Official tries to explain banks’ low business lending levels

It was announced recently by the Business Secretary, Vince Cable, that the big banks in the UK were failing to meet their agreed targets with regards to lending to small and medium sized businesses. Figures were released recently showing that based on quarterly results the banks had not met their targets, and were therefore not on target for meeting their annual business lending minimum figure.

The banks have argued consistently that the reason behind the low lending figures for small and medium sized businesses was that in the current climate many businesses did not want to take out loans. Banks claim that whilst they are making credit available for business customers the low demand for finance means that there is little they can do to increase their lending figures until demand increases.

This has now been backed up by an industry official, Anthony Thomson, chairman and co-founder of Metro Bank. He said that his bank is now targeting small businesses as its main customer but that demand for borrowing is low. He said that whilst many businesses had signed up to the bank the demand for finance was much lower than had been expected, which meant that the bank was unable to lend as much to business customers as it may have anticipated. He also said that businesses were failing to look for the best rates on loans.

He said: ‘I hate to sound like I am defending the big banks but our experience is that there is just not the demand for credit from small companies.’ He also said: ‘I always thought small firms would be very sensitive to interest rates, but they are even less concerned about the rates than consumers.’

Tags: industry, customer, borrowing, Metro, business, banks in the uk, Anthony Thomson, industry official

Competition increases in personal loans market

The start of this year has marked a change in the personal loans market that has seen a variety of well known lenders reducing the rates on some of their personal loans, and this has resulted in the average rate of interest being charged on loans of between £7500 and £15000 falling to their lowest level since November 2008.

Many consumers who have been considering a loan will welcome the news, as it means that they will pay far less for their borrowing as lenders compete with one another to offer the best deals and entice consumers away from their competitors. High Street banking giant Santander is offering a personal loan between these amounts at just 7.3 percent, and others are also offering similar rates.

However, those that are after a loan of £5000 or less will find themselves paying far more in the way of interest, as the rate of interest on smaller loans has actually increased during this period. Sainsbury’s, Tesco, and M&S Money are amongst the other lenders that have decided to reduce their interest rates on larger loans, but some are only offering the most competitive deals to existing customers rather than both existing and new customers, which may cause some disappointment amongst both consumers and industry officials.

A financial expert stated: ‘It’s welcome news for customers to see loan rates falling at long last and from some of the largest providers in the market. It’s a shame that the rate cutting has, apart from Tesco and M&S Money, been targeted at existing customers only. The other downside is that lower interest rates are not on offer for smaller borrowings, so for anyone looking to borrow a sum of say £2,000 to £3,000, the interest rate will be well into double figures and in some cases pushing 20% APR.’

Tags: loan rates, new customers, customer, money, downside, year, apr, expert

Energy customers could pay price for leaving fixed rate deal

Over the past couple of years many energy customers in the UK have decided to opt for a fixed price deal with their energy firm in the hope of avoiding soaring energy costs. These fixed price deals are set for a specified period of time, but in some cases when the deal expires the energy provider rolls the customer onto another fixed price deal automatically if they do not hear from the customer to say otherwise.

Officials are now concerned that customers who want to get out of a fixed rate deal with their energy supplier in order to switch to another provider could face crippling financial penalties with some facing fees as high as £200 simply for wanting to get out of the fixed rate deal that they are locked into. The Fixed Price 2015 tariff from energy giant EDF is the one that comes with the highest penalty, with customers being charged up to £200 for leaving the deal earlier than the expiry.

Experts are now urging consumers to make sure that they keep an eye on their fixed rate deals, and to make the switch when they get the chance rather than risking being rolled over to yet another contract and then getting stuck on another deal for even longer. British Gas charges up to £100 for exiting these deals early, Scottish and Southern Energy charges up to £75, and Scottish Power charged up to £50.

One official said: “This is a trap that people really should be aware of. If you are on a fixed rate deal, make sure you know when it comes to an end and switch accordingly. If you forget to do this in time, you will either end up stuck on a tariff that may not suit you and find yourself spending hundreds of pounds to get out of it. This is yet another reason to compare energy prices and tariffs on a regular basis, and make sure you switch as and when is necessary.”

Tags: provider, tariff, customer, fixed price deal, Price 2015 tariff, uk, energy supplier, contract

Trust still shrinking in UK banks

It has been claimed that the level of trust in UK banks is continuing to shrink amongst consumers following the chaos that followed the global financial crisis. The boss of Co-op said that as a result of lack of trust amongst consumers in the banking sector many were continuing to shun traditional banks.

Peter Marks, the Co-op chief, said that banks had been through a tough time since the onset of the global credit crisis, but he added that most had deserved it because they did not always act ethically. His comments came after the Co-op Bank released its performance and profits figures recently.

The bank’s first half pre-tax profits came to £260 million, which was a hike of 17 percent. Current account openings were said to have increased by 30 percent, and lending to small businesses apparently nearly doubled from £600 million to over £1 billion.

However, confidence levels in the banking sector have been sliding since the chaos that occurred with Northern Rock, which became the first official financial victim of the credit crisis in the UK. Since then various reports ranging from huge banking bonuses to senior staff to security breaches and lack of lending have seen consumer confidence take a further battering.

At one point following the credit crisis many were too nervous even to put money in the bank, and many were keeping their savings at home or in alternative places because of their lack of confidence in banks to keep their money safe.

One industry expert said: “Some banks do deserve the battering they have taken when it comes to customer confidence levels, as many have not acted ethically. It doesn’t help when all consumers see in the papers and on the internet is reports of bosses being paid huge bonuses whilst consumers are left earning little to nothing by way of interest.”

Tags: lack of trust, economics, customer, Cooperative, bank, Co-op Bank, financial crisis

Energy firm breaches new rules

It has been revealed that an energy firm has recently been found guilty of breaching new regulations with regards to consumer complaints. According to a recent report EDF Energy failed to record customer complaints properly in line with regulations. The breach is said to have occurred between October 2008 and March of last year.

The report claims that the problem has now been rectified and the energy supplier has had to pay £200,000 to charities that help consumers. As a result of the payment that the energy supplier has made the UK’s energy regulator, Ofgem, has decided against imposing a separate fine against the energy firm.

The regulations that the company was found to have breached were introduced in 2008, and this is said to have been the first investigation since the rules were brought in. The energy firm is said to have taken immediate action to put the matter right. The rules had been brought it try and improve customer service levels from energy firms, which typically receive a huge number of complaints relating to customer service and billings.

The regulations aimed to ensure that consumer could contact the energy firm and have to explain the situation just once, and the complaint would be properly recorded so that the matter could be resolved or continue to be dealt with effectively. This also made it easier to monitor how long it took for the complaint to be resolved, helping to ensure that it was sorted out within the specified timescale.

EDF Energy said: “When Ofgem first identified in January 2009 that the number of complaints we had recorded was lower than expected, we immediately instigated a review and developed a robust action plan to resolve the matter. The actions we took led to an almost immediate and sustained improvement, such that our recorded complaints are now fully consistent with our expectations and with other suppliers.”       

Tags: energy firms, Electric power, customer, energy supplier, Complaint

Banks need to do more to help struggling customers

It has been claimed by the Financial Ombudsman Service that banks in the UK need to take more action to help consumers that are in dire straits with their finances and who need help to keep them afloat financially. Read more

Tags: debt management, Financial Ombudsman Service, overdraft, financial assistance, customer, Financial Services Authority, bank, turned away

Overdraft interest rate increases from Barclays

Barclays Bank has recently hiked up the interest rates charged on its overdraft facilities on many of its accounts, including its packaged current accounts for which customers have to pay a monthly fee. Read more

Tags: barclays, overdraft interest rates, Additions, Bad news, bank accounts, increase, customer, overdraft deals

Water firms receive record numbers of complaints

According to a recent report water firms have been receiving record numbers of complaints over the past twelve months. The data comes from the water watchdog, the Consumer Council for Water. Read more

Tags: year, customer, United Kingdom, individual water companies, water firms, South West Water, Consumer Council for Water, complaints regarding water

Regional gas pricing warning from Which?

The need for gas customers to look out for and switch to the best deals is becoming ever sharper, with suppliers indicating their willingness to adopt regional pricing policies.

In January, npower began charging different tariffs in different parts of the country, reportedly to reflect the varying costs of transporting gas.

ScottishPower and Scottish and Southern Energy already have similar schemes, and British Gas has refused to rule the idea out.

Siobhan Parker of Switch with Which? warned: “The adoption of regional gas prices by some suppliers further emphasises price variations around the country. npower has announced an average gas increase of 12.8 per cent, but customers living in regions such as London and the East Midlands are being hit with a much bigger price rise of 23.8 per cent.

“People must vote with their feet and seek out the best deal to combat the effects of what is ultimately a postcode lottery.”

This is not to say that some parts of the country are simply more expensive than others – yet.

Figures from Which? show that Yorkshire is the most expensive region, on average, for npower customers, while Wales is the priciest place to live for ScottishPower customers.

Tags: southern energy, show, different parts, best deal, adoption, customer, Siobhan Parker

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: bank, overdraft, charge, interest, authorized, fee, balance, pay

Lloyds reductions in charges may not be all that great

Consumers and campaigners were pleased when Lloyds TSB, one of the UK’s major high street banks, recently announced that it was cutting its charges for unauthorized overdraft use, bounced cheques, and returned direct debits.

However, the victor has quickly turned to concern, with campaigners pointing out that under the new charging structure many bank customers could actually find themselves even worse off than they are now.

Lloyds TSB announced that it would be cutting the charges for bounced cheques from £25 to £20. It also announced changes to charges for unauthorized overdraft use. Previously going over the overdraft limit meant a customer would be charged £30 with a maximum of three charges per month. However, this has now been changed to a monthly fee of £15 and then between £6 and £20 per day for a maximum of ten days.

Officials state that this could mean that someone that exceeds their overdraft limit by £100 could clock up £200 in charges. An official from Which? stated: ‘These charges appear excessive. If you go over by £100 in the course of a month you could end up with total fees of up to £200.’ Other major banks have also made changed to their charges following in the footsteps of Lloyds, but is seems that these charge reductions may not be as beneficial as they initially appear.

The Office of Fair Trading has recently announced that if banks do reduce their charges to the satisfaction of the OFT then the test case scheduled for next year may be cancelled. However, this will only happen if the reductions made by the banks are in the consumers’ best interests.

Tom Smith
20th October 2007

Tags: personal, profits, overdraft, lloyds, customer, fees

NatWest launches online multi-currency system

The launch of NatWest’s new ibanking product has been successful, the offshore banking provider said today.

An internal survey of 500 customers showed seven-in-ten saying that the product made them more confident about banking online.

ibanking is a multi-currency banking product which is conducted online. Customers can therefore access their account and transfer funds from anywhere in the world, and view their details through entering their customer number, PIN and password.

Head of NatWest International Personal Banking Julian Gouge said: “We recognise that online security is a key concern in today’s society and the ibanking system gives customers the reassurance they need when making transactions and controlling their finances.

“Whether you are enjoying yourself on holiday in Jamaica or working in Japan, ibanking allows you to make payments and manage your finances within seconds at any time of the day or night.”

Offshore banking products for customers are provided by many other high street banks in Britain, including Lloyds TSB and HSBC.

Tags: hsbc, saying, Lloyds Banking Group, Offshore bank, today, lloyds tsb

Are insurance company customers happy?

Insurance companies have been under fire for various reasons over recent months, and many have expressed dissatisfaction with their insurance provider.

However, it is increasingly difficult to determine just how unhappy customer actually are with their insurance providers because many providers now refuse to provide information on their customer satisfaction levels, making it difficult to determine how effective their services are.

According to recent reports around fifty percent of the leading insurance companies in the UK will not provide information relating to how satisfied or dissatisfied their customers are.

However, these companies had already agreed to provide the results as part of a survey that was being carried out by Association of British Insurers. The nationwide survey was designed to evaluate customer satisfaction levels within the insurance industry.

Amongst the insurance companies that have refused to provide these details so that their customer satisfaction levels can be compared to rival insurance companies are Norwich Union, Standard Life, and Friends Provident.

The customer satisfaction survey was designed to try and improve services within the insurance sector. Around 85 percent of insurance companies in the UK signed up to the survey, but despite their agreement many have not provided the necessary details relating to customer satisfaction levels.

A Friends Provident spokesperson stated: ‘We do not believe it is helpful to look at the highlevel results in any sort of league table form as we recognise that there are many reasons why results can vary.’

A spokesman for Zurich Insurance stated: ‘The results are intended to help companies understand their progress against commitments they have made. They are not intended as an accurate measure of benchmarking.’

An official from consumer group Which? said: ‘We think results for each company should be published in a standardised way with individual firms’ scores disclosed.’

Tom Smith
3rd July 2007

Tags: Insurance, company, happy, home, cost, customer, results

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: rbs, scotland, royal, facilities, fees, charges, customer, account, bank

Home insurance customers ‘pay more when loyal’

Loyal customers to home insurance companies are being penalised as firms battle out to cheapen prices rather then to extend services, according to a new report.

Defaqto, a data collection company, has found that rather than retaining established customers through extending cover or offering new and improved services to customers, firms would rather lower prices to attract new business.

This means that newer customers pay far less than loyal customers through various cash back deals, which have risen in frequency by 60 per cent in the last 12 months.

“It hardly seems in keeping with the Financial Services Authority’s rules for Treating Customers Fairly that two customers with exactly the same risks should pay markedly differing amounts for their policies,” said Brian Brown from Defaqto.

“It would appear that increasing loyalty never goes unpunished and rewards are only available for the disloyal.”

He recommends that consumers double-check their home insurance deals to see that any new purchases are still covered and that they still have a competitively-priced deal.

Tags: data collection company, Financial Services Authority, customer, Business and Economy, Insurance, competitively-priced deal

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: owner, customer, business, bank, consultation, unclaimed monies, purpose, british bankers association

Defaqto: ‘2yrs of free banking left’

The end of free banking could be upon us within just two years, according to leading research firm Defaqto.

According to the company, the backlash from increased pressure on banks to reduce penalty charges could see consumers being charged a tariff for their bank accounts.

Defaqto says that this could rear its head as either a monthly fee or a pay-as-you-go system, which would see customers charged in relation to how often they use their account.

Any system like the latter could leave vulnerable people in a worse situation than they are currently in, especially if additional charges are added for the processing of things like cheques or discounts are offered to those using other bank services.

The UK has enjoyed free banking for 23 years, but Defaqto warns that the banks have to make up the money in some way.

“I will be very surprised if free banking is universally available in two years time,” said David Black, head of banking at Defaqto.

“The first major provider to introduce charges for all customers is going to take a lot of flak but it is likely that the majority of the main providers will then follow the lead.

“I would then expect to see a significant increase in account switching as well as many people closing their secondary accounts,” he added.

The UK is currently internationally unique in not charging customers for current accounts.

Tags: research firm, leading research, relation, vulnerable people, free banking, provider, customer, flak

Apacs introduces new payment system

Making payments over the phone and online will soon become a quicker process, thanks to the implementation of a new payment system.

The UK payments association Apacs has revealed that the new system is on track and it believes that those doing their banking online and over the telephone will enjoy using the new system.

Apacs says that the UK will now be brought up to speed alongside the frontrunners around the world when it comes to making payments.

Bankers can expect to see payments made almost in real-time, removing the hassle, and sometimes confusion, of waiting for money to enter or exit your account.

“This service will be great for any customer wanting to move money quickly – perhaps to pay a bill or move money between accounts,” said Paul Smee, chief executive of Apacs.

“Like the internet, it will be available all day, and will move a payment within a few hours and on any day of the week.”

As well as online and telephone banking, the new system will speed up the movement of standing orders.

Apacs claims that standing orders will be processed within the same day, a vast improvement on the three days it currently takes.

So far, a host of major banks are onboard with the scheme, with HSBC, Lloyds TSB and Barclays among the 13 to get involved from the very beginning.

Tags: chief executive of Apacs., Business Finance, customer, lloyds tsb, Economy of the United Kingdom, scheme, apacs, service

Ex-smokers see financial benefit

For many people the New Year brought with it a resolution to give up smoking.

The health benefits of kicking the habit are well known and well publicised, but Sainsbury’s Bank says few people consider the financial advantages.

Aside from saving money by not buying cigarettes, ex-smokers could find that they save as much as 48 per cent when they take out a life insurance policy.

Sainsbury’s says that in order to benefit from the reduction when taking out a policy with the bank, a customer must have remained smoke-free for a minimum 12 months.

“If you gave up smoking last New Year and haven’t yet taken out life insurance, now is the time to shop around for a good deal on a policy. If you haven’t smoked for 12 months then you will qualify as a non-smoker,” said Claire Moyles, life insurance manager at Sainsbury’s Bank.

“Our research shows that when the ban on smoking in public places is introduced into England and Wales later this year, 1.44 million people plan to give up smoking.”

Sainsbury’s has calculated that around 740,000 Britons have managed to stick to their 2006 New Year’s resolution to quit smoking.

Tags: Ethics, habit, kicking, smoking, financial benefit

FSA makes MEAF statement

The Financial Services Authority (FSA) has released a statement on mortgage exit administration fees (MEAF).

The organisation was responding to recent concerns which have been raised about MEAFs which have been unfairly increased.

It means that some consumers have been charged higher exit fees than was originally agreed and has made switching mortgage lender and paying a mortgage off early more difficult.

FSA officials have now said that lenders have four options, one of which they must settle on by February 28th.

Lenders can either charge no MEAF whatsoever, charge the original MEAF, a revised MEAF or the current increased MEAF.

“We expect that these measures, agreed with the Council of Mortgage Lenders, will stop borrowers from being surprised by unexpected increases in these fees,” said Clive Briault, managing director of retail markets at FSA.

“People will now know when they sign up for a mortgage what fee they will pay on exit, or should be given a clear idea of how the fee might be increased fairly.”

FSA is also calling for previous customers to be given the same treatment as new customers, meaning if a customer has paid a higher MEAF than current borrowers, he or she should be refunded.

Tags: idea, administration, Financial Services Authority, meaf, council of mortgage lenders, clear idea