More compensation payouts to be issued by Halifax

High Street banking giant, Halifax, has recently admitted that it may have to pay out more compensation to customers over a mix up with its mortgage rates. Earlier this year the lender identified around 600,000 customers who may be eligible for compensation over confusion about mortgage rates, about half of whom ended up receiving compensation payouts. The lender has now stated that there could be another 250,000 people who may be eligible with around half of them expected to actually receive compensation.

The compensation that the lender pays out could be up to £4500 per person based on a mortgage of £150,000 where the borrower has been affected for three years. The payouts will equate to either 1 percent of the mortgage interest for each year that the borrower has been affected or will be a fixed compensation payout. With tens of thousands of borrowers potentially set to receive compensation, Halifax could have another huge bill on its hands.

The confusion has arisen over Halifax increased the cap on its standard variable rate mortgages from 2 percent above the Bank of England base rate to 3 percent above. The UK’s financial regulator, the Financial Services Authority, expressed concern that wording on documentation may have led borrowers to believe that they would receive advance warning of any such changes. Halifax subsequently came to an agreement with the FSA over paying compensation to customers who were affected.

A Halifax official said: “In February 2011, we agreed a voluntary agreement with the FSA in relation to a customer contact and goodwill payment programme with specific Halifax mortgage customers. We have subsequently identified a further group of customers that are eligible for inclusion within the programme. We are now in the process of writing to these borrowers explaining what this means for them.”

Tags: standard variable rate, customers, tens of thousands, bank of england, lender, Street banking giant, goodwill, Halifax mortgage customers

Payday loan repayment delays can lead to hefty charges

According to a recent report there are now many people who take out payday loans in order to bridge the gap between paydays. With the cost of living soaring, petrol prices having rocketed, bills going up, and food costing much more, many people are now struggling to make ends meet financially and their wages are simply not lasting for the whole month, leaving them short of cash part way through the month when the next payday is still a long way off.

As a result of this, more and more people have found themselves in a situation where they have had to borrow money in order to make ends meet and for some this is becoming a regular occurrence. Whilst some people are turning to family members and friends in order to secure this finance to tide them over others are turning to lenders, with many opting for payday loans because they are quick to process, require no credit checks, allow consumers to borrow modest amounts of money for short periods of time, and offer a fixed fee.

However, whilst some people have found these payday loans to be a financial lifeline in a very difficult climate, industry experts are warning that the cost of borrowing can increase even further with these payday loans if they are not repaid on time. The interest rates charges are already extortionate on these loans, although many customers do not realise this because they are borrowing the money for such a short period of time.

One financial industry professional said: “There is a real danger that customers could fall into a spiral of debt where they have to take out a loan each month just to make ends meets. The golden rule is not to borrow money unless it is absolutely necessary.”

Tags: credit checks, Payday loan repayment, tide, short periods, personal finance, result, order, customers

Foreign banks take the number one spot for savings again

Over recent months many consumers may have been thinking about trying to put a little money aside wherever and whenever possible in case of emergencies, especially given the ongoing tight credit conditions that are making it difficult for many to get finance when they need it. However, with the high cost of living and hikes up bills most consumers are looking for a way to make their money work as hard as possible in terms of rewards. Read more

Tags: United Kingdom, past year, savings accounts, savers, foreign banks, customers

Earning money from banks

Over recent years banks in the UK have not seen much positive publicity, and have come under fire for everything from security breaches to hefty charges. Read more

Tags: accounts, transfer, bank, current, customers, earn, savings, interest, referrals

Interest payments on current accounts to be abolished by First Direct

The Internet banking arm of the HSBC, First Direct, has announced that it will be cutting interest charges on current accounts for customers.

According to officials from the bank the money that is saved from not having to pay interest on current accounts will be used to increase interest rates paid on savings accounts. However, following the mass exodus of customers earlier this year, after the bank announced that some customers would be charged monthly fees of £10, this could be a bad move for the online bank.

First Direct currently has two current accounts in place, and although these accounts do not enjoy the greatest interest rates there is still interest paid on deposits. The cheque account offers an interest rate of just 0.1% on credit balances, whilst the bank account offers 2%. However, in November the two accounts will be merged to create just one standard account known as the 1st Account, and this will pay no interest at all on credit balances.

Officials from First Direct state that customers will be compensated by way of better deals on their savings. An instant access account paying 5.5% will be available, although this is still far lower than the best buy savings accounts offered by other financial institutions, with the highest currently standing at 6.3%. An interest free overdraft facility of £250 will also be available to customers, along with free text banking that could help customers to avoid penalty charges applied when the account goes over its limit.

An official from the bank stated: “A staggering 96 per cent of our customers told us credit interest wasn’t an important factor in choosing to bank with us. We figured it made far more sense to use every single penny we now pay in credit interest to give customers the chance to earn serious interest on higher-interest savings accounts.”

Tom Smith
26th October 2007

Tags: savings, Banking, financial, interest, high, customers, first, accounts, direct

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: accounts, bank, lloyds, charge, customers, fees, court, tsb

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: interest. lower, rates, customers, england, rises, base, Banking

Abbey customers find mortgages been extended

There was a shock in store for many customers with the Abbey bank last week, as an oversight resulted in many customers’ mortgages being extended by years without them even being informed about it.

The blunder meant that thousands of homeowners have seen their mortgage repayment term extended, in some cases by up to fifteen years. This resulted from the bank failing to make changes to customers’ repayments, and meant that the term of the loan was increased by a considerable amount of time.

Rising interest rates in the 1980s and 1990s resulted in the customers’ paying more in interest on their mortgage, which meant that out of each repayment a higher amount was being applied to the interest. However, because the bank failed to increase customers’ repayments less of the capital was being repaid. As a result of years of underpayments, many have now found that they will be lumbered with a mortgage for up to fifteen more years.

Abbey should have contacted mortgage customers to explain that the rise in interest rates meant that their repayments would have to increase to enable them to pay off the loan within the arranged mortgage term.

However, the bank did not do this, and as a result customers continued with the same repayments, oblivious to the fact that they were not paying enough to cover the capital and interest repayments without extending their mortgage term.

Following a flood of complaints from those affected, an official from the Financial Ombudsman Service stated: ‘This is an issue specific to Abbey because it was not explained to the customers and they were surprised to discover they would have to pay over longer terms. Those affected could still be entitled to compensation.’

Tom Smith
15th July 2007

Tags: rates, customers, mortgage, abbey, interest

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: bank, rise, accounts, customers, rate, increase, savings, interest

Barclays customers hit by fraudsters over festive period

Many consumers that bank with Barclays have been receiving fraudulent emails from scam artists over the festive period, with the content of the emails designed to persuade them to provide their financial data such as account details and personal information. Millions of emails were sent out to Barclays customers over the Christmas period, with the fraudsters claiming to be from the Protection Department of the UK banking giant.

The emails that were sent out had the official Barclays logo on, as well as links to help line numbers. The emails went on to ask consumers to complete their account and financial information online. The conmen were then able to use this information to access customers’ accounts and conduct further fraudulent activity. The process of sending out fraudulent emails and setting up fake websites to obtain customers’ financial and personal details is known as phishing, and this is an activity that has seen a real increase over recent years.

Barclays officials have gone on to advise consumers that they should never respond to this type of email, as the bank states it would never send out an email asking a customers to provide their financial details. The bank also warned that anyone that has already responded to these emails by providing their data should contact the bank as soon as possible in order to get their bank account frozen to minimize the risk of further fraudulent activity on their account.

One Barclays spokesperson stated: ‘This is a mean thing to do at this time of the year. What these are, and our anti-fraud guys will have picked them up, are phishing emails. Barclays would never ask customers for personal details in e-mails. If customers get them, they should delete them straight away and not enter any details.’

For more free advice try any of the following sites:

• Citizen’s Advice
• Direct Gov
• FSA’s Money Made Clear

Tags: customers, Banking, christmas, fraud, scam

Consumers could accrue bank charges over the Christmas and New Year period

According to recent data released by the consumer group Which? a large percentage of consumers in the UK could be at risk of accruing hefty bank charges by using their overdraft facilities to fund the expense of the Christmas and New Year period. Read more

Tags: banks, cost, customers, accounts, charges, christmas, accrue, consumers