They’re going to start testing a 90-day loan, so people can spread costs out over longer periods, and the idea is that there’ll be greater flexibility too. They need to do something to win people back to their business, as in April, they announced a loss of over £37 million.
For the trial, only existing customers will be allowed to apply for these new loans. Those that do, will be able to on the same terms as the existing product, paying interest of 0.8% – or 80p per £100 borrowed – per day.
A Wonga spokesman said: “We can confirm that we are planning to launch a pilot of a more flexible, three-month instalment loan to existing customers this week.”
The lender is still wrestling with a lot of mither at the moment, as they are still going through a process of authorisation by the FCA. They have been operating under interim licences since 2014. The FCA aren’t messing around though, and have said that they think the majority of payday loan companies are going to go out of business, since they introduced a cap on loans and repayment fees.
Can Wonga pull out of all this? Doesn’t look likely.
There’s been job losses at the company, with chairman Andy Haste saying: “Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes. However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market. Regrettably, this means we’ve had to take tough but necessary decisions about the size of our workforce.”
Lloyds Banking Group are going to cut another 1,000 jobs today, which include those who work in the branches. These cuts are part of a larger target of 9,000, which was announced around a year ago. Before this week, 2,360 of the 9,000 job reductions have been lost, and Lloyds are looking at completing the grim task by 2017.
This news follows Chancellor George Osborne saying that the government plans to offer billions of pounds of discounted Lloyds shares to investors in 2016, which is no use to those getting their P45s just before Christmas.
The government had a 43% stake in the bank, but have managed to reduce that to 10% (or just shy of). They’ve raised £16bn in the process, which is still short of the original £20.5bn injection at the moment. What isn’t helping Lloyds, is that they have put aside £14bn for their part in the mis-selling of payment protection insurance (PPI), but that’s their own stupid fault for being snide.
There’s still going to be some branch closures, which means Lloyds are looking at getting more of their customers involved with their digital banking arm. They have 5 million mobile banking customers, which is a number that’s only going to grow.
Lloyds are looking at closing banks in urban areas, where they already have a number of outlets.
Barclays have been slapped with a whopper of a fine – to the tune of £72 million – by the Financial Conduct Authority. Why? The FCA say that the bank “ignored its own process” when handling a £1.9bn transaction for a group of people described as ‘wealthy and politically connected’.
*Harry Hill sideways look to camera*
The FCA said that Barclays “went to unacceptable lengths to accommodate the clients” and didn’t carry out sufficient checks on the deal which meant they “failed to minimise the risk that it may be used to facilitate financial crime.”
This transaction went through in 2011/12, and Barclays executives knew it involved “politically exposed people”, which should’ve seen the company being extra careful and monitored things more closely.
However, it turns out that the bank rushed the whole thing through, and made themselves £52.3m in revenue as a result. UK banks are supposed to be extra vigilant when it comes to doing transactions for those “who may be able to abuse their public position for private gain”, in a bid to reduce the risk of bribery and such.
The FCA found no involvement of financial crime in the transaction, and haven’t said who was involved. Either way, this penalty is the largest imposed by the FCA or its predecessor for financial crime failings. Barclays had to hand over the money they made from this dicky looking deal, and were fined £20m on top.
Mark Steward, from the FCA said: “Barclays ignored its own process designed to safeguard against the risk of financial crime and overlooked obvious red flags to win new business and generate significant revenue. This is wholly unacceptable. Firms will be held to account if they fail to minimise financial crime risks appropriately and for this reason the FCA has required Barclays to disgorge its revenue from the transaction.”
MasterCard has, today, launched a limited “Fare Free Mondays” promo, which is offering free public transport to Apple Pay users in London. This is going to be a thing on Mondays between November 23 and December 14, 2015.
MasterCard customers who are using Apple Pay to tap their way around the capital will have up to £27.90 in daily fares refunded by MasterCard, which is handy if you’re in London. It is utterly useless for the rest of the UK mind you, but there you go. You can use it on the Tube, buses, tram, DLR, London Overground and most National Rail services.
Mark Barnett, president of MasterCard UK&I said: “The move by TfL last year to accept contactless cards and devices on London Underground has been a phenomenal catalyst to the growth in contactless payments across the UK. Now that Apple Pay has arrived we want to encourage travellers on London’s transport network to try it out and give them another convenient option to pay for their travel.”
“What better way to do this, than to offer MasterCard customers using Apple Pay the chance to travel for free over the next four consecutive Mondays.”
So, if you don’t live in London and have an Android phone, feel free to swear under your breath about those gits who live in London getting all the good stuff.
This fine comes in a week when the Information Commissioners Office (ICO) are throwing fines at all sorts of spam-pests, totalling £250,000. The £80k was served to Birmingham-based UKMS Money Solutions Ltd, and of course, they were dealing in nuisance PPI messages. The company failed to check that the people they were messaging had agreed to receive marketing text messages.
The ICO are getting in touch with 1,000 of these spam-vendors, to ask them what they’re doing to comply with UK laws. If it turns out they’ve failed to go through proper procedures, there’s going to be more fines doing the rounds.
ICO enforcement manager, Andy Curry, said: “UKMS relied on their data suppliers’ word that the people on the lists had agreed to be contacted. That’s simply not good enough. UKMS should have known that the responsibility to ensure they had the right consent to send messages to people rests with them.”
There’s a lot of calls for tougher action against these sorts of companies, because at the moment, they can dodge penalties by simply closing down their business and then re-opening on the same day under a different business name. It really is a farce. One of the things that is being spoken about, is that, instead of fining companies, you fine directors who are responsible.
The ICO would also like to see an increase in the maximum fine possible. Currently it stands at £500,000, which is clearly not enough of a deterrent.
Barclaycard customers will be able to look at their Experian credit score online, through the Barclaycard mobile app, which will be a thing early next year. You’ll also be able to get hints and tips at how to fix your credit score, and the access will be unrestricted.
Tesco Bank, meanwhile, are teaming up with Noddle, who are part of Callcredit, as they look to give customers access to their score. Existing customers can check it from today, while new customers will have to wait until December 11th.
Things like missing bill payments, being in your overdraft frequently, and applying for a lot of credit at the same time are among the things that can harm your credit score.
The ability to check your score means you can decide whether or not to apply for something, as it’ll give you an indication of how likely or not you are to be successful with an application. With two banking services jumping in on this, it looks likely that the other financial institutions will join in too.
Justin Basini, co-founder and CEO of ClearScore, said: “The fact that some lenders are giving customer access to their credit scores for free is a step in the right direction, but today’s announcements will only affect a relatively small group. Credit reports and scores are like a person’s financial CV and impact their lives in a myriad of ways. They help determine whether somebody gets the best deals on financial products, whether they can buy or rent property, and can affect their ability to get a mobile phone contract or even a job.”
“It’s encouraging that others are following our lead to give people access to their credit information.”
The report about the complete mess at HBOS has indeed, shoved a load of blame at the feet of the bank’s former board, calling for formal investigations. In short, the investigation has called for another investigation.
The huge report (400 thrilling pages) was published, looking at banning orders against former chairman Lord Stevenson, and former chief executives Andy Hornby and James Crosby. Other people who used to be at HBOS like Mike Ellis, current chairman of Skipton building society, Colin Matthew from the international division, and Lindsay Mackay who ran the treasury, have also been named.
“Ultimately responsibility for the failure of HBOS rests with its board,” said the report. It also points a finger at the former heads of the now-defunct Financial Services Authority. The boardroom at HBOS has been described as lacking in banking nous, and creating a culture that wanted growth at all costs. The FSA meanwhile, have been described as making mistakes, and having an investigation that was too narrow, with particular emphasis on their decision to only investigate one former HBOS executive, Peter Cummings.
Cummings who was banned and fined £500,000 back in 2012, but the report says there were clear indications that others should’ve been looked at.
“It is my view appropriate that the FCA and/or the PRA should now take the opportunity to give proper consideration to the investigation of individuals other than Mr Cummings and thereby do that which their predecessor failed to do. There is plainly a public interest in the FCA and/or the PRA giving proper consideration as to whether to investigate any other former members of HBOS’s senior management in the light of the failure of this systemically important bank,” said Andrew Green QC, who did the FSA review.
The report quotes Clive Adamson, who used to be the FSA director of enforcement, saying that “the people most culpable were let off.”
Green continued: “It appears that because enforcement could not be certain of winning disciplinary proceedings against Mr Hornby, the decision was taken not to investigate him. This was a misguided approach in that placed excessive weight on a view of the prospects of success formed at such an early stage.”
The report says: “The FSA’s approach was too trusting of firms’ management and insufficiently challenging. The FSA executives management, led by chief executive John Tiner, designed (and failed to redesign) this deficient approach to supervision. Further the oversight of the executive by the FSA board, led by the chairman Sir Callum McCarthy, was insufficient.” It added that the regulators at the time were guilty of only employing a “light touch” when it came to controlling the City.
Regulators will now conduct their own review into whether enforcement action on the strength of this report, with decisions being made on that “as early as possible next year”.
Barclays are looking at another huge fine of $100 million (£65.7 million) as they in a settlement with the New York financial regulator, as they try to sort out the mess they made after they rigged foreign exchange markets.
Now, this is from a ‘person familiar with the matter’, so we can’t say this is definitely happening, but Barclays could be making this settlement with the New York Department of Financial Services in the next few weeks.
The bank already agreed to pay $120 million earlier in the month to settle private American litigation case, which had accused Barclays of conspiring rig Libor rates with their rivals. Back in May, they also agreed to fork out $650 million relating to forex trading.
According to Moody’s, the total cost of litigation faced by banks since the 2008 financial crisis is somewhere in the region of $219bn, which is a staggering amount of money. The majority of fines has been slapped over American banks, but now, they’re hitting European banks hard. The whole thing is a complete mess.
David Fanger, Moody’s senior vice-president, said: “At this point, probably, European banks are more vulnerable because US banks have [already] taken more of the provisions.”
The bosses of HBOS, the mortgage vendors who were bailed out during the 2008 banking farce, reportedly put pressure on auditors to sign off lower bad loan provisions, so they could reduce concerns about their financial wellbeing. This is according to an official probe, which will wrap up this week.
Sky News can reveal that a report to be published on Thursday will make the explosive allegation that HBOS executives leant on KPMG to approve their own analysis of impairment charges, despite the audit firm taking a more pessimistic view about the bank’s balance sheet.
The news that auditors were being leaned on in such a manner is only going to see more action against certain business, which could end up seeing former HBOS board members being banned from ever working in the financial services sector again.
Sky News reports that the bank’s former bosses had tried to persuade KPMG to adjust its view of the level of provisioning required, which will be revealed in the report by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). There’s going to be a lot of fingers being wagged at former chief execs James Crosby and Andy Hornby, and former chairman, Lord Stevenson. Will enough be done to discourage others though? Don’t hold your breath.
Of course, regulators can’t fine any of the former executives, even if they are viewed as being culpable, thanks to a six-year statute of limitations, which has now expired. How very, very convenient. As such, the Financial Services Authority (FSA) will also be getting it in the neck, as they were supposed to be keeping an eye on all the banks.
“There is now a reasonable prospect that the public will at least have an opportunity for a full explanation of this catastrophic failure,” Andrew Tyrie, the Treasury committee chairman, said this week. ”The work of the advisers can give Parliament and the public more confidence that the role of the FSA, in the failure of HBOS, will have been fully disclosed.”
The Royal Bank of Scotland pretty much saw all their profits wiped in the third quarter, making a paltry £2 million. That doesn’t even buy a decent League One footballer these days. The bank, now state-owned, was hammered by the cost of misconducts of the past, and the price of restructuring.
Get this – this operating profit (before tax) is 99.8% lower than the £1.1bn reported in the same period last year. That’s a remarkable drop. The main costs saw RBS coughing up £129m in litigation and conduct costs, and £847m for restructuring.
Chief executive Ross McEwan said: “These results show that we are making really good progress against the targets we have set ourselves and we are becoming a much stronger bank.”
Of course, RBS are creating a new (old) bank called Williams & Glyn, with 314 branches in the North West of England, which will be – in part – backed by the Church of England. They vow to uphold “the highest ethical standards”, which hopefully means they won’t be making another mess like they have recently.
RBS is still 73% owned by the taxpayer, after being bailed out during the financial crisis, and have had to concede that past misconduct problems still aren’t resolved, as costs continue to rise and become “substantially greater” than they initially thought.
Well, it looks like there’s moves to get rid of the smaller coins, kicking off in Ireland with a new scheme. If it is successful, it could be rolled out in Britain too.
So what’s going on? Well, the new rule see you having your change rounded up, or down, to the nearest 5 cent. There’s a trial going on in Wexford, which follows similar schemes in Holland, Finland, Sweden, Denmark and Hungary.
Dr Ronnie O’Toole, an economist at Ireland’s Central Bank, said: “Consumers may be surprised at first but, judging from the experience in Wexford, they will embrace rounding very quickly.”
Thing is, it costs mints a lot of money to issue the smallest coin denominations, and with the euro, Ireland has spent 37million euro (around £27million) issuing one and two cent coins, since it was introduced. That’s three times the rate as the rest of Europe. It is hoped that this new rule will reduce the need to make more, as there’s enough in circulation.
Obviously, the coins will still be legal tender, and the changes will only apply to cash transactions. If you’re paying for something on a card, or another form of electronic payment, you’ll just pay the normal total. It would also only be used on the final cash total of a bill, rather than individual items.
So, if you get a bill for something, and the amount ends in one and two cents or six and seven cents, it’d be rounded down to the nearest five. Those ending in three and four cents or eight and nine cents, would end up being rounded up. Sounds like a good idea, in principal, but the cynic in us makes us think that some businesses might use this as a scam to rinse more money out of customers.
Either way, would you like to see something like this over here?
The owner of The Money Shop is going to be refunding £15.4m to 147,000 customers after the lender was investigated by the Financial Conduct Authority (FCA). It is owned by Dollar Financial UK, who as trade as Paydday UK, Payday Express and Ladder Loans.
They are going to reimburse customers who have fallen foul of the way affordability checks were handled, as well as system errors and debt collection mistakes.
The investigation found that many customers were lent more than they could afford to repay, and as a result, the company has agreed to change their lending criteria.
Jonathan Davidson, director of supervision for retail and authorisations at the FCA, said: “The FCA expects all credit providers to carry out proper checks to ensure that borrowers don’t take on more than they can afford to pay back. We are encouraged that Dollar is committed to putting things right for its customers.”
The FCA said 65,000 customers are going to be contacted and will receive a cash refund, while 67,000 would see their current loan balance reduced. 15,000 customers will see both. Those affected will not need to do anything, as the FCA is making Dollar Finance do all the donkey work. The money will start to go out early next year.
Dollar chief executive Stuart Howard said: ”It is proper that we put things right where they have gone wrong and I have gone further than the review in reforming the way our business operates to reflect the company aim of being the most responsible lender in its market place.”
Barclays, RBS and HSBC have been hit with a $924m (£600m) bill for foreign exchange-rigging, which means those charges will no doubt be passed on to customers. Great. That’ll teach the banks a lesson, eh?
Barclays will be paying $384m, HSBC $285m and RBS have agreed to fork out $255m, according to Sky. There’s other banks involved too - French bank BNP Paribas and Goldman Sachs will be paying $249m between them.
If you think this is over, think again. While this payment is rather large, there could be more to come, as there’s a host of other investigations that are still going on, including a criminal probe by the Serious Fraud Office.
“We look forward to presenting these momentous settlement agreements to the federal court for approval, but our work is far from done,” said David Scott, managing partner of Scott+Scott (they brought this case into being). ”Given our in-depth knowledge based on our success against the banks in the US, Scott+Scott is gearing up to bring the action to Europe.”
So there you go. Good that the banks are being penalised for their bad form, but you know they’ll make their money back through our pockets.
We spoke about the CMA investigating the banks earlier in the week, and now, the Competition and Markets Authority have published some of their findings.
One of the big things is that customers could save an average of £70 a year if they switch their account to another provider. It was thought that the regulator might start breaking the banks up too, but they haven’t gone for it on this occasion.
The CMA did conclude, however, that the current market is resolutely not working competitively. They think that too many customers have stayed with their bank for more than 10 years, which shows we’re not prone to moving to better deals when they’re out there.
57% have been with their bank for more than 10 years, with 37% sticking with their provider for more than 20 years.
Another thing that the CMA are not happy with, are complex charges. They suggest that banks should be required to prompt customers to switch when certain things happen – such as their local branch closing, or if overdraft charges change. They should also make it even easier for people to switch accounts, and that their should be a new price comparison website for small businesses.
The CMA pointed out that those who regularly go into the red could be saving £260 per year by switching accounts, and they’d like to see more effort made so that customers are aware of the fact that they can move between banks and products. They said in their report that people are still put-off switching their current account because they think it would be “complicated, time-consuming, and risky”.
“Despite some encouraging developments, particularly in the shape of challengers that have entered the market in recent years, for too long banks have been able to sit back and take their existing customers for granted,” said Alasdair Smith, head of the retail banking investigation for the CMA.
“We don’t think that customers will truly benefit from a more competitive marketplace until they can compare accounts more easily and feel confident that they can switch without risk,” he said.
The CMA’s final report will be published in May 2016
European competition commissioner Margrethe Vestager said that these deals that Starbucks had in Holland and Fiat had in Luxembourg were basically state aid. Now, the Netherlands and Luxembourg disagreed with the Commission, and Starbucks are likely to appeal.
For now though, they’re all in trouble and investigations into tax deals are continuing, with Amazon and Apple under the spotlight.
“Tax rulings that artificially reduce a company’s tax burden are not in line with EU state aid rules. They are illegal. I hope that, with today’s decisions, this message will be heard by member state governments and companies alike,” Vestager said.
“All companies, big or small, multinational or not, should pay their fair share of tax,” she added.
The Dutch government are “surprised” by this decision, and they’re pretty sure that their arrangement with Starbucks doesn’t contravene international standards.
The Luxembourg Ministry of Finance said the Commission had “used unprecedented criteria in establishing the alleged state aid”. ”Luxembourg disagrees with the conclusions reached by the European Commission in the Fiat Finance and Trade case and reserves all its rights.”