest payments.

Tags: Loans, improvements, bank, cost, diy, Mortgages, unsecured, credit, interest

Bank claims that most consumers won’t be affected by new charges

Following its recent announcement to start charging UK customer a ten pounds monthly fee if they did not meet certain criteria, the First Direct Internet bank, a subsidiary of the HSBC Bank, has been defending its decision. The bank has been receiving calls from many angry customers who want to know why they are going to be charged a fee for using the bank’s services. The bank currently has around 1.3 million consumers, but some experts have warned that First Direct may lose a lot of its custom as a result of the new fee.

The new charge introduced by First Direct is due to come into force in February of 2007, and current account holders that do not pay in or maintain a balance of at least one and a half thousand pounds in their current account each month could find themselves being charged. Exceptions to the new charge are those customers that also have other financial products with First Direct, such as a mortgage, credit card, savings account, or loan.

One spokesperson from First Direct stated that he did not think that the bank would lose custom as a result of the new charges, and stated that most consumers that banked with First Direct would not even be affected by the new charges. He stated: “Around 85 per cent of our customers will still pay nothing after these charges are introduced. The only people affected will be those with just a current account, if they do not keep a balance of £1,500 or more. “

He also added: It’s possible that not a single one of our customers will pay the charges. We’ve got a great number of customers who’ve got accounts with us they don’t particularly use. We’re just asking those customers to bring more banking to First Direct to make us their first choice.”

Tags: interest, charges, fines, Banking, first, account

HSBC Becomes First UK Bank To End ‘Free’ Banking

20 years after HSBC and Barclays introduced the concept of free banking to the UK, HSBC have announced that it is now time to pull the plug on this popular product and re-introduce a charge for using its banking services.

At present, HSBC has announced that it will limit charging the fee to its online banking arm, First Direct.  Moreover, the fee charge of £10 per month will not be applied to all customers of First Direct.  The “lucky” First Direct customers who will find themselves subject to the £10 monthly fee will be those who fail to make deposits of at least £1,500 per month or those who do not maintain an average balance of £1,500 on their current accounts.

While it is true to say that the UK has remained one of a very few select countries to maintain free current account banking for those bank customers who do not go overdrawn, over time this has probably been one of the most popular products that major UK banks have offered.  Nevertheless, it seems, in this case, that the success of free current account banking in the UK has also been its eventual down-fall, with many leading UK banks having made grumbling noises over the past year or so that the because the UK has free current account banking, this no longer makes the banks competitive with their European and American competition, the majority of whom already charge for current account services.

To many of the 1.3 million customers of First Direct, however, this is going to be a bitter pill to swallow.  UK banks made record profits in 2005, so to now be told that the bank is no longer competitive with its overseas rivals merely because it has not been arbitrarily applying a monthly fee  £10 on certain financially disadvantaged customers may just sound a little like sour grapes.

Thankfully, other leading UK banks, such as Royal Bank of Scotland, Barclays, HBOS and Lloyds TSB, have decided not to follow the lead of HSBC at this time.  However, with most UK bank’s looking to recoup the estimated £1 billion in lost revenue following the Office of Fair Trading’s forced cut to penalties applied on late credit card payments, it would need optimism of the highest order to believe they won’t follow suit soon, a view clearly echoed by a spokeswomen for Royal Bank of Scotland, owners of Nat West, who, when asked RBS’s stance on the issue, was quoted as saying that: “There are no current plans, but you can never completely rule options out in the long term”.

In the meantime, the estimated 200,000 customers of First Direct who are likely to be directly affected by this latest move now have until February 2007, when the new charges will come into effect, to either get their accounts in order so that they do not fall foul of the new charges or to look for alternative free banking arrangements. 

Kindly, however, First Direct have given the 200,000 or so estimated customers it says will likely be effected by this move a ‘get out of jail’ free card: the bank will agree to waive the fee if the customer agrees to take out another First Direct product – such as a loan or insurance. 

Tags: scotland, fees, loan, charges, bank, royal, uk, Insurance, Banking

Interest Rate Rise Could Mean Nearly £300M More To Pay For Homeowners

A recent study carried out in relation to the recent interest rate rise enforced by the Bank of England has shown that mortgage payers in the UK could be paying nearly three hundred million pounds more collectively in monthly repayments on their mortgages. The interest rate hike was recently announced, after Bank of England officials increased it from 4.75% to 5%.

The figures with regards to the monthly rise in total mortgage repayments came from an analysis carried out by Egg. Officials from Egg have advised consumers to start shopping around for a better deal on their mortgages in order to try and save money on the amount that they will otherwise have to pay out as a result of the interest rate increase. Those on a variable rate mortgage could find that the 0.25% rise in the base rate could make a significant difference to their monthly outgoing based on the value of their mortgage.

According to the report from Egg, those with variable rate mortgages in the UK will each pay an average of around £35.92 more each month as a result of the interest rate increase. With over eight million mortgage payers currently on a variable rate, this could mean a rise of around £292 million per month on total mortgage repayments.

Officials state that by doing a little research and shopping around for a more competitive mortgage deal consumers could cut back on the financial impact that the interest rate rise has on their monthly outgoings. There are a number of deals available on the market at the moment, and some consumers may prefer to opt for a fixed rate mortgage to avoid further financial implications in the event that the interest rate rises again early next years, as predicted by some financial experts.

Tags: payments, rise, Mortgages, home, deals, offers, debt, rate, interest, pay

The Process and Benefits Of Switching Bank Accounts

It’s a free market, competition is positively encouraged between companies and the banking world is no exception. So what do you have to do when you want to change banks accounts? Read more

Tags: bank, bank accounts, switch bank accounts, finance, best bank accounts, old one

How Do Bank Accounts Work?

Why does it take so many days for a cheque to be paid into your personal account? We thought we’d look at how these bank accounts actually function from the Bank’s side of things and maybe along the way we’d find out whether the system is fair to its customers. Read more

Tags: faceless acronym, amount of time, Government enquiry, bank, bank accounts, how do bank accounts work, BBC How Do Bank, cheque

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