PayPal – a company that people don’t exactly trust or like – have announced that they are going to start offering cash advances to small businesses in the UK. If you can’t get a loan, then PayPal want to ‘help’.
Of course, everyone’s problems with PayPal are well documented, but so too is the general irritation with loan companies and banks. It is basically getting a consumer to pick which illness they’d like.
The PayPal Working Capital fund will launch in the UK later in the year, but has been giving out loans in the USA since last September. And people are taking them up on the offer. Thus far, they’ve made £82m worth of advances to American firms.
They say they will provide “funding in minutes” after approvals and all that… but no credit check. A one-off fee is required on the advance (like interest) and the fee you can receive is based entirely on sales history from the PayPal account, the amount of money being advanced and the schedule of repayment.
Businesses will pay back what they owe with a share of sales made using PayPal, so if you don’t sell anything on a given day, PayPal get nothing.
In America, there’s been glitches – a number of customers have noted that unauthorised payments have been taken out of their PayPal account as repayments, with PayPal clearing business accounts without much fanfare or explanation.
Would you trust PayPal to sort you out with a loan? Or are they no better or worse than any other loan company?
It’s estimated that 45p in every pound shelled, the taxpayer won’t ever get back.
Under the current system, students can borrow to cover the full cost of £9,000-a-year tuition fees, and do not have to start paying back their loans until they have finished studying and are earning above £21,000 a year, and any outstanding debt is written off after 30 years.
However the sheer amount of students defaulting on their debt (ie: they haven’t got jobs or even if they have, they’re not paying enough), and the system looks in crisis as it will soon become financially unviable.
Originally, the government has projected that 28% of loans would have to be written off, but ministers have been continually shouting “HIGHER!”
The number has been revised because economists have downgraded their predictions of how much graduates are likely to earn in the future.
The National Audit Office predicts that student debt will increase from £46 billion in 2013 to about £330 billion by 2044.
Meanwhile, the Student Loans Company is supposed to have 98.5 per cent of borrowers in a repayment channel – which means they are either repaying on time or not earning enough to repay, but they’re allowed to include people in that total, even if they don’t have any information on them.
The Institute of Fiscal Studies has predicted that the average student will now leave university with about £44,000 of debt, in 2014 prices, compared to about £25,000 under the old system.
Although the lowest earners will pay back less, far fewer graduates will pay off their debt in full by the age of 40, and almost three quarters will never earn enough to pay back their loans in full.
Tuition fees are higher in England than in any other public university system on Earth, and when you throw in other expenses, the cost of studenting in England in general was the third highest in the world.
The rules were launched by Trouble-haired chancellor George Osborne, following his announcement earlier this year when he scrapped a rule forcing people to buy an annuity, and thus freaked out insurers the land over.
Osborne is keen to allow people to tap into the cash they set aside during their working life by reducing tax penalties imposed on those who withdraw their savings in a lump sum.
On Monday, the government confirmed its intention to go ahead with such plans, seen as the biggest reform of pensions in a generation, and added details to its proposals following a consultation with industry, employers and consumer groups.
Osborne said: ”It’s right to support hard working people that have taken the long-term decision to save for their future and I’m pleased that the responses we had to our proposals on making pensions more flexible have been overwhelmingly positive,”
“The government believes that the overall impact … is likely to be limited,” it said. “It is expected that there will still be a strong continuing demand for high-quality fixed-income assets, including government and corporate bonds.”
It all sounds quite good, but there are worries that the changes will allow pensioners to piss away all their savings while giddy in the first flush of freedom. Osborne, with his legendary charm, has rejected this idea.
It was all panic when Osborne first announced the shake-up earlier this year, it hit the share value of firms like Legal and General, Aviva and Standard Life who run annuities businesses. The shares have since recovered slightly, but remain below their pre-announcement levels.
The finance ministry said that after consultation, the industry estimated that only 10-20 percent of people in defined-benefit pension schemes would transfer out of them. Some pension schemes might need to hold more liquid assets as a result, however.
A summary of the consultation said the financial guidance provided to retirees would be provided independently and funded by a levy on regulated financial services firms.
All good news for anyone with a pension then. Oh.
They’re planning to ditch the “cuddly” puppets too. Which plays havoc somewhat with the definition of cuddly, but there you go. They’re off.
Incoming Wonga chairman Andy Haste, former chairman of insurance giant RSA, has said he didn’t want Wonga to be associated with ‘anything which inadvertently attracts children’.
Which is a relief, because the only children who’d be attracted to those puppets are the sort that need counselling.
Mr Haste added that he wants Wonga to become more ‘customer focused’ and change its business operations, even if that means it makes less money in the near term.
It’s all part of the government’s attempt to put a cap on lending and stop these asshats from rinsing the vulnerable for all they’re worth. As of July 1, lenders must put ‘risk warnings’ on television adverts. They are also banned from rolling over loans more than twice and must check potential customers can afford to take out debt before giving them loans.
The Wonga news comes weeks after Wonga said it had agreed with regulators that it would pay £2.6 million in compensation after chasing struggling customers with fake legal letters to pressurise them into paying up. Classy.
Mr Haste said the company, must review rates, fees and charges and no longer be seen as targeting ‘the young and the vulnerable’. We can assume they’ll have to stop sponsoring Newcastle United then?
He said: “Wonga is a company that needs to go through significant change if it is to have a sustainable future. Some serious mistakes have been made. The company admitted those mistakes and it has apologised for those mistakes. Wonga has understandably faced a lot of criticism and I know that we need to repair our reputation and regain our right to be an accepted part of the financial services sector.”
Which is all waffle as you can imagine, but ultimately the godawful pensioner puppets are no more. Now if we can convince Dolmio and Compare The Market that the puppet thing isn’t working, we can have a lovely big bonfire.
A survey says that one in four of us would use a purely digital bank. No ‘banking ambassadors’, no counters, no humans. Apparently, we don’t care. A large percentage of us wants everyone to leave us alone and shuffle numbers about on a screen and then forget about it.
Unsurprisingly, the survey, by Accenture, found that folks between the ages of 25 and 34 are the ones most in favour of digital only banking, and are happy to only access their bank via the internet. And 80% of the 3600 current account holders surveyed are using internet banking regularly – however, the figure using mobile banking is just 27%.
BUT, there’s a bit of paradoxical confusion going on, too. It also found that there was a rise in customers using branches – up to 52% from 45% in 2012. And the biggest rise of all was between 18-25 year olds – the people you might assume would be all over digital banking like a rash.
‘This year’s survey underscores the growing complexity in how consumers want to interact with banks in the digital age,’ said Peter Kirk, from Accenture’s financial services group.
So what do we want? People or machines? Or both? Or do we just want that thing that seems so elusive – a bank that doesn’t annoy the crap out of us?
This is the modern world, as Paul Weller once snarled, so instead of having people who sit behind desks and actually know stuff, Barclays is re-assigning 6,500 cashiers to act as roaming banking concierges, who will try and encourage you to use a machine.
Yes, a person’s job will actually be to encourage you not to talk to them, thus eventually rendering their job obsolete. But it’s okay – they will have an iPAD!
They’ll be called Community Bankers, and it’s all part of Barclays’ obsession with becoming ‘counterless.’ Most people don’t mind counters – at least they’re something to lean on when you’re wearily putting your head in your hands – but Barclays appear to be dreaming of an automated future free from cumbersome, awkward humans who want to be paid wages.
Barclays said the move ‘reflects the radical way banking is changing with customers increasingly choosing to conduct basic transactions through a digital platform and instead using branches for more in-depth conversations with staff’
Of course, this doesn’t take into account the idea that some transactions DO involve an in-depth conversation with staff. Instead, though, we will all be airily waved through the banking hall by Bank Waiters.
But what about the elderly, who would rather overdose on Senokot than deal with a machine? Well, you might have also heard of their ‘Digital Eagles’ project, which is pathetic in a way that only financial services blue sky thinking can be. They’ll also be encouraging old people to use technology so their jobs can become obsolete, too.
If they keep going like this, by this time next year Barclays won’t have the expense of paying any staff at all – which is presumably what they’re aiming for…
According to a survey by ESurv, in June there were was ‘glut’ of teeny tiny 15% mortgage deals (hello, Help to Buy!) which has pushed the number of at-risk homeowners to levels not seen since the financial crisis.
The number of households with a high Loan to Value rate is now 10,898, which now accounts for 1 in 5 new mortgages, compared to 1 in 9 a year ago.
There’s also a regional divide – the majority of high LTV mortgages are in the North, where more than a quarter of people have them. Meanwhile, in That London, only 7% of mortgages have a high LTV. That’s probably because in the North, you’ll be lucky to earn enough to feed the whippet, fill the tin bath and have enough left over for a latte – let alone save up an enormous deposit for a house.
All this means that if house prices suffer any kind of slump in the future, that these householders will be plunged into a graveyard of negative equity, because their mortgage will cost more than the house is worth.
Seem to remember that happening back in 2008…
Ever wondered why you’re walking around in a knackered daze with moths flying out of your pocket, wondering how to make ends meet AND keep up with the endless demands of children, who want things like water, food and new shoes?
Well that’s because the amount of money required for an acceptable standard of family living has gone up by 46% since 2008, according to the Joseph Rowntree Foundation. And we’re not talking about trips to Legoland or booze and hookers for Dad. We’re talking BASIC NEEDS.
Despite the fact that the amount of money needed for staying alive has risen by almost half, wages have gone up by a piffling, paltry, perfunctory 9%.
The JRF have said that even if wages start to rise, the gulf between income and cost of living is so huge that families still couldn’t hope to catch up.
‘People have talked a lot about wages falling behind the cost of living but this really lays bare the challenge to make up lost ground.’ Said Katie Schmuecker from the JRF. ‘This isn’t just falling short, it’s falling behind.’
So that’s why you feel like you’re running to stand still ALL THE TIME. No wonder our heartless moneybags overlords call us ‘hardworking families’, eh?
The clampdown on payday lenders starts tomorrow, which means they won’t be able roll over loans more than twice – plus there’ll be tighter restrictions to your bank account, so Wonga won’t be able to drain all your wonga.
July 1st will also be the day they’ll have to start being more transparent in their advertising. They’ll have to slap warnings all over the big rubbery face of Earl and his old lady friends, telling people about the risks of late repayment, with a link to the Money Advisory Service in case people need help.
The exact wording? This:
‘Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.‘
Things are looking a bit shaky for the payday loans industry as a whole. A massive investigation is currently being conducted by the Competition and Markets Authority, following the billions of complaints and debt from its customers and critics. The FCA is also looking into capping the overall cost of a payday loan.
So could these new regulations mean that payday loans will soon be a thing of the past? Or are we all so skint and desperate that we’ll do anything to borrow a quick buck?
And this time the Attorney General of New York State has weighed in on the bank. Eric Schneiderman and the state of NY have filed a lawsuit against them for giving an unfair advantage to high frequency, ‘predatory’ trading clients in the US – despite telling everyone else that they were trying to protect other customers against such traders.
‘Dark pool’ trading allows investors to trade without influencing the market.
Barclay’s dark pool system was called LX Liquidity Cross, and was supposedly set up to get customers the best possible prices for their shares. Instead, they – whaddya know? – maximised their own profits. Nearly all trading was done through LX, rather than through other exchanges that would have offered a better price.
‘Barclays grew its dark pool by telling investors they were diving into safe waters,’ Schneiderman said. ‘Barclays’ dark pool was full of predators – there at Barclays’ invitation.’
*cue theme from Jaws*
Most people don’t pay by cheque any more, but even so, they often show up, as if BACS was never invented. And it’s a drag to go into branches to cash them.
Soon, though, you’ll be able to take a picture of your cheque on your smartphone and pay it in either via email or your mobile banking app. It’s called ‘cheque imaging’ and next week the government is expected to give the go-ahead for legislation allowing banks and building societies to use it.
It’s great news for us, because electronic cheques will speed up the interminable clearing process involved with all those bits of paper. At the moment you have to wait up to a week for a cheque to clear because it has to go from your bank to a clearing centre. But cheque imaging bypasses all that antiquated messing around, and it will only take 2 working days for your money to appear in your account.
However, it’s bad news for branches. Take away the need to cash a cheque, and you could see nothing but tumbleweed and unemployment. But, the hardy paper cheque might not be phased out entirely. Even if the legislation goes ahead, the Cheque and Credit Clearing Company says: ‘Customers wouldn’t have to do anything different if they don’t want to. They would still be able to pay cheques into their accounts at branches.’
But if it only takes 2 working days to clear a photo of your cheque, what’s the betting that we’ll all be doing it via email instead?
Well then you should check out if you can get the spare money back, as there’s £124 million on them (not yours, but loads in general)
Transport for London reckon – out of the 75 million cards issued since time began (2003) – that there’s around 28 million cards that haven’t been used for over a year, and THESE have a combined amount of £64 million on them. Lordy. TfL also has £59.5 million in deposits on these cards too.
Once you’ve found your card, here’s what you can do:
Phone: call 0343 222 1234 with your Oyster number to hand and go through all the security questions, get the nice person on the other end to cancel your card, which you then send to TfL’s customer services HQ to get a full refund of your credit and deposit via bank transfer, cheque, or TfL website credit.
Post: Complete a TfL refund form and send it in to TfL with your Oyster. (Admittedly, if you live in, say, outside of London, a TfL refund form may be difficult to come by).
Person: You can apply for a refund at any London Underground ticket office (BE QUICK WHILE THEY STILL USE HUMANS) and someone will be able to help you.
If the payment method you originally used was a debit or credit card that’s since expired, you can ask for the refund to be transferred to a nominated bank account or to receive it via cheque. If you haven’t registered your card, you’ll need to show some form of ID in order to get the refund. You can’t get a refund on behalf of someone else.
If you can’t be arsed to do any of this, and fancy being nice, TfL donate unused cards to charity, and the spare cash goes to the Railway Children charity which helps nippers on the streets of Africa, India and the UK. Which is quite nice isn’t it? (Although you’ll probably go for the refund though eh?).
They can’t even do an apology properly, can they?
These shortfalls apparently affect credit card customers with Lloyds Banking Group, Barclays, Capital One and MBNA.
It seems that they’ve not paid back charges and penalty fees for those with a policy that is linked to a credit card. While some have seen thousands of pounds repaid in interest and premiums, some customers have been stiffed.
These figures come from a BBC report and, it is worth noting that they’ve not shared their calculations with the Financial Conduct Authority – it seems the FCA have a difference figure and have said: “In some cases a penalty fee may have been incurred for going over a credit card limit regardless of the PPI, in which case we would generally take the view that this charge would not need to be refunded.”
Lloyds Banking Group said in a statement: “We are committed to doing the right thing for our customers and this includes ensuring that each PPI case we receive is investigated on an individual basis. When a customer lets us know that they may have incurred other costs because of their credit card PPI policy, we will investigate and make an appropriate refund.”
This is a story that will rumble on and on.
The new affordability tests, which ask a variety of quite tough and nosey questions, are said to be the main cause for this, and hence having a knock on effect on the housing market.
The approvals fell for a third month in April 2014, according to the Bank of England, and these new rules are said to be part of the reason.
The seasonally adjusted figures showed that a total of 62,918 house purchase loans were approved during April, the lowest number since July 2013. It’s also markedly lower than the previous six months’ average of 70,132.
Analysts reckon that these figures, along with those of an increase in manufacturing, showed that the UK economy was undergoing a hoped-for rebalancing away from housing and consumer-dependent growth to an industry-based model.
A man with a great name – Samuel Tombs, who is UK economist at Capital Economics – had this to say:
“The data has provided more encouraging evidence that the recovery is shifting away from its excessive dependence on housing and consumers towards industry”
So the economy may be showing signs of recovery, but be cautious, as these tests may actually really start dragging on the property market. While it’s still happening with house-buying and that, and the market is still vibrant with house prices in England and Wales rising 6.7% in April compared with the same month last year, according to the Land Registry.
The slowdown in approvals over the spring means that in April mortgage lending to homebuyers was 17% below its recent peak of 75,838 in January, when total lending peaked at 124,358 approvals.
Remortgaging has also dropped off since the start of the year, with 31,703 loans approved for existing borrowers who were not moving house. This is below the previous six-month average of 34,316.
The total value of mortgages approved fell to £15.7bn in April, down from £16.3bn in March, while loans for house purchases dropped from £10.6bn to £10bn.
So that’s all super news if you ever do find yourself on the property ladder.