RBS to close many insurance offices

It has been announced that Royal Bank of Scotland is being forced to close half of its insurance offices. This comes after the taxpayer bailout that resulted in the company being forced to sell its Churchill and Direct Line insurance divisions. Under the plans there will be two thousand jobs axed at the division, as the lender prepares to sell its insurance business.

Glasgow will see two offices being closed, causing the loss of over six hundred jobs. There are also closures expected in Peterborough and Bristol, which will see another six hundred jobs go. Union officials are angry about the measures because they blame the loss of hundreds of jobs on the failures of the bank, which was one of those that had to be bailed out using taxpayer’s money.

The global credit crisis caused the near collapse of the banking system in the UK, and whilst the troubled Northern Rock was the first major victim of the financial crisis in the UK, and had to be nationalised after it became the first victim of a run on a British bank in a century and a half, a number of other big name High Street banks ended up following its footsteps.

Whilst it is taxpayer’s money that has resulted in the bank being bailed out lenders are still being very cautious when it comes to providing finance to consumers and businesses, which has already caused a lot of controversy. The loss of jobs resulting from these RBS closures will now cause more controversy, as the blame has been laid squarely at the feet of the bank itself by union officials.

Union Unite official Rob MacGregor said: ‘RBS staff are continuing to pay the price for the bank’s failure with their jobs.’

Tags: insurance divisions, lender, rob macgregor, Insurance, Royal Bank of Scotland Group, British bank, finance, direct

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: direct, financial, Banking, accounts, high, interest

How To Build Up a Good Credit Rating

It is evidently not a good thing to have a bad credit rating. For example, it can limit your borrowing options. The sorts of thing that contributes to a poor credit rating are county court judgments, defaults on payments and bankcruptcy orders. In the case of circumstances such as these, the only way to get credit (loans, mortgages) is through the sub-prime market. Here the borrower is charged high rates of interest to reflect the apparent risk to the lender.

There are two main credit reference agencies who compile credit histories on individuals. These are Equifax and Experian. They take their information from sources such as the electoral roll, county court judgments and the payment of past debts. When anyone takes out a new form of credit it will leave a record which these credit agencies also draw upon. But it is not the credit agencies who make the decision about whether to offer credit to would-be borrowers. It is the lender who makes that decision, based on the information provided by the credit agencies and their own lending criteria.

Under the Data Protection Act, if a lender refuses you credit, it must tell you why. Under the Act, if scoring was used to help the lender decide not to give you credit, then you are entitled to ask for you application to be reviewed. Even it this doesn’t help you to get credit this time, you will be able to see your rating and where it might need improvement. Or it can highlight errors that may be on your record (and they do happen) and you can try to get them rectified.

If you do have a poor credit rating, it is a good thing to work to make it better. Although bankcruptcy remains on a rating for up to six years, a year of good credit practice should return a rating to a healthy state.

To begin with, you should ensure that you pay off your creditors on time. If you do have to miss a payment, tell the creditor and make sure that you make the payment the following month.

Even simple things like making sure you are on the electoral role and completing credit application forms correctly will help to improve your rating. Agencies allow people to explain why they may have had a poor credit performance, and a ‘notice of correction’ can be attached to their report explaining, for example, whey they missed payments.

It is worth buying access to your credit history from one of the agencies to make sure that everything is in order. As an example, if you have had a county court judgment, but have since paid the debt, make sure the payment is recorded on the file. If you have had a bankcruptcy order annulled, make sure a copy of the annulment or order of discharge is sent to credit agencies.

Another way of boosting your rating is to take out a store card and pay off the balance regularly and on time. The rating can be improved quickly by opening a variety of accounts, but make sure you do pay off the debt each month. You can also ask someone you know well (family or friend) with good credit history to co-sign for a small loan or credit card. This also helps your own rating.

It is a bad idea to keep applying for credit if you have already been refused by another lender. A lot of searches on history does not work in your favour. The tip is to ask the lender if you fir the profile of people they give credit to.

Having no credit record can be as bad as having a poor credit record. So if you have no credit record, start to build one up – a good one.

More Information:

• Credit Building Tactics
• Bad Credit-Credit Cards

Tom Smith
19th June 2007

Tags: record, good, payments, history, rating, bad, build

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: fees, charges, interest, direct, first

Will other banks follow First Direct and charge fees on current accounts?

Following the shock announcement recently made by officials from First Direct Bank, a subsidiary of HSBC, that it intends to start charging customers that do not pay a certain amount into their current accounts each month, many are now wondering whether other banks and building societies will follow suits, bringing to an end the era of free banking for consumers in the UK.

First Direct made the announcement last week, shocking experts and customers by stating that a ten-pound monthly fee would be charged to current accounts that did not have at least fifteen hundred pounds in. It has now been revealed that Nationwide may also be looking into charging bank account holders in the same way at some point in the future, with one executive from Nationwide allegedly stating: “I don’t think we can rule out charging for current accounts totally although we have no immediate plans to introduce such charges at the moment.”

Halifax, on the other hand, have promised that it will not be introducing any such charges on current accounts, and is in fact planning to open three new branches in the UK, as it is thought that many existing First Direct costumers will now be eager to find alternative banking solutions in order to protest against and avoid the new charges being introduced by First Direct.

One official from the Halifax stated: “Halifax is committed to free banking, and we would hope that other banks and building societies share this commitment.” Sadly it looks as though First Direct do not share any such commitment, and the impressive reputation and customer base that this Internet bank has built up over recent years is likely to take a tumble over the forthcoming months, with consumers desperate to get their accounts switched to a non-charging bank or building society.

Tags: Banking, free, personal, hsbc, interest, uk, first, charge, direct