Treasury gets involved in controversy over cheques

Recently it was announced by the banking industry that by 2018 it was planning to phase out the use of the humble cheque altogether. Over recent years a rising number of retailers have stopped accepting cheque as a form of payment, stating that cheque use can be time consuming and costly for businesses to process. This has led to the banking industry stating that it plans to get rid of cheques altogether over the course of this decade. Read more

Tags: bank, cheque, Cheque and Credit Clearing Company, consumers, treasury, Treasury spokesperson

Whistleblower slates FSA over building societies

A whistleblower who has chosen to remain anonymous due to fears over legal action has slated the UK’s financial regulator, the Financial Service Authority, over its lack of action with regards to building societies venturing into risky areas during the credit boom. The FSA has been accused of ‘apathy and complacency’ by the whistleblower, who was a former supervisor with the authority. Read more

Tags: fsa, regulation, lord turner, credit boom, building societies, Financial Service Authority

Government needs to rebuild consumer trust

The Northern Rock crisis has eroded customer confidence with one in five admitting they have lost trust in banks, according to new research.

Findings from Fool.co.uk reveals that up to one in thirty consumers have considered moving their investments in the wake of the financial turmoil caused by the collapse of the bank.

David Kuo, head of personal Finance at Fool.co.uk, said that it was not only trust in Northern Rock which had been damaged by the upset.

“The ability of the Treasury, the Bank of England and the Financial Services Authority to regulate banks has also been called into question,” he stated.

He concluded that the government should ensure that the bank is returned to private ownership to prevent distortion of the banking market and ensure “healthy competition” remains to give customers the best deals.

Meanwhile, Ron Sandler, appointed as the new chairman of Northern Rock, has informed staff that the bank will remain in the hands of the state for several years to ensure stabilization.

An unspecified number of job cuts are also expected among the 6,000 strong staff.

Tags: financial turmoil, competition, Employment Change, Ron Sandler, Fool.co.uk

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

Stamp duty is “big financial barrier”

The tax man is expected to reap the rewards of Gordon Brown’s final Budget with an additional £1.4 billion expected to enter his coffers as a result of stamp duty alone.

It comes as the Chancellor failed to raise stamp duty thresholds despite the average house price soaring in recent years.

The higher thresholds have been in place since 1997 yet in that time the average house price has rocketed by 175 per cent.

It means that more and more people are now expected to pay the tax, with first-time buyers being hit hardest as they struggle to get a mortgage and take their first steps onto the property ladder.

Homebuyers are required to pay one per cent stamp duty on a property which costs up to £125,000, three per cent for a £250,000 property and four per cent for one valued at £500,000.

The problem is that an estimated 3.5 million homes in England and Wales are now valued at more than £250,000.

“Stamp duty should be indexed in line with house prices and inflation,” said the Council of Mortgage Lenders’ Christopher Dean. “It is a big financial barrier.”

The Treasury has admitted that two fifths of homebuyers in the country will now be required to pay stamp duty.

Tags: house, Victoria, finance, Herald Sun, treasury, budget

Travel insurance industry slammed in report

Millions of us could be going on holiday without adequate travel insurance due to hidden clauses in our policies.

That is according to the Treasury Select Committee (TSC) which carried out a report and found that many people are not being told exactly what they are buying when they take out insurance.

The TSC highlighted that there is “insufficient awareness” among consumers about clauses in travel insurance policies.

“All too often, exclusions are buried in the small print of insurance policies,” said John McFall, chairman of the TSC.

“Holidaymakers are risking damage to their health or considerable financial loss if they require treatment while abroad or repatriation to the UK.”

The report has caused a stir within the industry, with Which? calling it “damning” and saying that it reiterates “the urgent need for consistent regulation of travel insurance”.

“Which? research shows that travel insurance is being mis-sold and consumers aren’t being given the appropriate information,” said Mike Naylor from Which?.

“There is no reason why travel agents should be excluded from regulation.”

People planning a trip abroad are advised to take out travel insurance and Which? has compiled a list of tips to ensure that you get the right cover.

Declaring any information that may lead to a claim, checking cover limits and exclusions, looking out for excesses, reading the small print and informing the insurer of any medical conditions are all advised.

Tags: treasury, Financial services, Types of insurance, trip, adequate travel insurance, travel agents, report, exclusions