They reckon that digital currencies are going to become as vital and commonplace as banknotes. With that, they’ll ‘mint’ their own version. In a paper, talking about virtual currency, they said that this money could erase the need for a third party (aka A Bank) but they’re worried about the impact it’ll have on the shops and that there’s inevitably a need to have a central bank to regulate everything.
Of course, Bitcoin enthusiasts will be spitting their brews through their noses at the idea of The Man getting involved with their pennies. Having an authority, which people may not wholly trust, centralise the currency, pretty much goes against the enjoyment people get with the increased privacy that comes with digital currency.
“The emergence of private digital currencies (such as Bitcoin) has shown that it is possible to transfer value securely without a trusted third party,” said the Bank of England in a discussion paper. However, they’d like to control the mining of money and they think someone needs to control it, to make it less volatile.
“There are several different ways in which a central bank might make use of a digital currency,” the BoE said. “It could be used as a new way of undertaking interbank settlement, or it could be made available to a wider range of banks and NBFIs [non-bank financial institutions]. In principle, it might also be made available to non-financial firms and individuals generally, as banknotes are today.”
If you want to read the Bank of England’s paper on all of this, click here.
Google are revamping their Google Wallet service, upping their game to take on Samsung and Apple to make the battle for your money a three-way dogfight. Well, if you don’t include all the other companies that is.
Anyway, Wallet is getting improved and incorporating Softcard (which used to be called Isis Mobile Wallet, which would’ve been interesting if it were still called that in today’s climate) and in the States, will be a joint venture between AT&T, T-Mobile and Verizon Wireless. Similar deals are being worked on in a number of other markets and Wallet, of course, is already installed on loads of Android handsets, so look out for updates.
Google clearly want to take-on Apple Pay and the search giant’s announcement makes particular reference to the “tap and pay functionality” of Wallet, meaning that this is a move to make Android fans take their NFC app seriously, after years of indifference.
Seeing as AT&T, Verizon and T-Mobile had previously blocked Wallet on their phones, this teaming-up means that the new platform is going to be more robust than previous efforts.
Of course, only last week, Samsung bought into LoopPay, which means there could be a scrap between the mobile maker and Google, which is a problem that Apple don’t have.
However, with the UK being rather slow to embrace NFC payments, Google might hold out to see what Apple do first. With contactless payments being increased, things could get going sooner, rather than later.
Banks, accountants and businesses that help people evade tax are looking at giganto fines, according to George Osborne. The Chancellor is clearly responding to the HSBC scandal where their Swiss wing helped a load of bad sorts sidestep that pesky business of taxation.
Apparently, Gideon will be using the platform of a policy statement before the election to say that companies and organisations who are enabling tax-dodging will face the same penalties as those who benefit from dodging. Words being thrown around are “corporate failure” and the severe sounding “economic crime.”
People who fund political parties across the board will be hoping that he’s bluffing, eh?
Of course, this is a headache for Osborne, as he batted away questions about whether or not he’d talked about the HSBC scandal with Lord Green who just so happens to be a former HSBC chairman and was given the role of Trade Minister by the Government in 2011. Speaking about that, Osborne said: “Some very serious allegations have been made about HSBC Swiss and its role in knowingly advising people on tax evasion. Of course this is a matter that our criminal authorities, prosecuting authorities will want to look into.”
“We are currently in active discussion which I think will come to a fruitful end to get the French to allow us to pass some of this information to the Serious Fraud Office and other prosecuting authorities to address the concern… about the potential or alleged role of banks in this affair.”
Wonga have been getting it in the neck over all manner of things recently. There’s been a clampdown on payday lending rules, as well as big payouts over sending threatening letters to customers from legal firms they’d made up.
Then, the company that did their pensioner-based adverts said that they didn’t want to work with Wonga anymore, because of “certain practices.”
And things aren’t getting any better as the payday lenders are, according to Faisal Islam, going to “halve its UK workforce” thanks to the “rapidly changing market for short term credit”.
Sky’s Emily Purser added: “Wonga announces around 325 jobs will be lost as part of restructuring programme.” The reason given is that; “Wonga can no longer sustain its high cost base”.
The company says: “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. We appreciate how difficult this period will be for all of our colleagues and we’ll support them throughout the consultation process.”
The company have also been shedding senior members of their team too, losing Justin Hubble who was general counsel and head of international regulation, who was barely in the job for a year. Wonga also lost Lucy Vernall, who worked alongside Hubble. Niall Wass quit his role as Wonga’s chief executive in 2014 after 6 months at the helm, followed by his successor, Tim Weller, six months later. Wonga also lost Errol Damelin who founded the company.
New rules, big job losses and people not wanting to work with them… looks like Wonga are heading for Deathwatch.
We’ve had the 0.5% base rate for five years now, and while mortgages are currently at record breakingly low rates, and with long fixes, not all forms of credit have also dropped with the base rate. Credit card rates in particular are actually higher than those seen before the base rate drops. So what gives?
Bank of England figures this week reveal that, contrary to what might seem reasonable, credit card rates are actually higher now than they were in 2008- in some cases by as much as a quarter. In 2008, the average credit card customer was paying interest of around 15.5%, but seven years later, credit card interest rates now average 17.8%, which is nearly 36 times the base rate charged by the Bank of England. Practically every major card now has a basic interest rate of 18.9%, with only Nationwide standing out with its standard APR remaining static at 15.9%.
But what possible excuse can banks and card providers have for increasing rates at a time of lowest ever base rates? According to Moneysupermarket.com there is a “clear correlation” between the growing trend for extended 0% interest periods- with the maximum available 0% period now reaching a previously unthinkable 35 months- and higher rates at the end of the interest-free period. It’s like the banks are hoping to lure customers in with the 0% period, only to make their money back by charging more afterwards. Which is of course exactly what they are doing, banking on the fact that around four out of ten card holders fail to pay off their credit card balance every month.
Of course, the answer to it is to make sure you pay off your credit cards rather than face such hefty interest charges, or to make sure you are paying the most off balances with the highest interest rates first. And check when your 0% deal ends- once you revert to the standard APR it’s probably high time you started looking for another 0% deal. If 35 months is becoming a standard, even the busiest of us can probably find the time once every three years to save a packet…
With all the furore over Pensioner Bonds, the normal flurry of interest in cash ISAs has been a little subdued, not least because rates remain low while the base rate is still rock bottom. However, a growing trend for new ‘holding ISA’ accounts has now spread to the best buy cash ISAs, which could show a light in that long dark tunnel for savers.
The concept of a holding ISA is simple- instead of investing in a single cash ISA account, you invest in a cash ISA ‘wrapper’, and within your cash ISA portfolio, you then choose which cash ISA accounts to invest in, meaning you can choose to invest in both fixed term and instant access accounts.
While allowing easy access to part of your cash is one benefit, a major draw of this new type of account is that savers can “hedge” or protect themselves against rising interest rates. Typically, a fixed-rate ISA will pay a higher rate of interest than an easy-access account, as you exchange flexibility and instant access for a higher rate. Using a holding ISA, investors could put some money into fixed rate accounts and keep another pot in a variable account, ready to move should rates improve within the next three years. The interest would all remain tax-free and within the rule that only one cash ISA can be opened in any tax year as the investment is in the holding account not the individual cash ISA accounts.
But while this is not a new idea- both Newcastle Building Society and Nationwide have introduced similar style accounts, the entry of the Post Office into this market marks a turning point. The Post Office’s fixed-rate ISAs are currently market leading, paying the top rates for two and three years, at 1.95% and 2.1% respectively, and both accept ISA transfers. Even the Post Office easy access ISA at 1.5% is top of the offering, although this does include a 0.85 percentage point bonus for the first 12 months, so after a year savers need to be savvy about looking for a better rate.
The ISA allowance will increase to £15,240 on 6 April for the 2015/16 tax year.
The Post Office said its new Holding Account was created to “address the frustration of customers at being restricted in only being able to open one cash ISA per tax year”.
Henk Van Hulle, head of savings and investments at Post Office Money, said: “No customer will now lose out on their annual ISA allowance when choosing a fixed-rate cash ISA over a variable-rate cash ISA. They can benefit from both.”
The Post Office’s new online holding ISA will automatically be opened when customers apply for either the Post Office’s fixed or easy-access ISA products. We’re still looking for the downside…
That’ll lift the mood just before a General Election won’t it?
The annual CPI fell to 0.3% according to official figures, down from December’s 0.5%. So what does that mean to you? In real terms, it means that if you spent £100 on some shopping last year, right now, it will cost you £100.30.
The Bank of England think that inflation will turn negative for the first time in fifty-odd years within the next couple of months, which is exciting. That might mean things get cheaper for once (although, don’t make any bets on it – retailers aren’t that kind). In addition to that, economists reckon that their data crunching will show that wages actually rose by 1.8% in the three months to December.
George Osborne, naturally, cheered this news on, saying that it was a “milestone in the British economy.” While this is good news, we need to see an upward trend beyond just food and fuel. It is a start though.
“There is certainly no sign of the systemic deflation that took a grip on Japan in the 1990s,” said John Hawksworth, chief economist at accountancy firm PwC; “Domestic demand growth remains relatively buoyant.”
Osborne added: “It’s great news for families, whose budgets will stretch even further. It shows that those who went around predicting a cost of living crisis were plain wrong. And it demonstrates the clear choice between a long-term economic plan that’s delivering stability and rising living standards, and the chaos of the alternatives.”
Spring might be in the air, with Easter on the far horizon, but Citizen’s Advice aren’t feeling very cheerful, with the issue of a new report that estimates consumers are losing almost a tenth of their income through problems with faulty goods, bad business practice and poor service.
Each year, Citizens Advice deals with 1.4m problems related to consumer goods, services and credit receives 3,000 calls a day. The charity has now calculated that £1 in every £10.60 earned was being lost as a result of poor practice by businesses used by consumers.
In its new report, Consumer Challenges 2015, Citizens Advice said consumers lost an average of £250, which for the poorest fifth of households is the equivalent of 19% of monthly income.
Interestingly, credit card debt is no longer the biggest debt issue for consumers, with complaints around these debts set to drop by 12% to 155,700 over the year. The top concern for consumers is now council tax debt, with Citizen’s Advice expecting to deal with 191,400 council tax debt issues in 2014/15 – a 20% increase on the previous year. Rising renta are also high on the consumer agenda, it said, with the number of rental debts reported to the on track to reach 122,800 by the end of March.
However, debt in itself is no longer the biggest problem facing clients. In 2008, debt issues made up 32% of issues while benefits and tax credit issues accounted for 27% of problems; by the end of 2012 it said this had switched to 29% and 37% respectively, with the advent of Universal Credit likely to exacerbate the problem further.
The top five sources of consumer problems, apart from debt and benefits, were secondhand cars, home improvements, energy, telecoms and furniture. One in four people seeking help had lost £600 or more, while one client faced losing up to £33,000 due to problems with a motor home.
Gillian Guy, chief executive of Citizens Advice, said “Some firms are using hidden terms and unfair cancellation processes to extort money from their customers. Tough times can be a fertile breeding ground for these kinds of bad practices. As a recovery takes hold, particularly with public spending so tight, industry, government and regulators need to help households by fixing failures in consumer markets.”
Security firm Kaspersky Lab reckon that, what equates to £648m, has been swiped which started in 2013 and are still going. It seems that these criminals are all based in Russia, Ukraine and China. Commies, eh?
Kaspersky have been working with Interpol and Europol to investigate this thievery, and that the money was nicked from Germany, Russia, North America, China, Ukraine and Canada. Not the UK though. Presumably criminals have got a respect for the villains that work in our banks.
“These attacks again underline the fact that criminals will exploit any vulnerability in any system,” said Sanjay Virmani, director of Interpol’s digital crime centre. Kaspersky added that these ne’er-do-wells herald a new era in cyber crime where ”malicious users steal money directly from banks and avoid targeting end users”.
The crooks have been given a name too, with Kaspersky calling them Carbanak. The name is hardly the Crips or the Sinaloa Cartel, and sounds more like a silo full of pasta, but we can’t have everything. Anyway, the gang are using computer viruses to get into networks with malware, which sometimes includes surveillance hacks which allows them to see and record everything that happens on staff screens. Very clever.
They can also transfer funds as well as, rather excitingly, tell cash machines to give out money at designated times of the day. Maybe that’s what was happening in Stanground last week?
Kaspersky say that each robbery took between two and four months, with around $10m taken each time: ”It was a very slick and professional cyber robbery,” said Kaspersky Lab’s principal security researcher, Sergey Golovanov.
Nothing in life is guaranteed, except its eventual end of course, but we are always a fan of a consumer guarantee, that gives you peace of mind that you are getting value for money. Now, however, an IVF company is offering a guarantee on life itself- if you don’t get pregnant, you get your money back.
Of course, this guarantee isn’t guaranteed, in that they can’t actually promise you will get pregnant, but for the thousands of couples who undertake IVF every year, isn’t the promise of some cash back if you fail some small comfort to spending thousands of pounds and still having nothing to show for it?
The money-back plan works by charging patients a fixed upfront fee for three fresh embryo and unlimited frozen embryo IVF cycles, which they have to pay for in full only if they result in the birth of a live baby. In practice, without a confirmed pregnancy, you pay around 30% of the full cost, meaning you essentially get a 70% refund if the IVF does not work. The catch (because there’s always one) is that 30% of the fixed cost works out at almost double the cost of a single cycle, meaning if you catch first time, you will have paid through the nose.
For example, if you “pay as you go”, a single cycle of IVF might cost around £5,500, compared with £10,800 upfront through the guaranteed Access Fertility plan. This means that, if you only needed one cycle of IVF, you would be £5,300 worse off under the guarantee. However, if you try two cycles of IVF and decide not to carry on, you could get a refund of £7,560 under the guarantee, meaning you spent £3,240 on two attempts, compared with paying £11,000 for two single PAYG attempts.
The guaranteed IVF scheme is open only to women under the age of 38 when they start IVF and who after screening qualify medically.
But why are over 50,000 women a year paying for IVF when they can get it on the NHS? Well, NICE guideline say that the NHS should fund three full IVF cycles to women under 40 who have been trying for at least two years, and one cycle for some women aged 40 to 42. However, over 80% of NHS areas do not adhere to these recommendations, often adding stricter criteria and banning those who already have children, even if that’s step children, and if you live in mid-Essex, for example, you are not entitled to any cycles on the NHS.
So is this guarantee a good idea, or is it just preying on desperate couples? Ash Carroll-Miller of Access Fertility who offer the scheme, thinks not. Funnily enough. “We explain everything at the outset and every client has given us near enough the same response: ‘We won’t care at that point [that we could have paid less] because we’ll have a baby.’ ” Given the success rate of IVF in women aged under 38 is around 30%*, it looks like a reasonable gamble against paying over the odds.
* figures from NHS
The culture around banking has been a cesspool since the ’80s, when they were let off the lead to do pretty much whatever they wanted. Successive governments didn’t do anything about it either, letting them crack on… until they mucked everything up and loads of information came out about them which painted them in a bleak light.
Of course, the current government isn’t going to do anything about it either. And why would they? The whole rotten system can be fixed by simply saying ‘sorry’.
And that’s what HSBC have done and, with their apology, we can all sleep soundly, knowing that that simple phrase has transformed decades of awful behaviour in the world of finance.
You’ll know that HSBC have been doing all manner of dodgy tax business via their Swiss arm, helping clients to sidestep taxes – many of whom just so happen to be fundraisers for the Conservative Party.
Anyway, the bank was so very, very sorry that they took out a full-page advert in the Sunday papers, saying that the whole thing had been a painful experience and that standards in place today “were not universally in place” in years gone by. Fixing all the problems in banking, HSBC said: ”We therefore offer our sincerest apologies.”
Nice that all those shady dealings are now consigned to the past, eh? It really is a big relief to us all and, more importantly, it was so nice to see MPs across the board talking about the issue and not ignoring it at all.
That said, now we think of it, it would’ve been nicer if HSBC had said something along the lines of ‘this won’t happen again’, and maybe some assurances from politicians that they might want to put penalties or rules in place to ensure that huge amounts of money don’t vanish like this, and that massive institutions actually bolster the tax pot for the UK, so maybe we wouldn’t have to see so many cuts made to public services.
All that is by-the-by now, because HSBC have said sorry, which makes absolutely everything right and proper in the world. God bless every one of them.
Wafting your cash card at a machine and a payment going through still feels impossibly futuristic to many of us (okay, just us) and from September, you’ll be able to do a contactless payment up to the value of £30, rather than the £20 limit we now have.
This means you’ll be able to tap-and-go on fancy wine or thirty things from a pound shop. It is all very exciting.
There was initial reluctance to utilise contactless payments, mostly through not being able to let go of the old habit of jamming your card into the machine, but last year, contactless spending trebled as more shops and more consumers got into the idea.
2014 saw a whopping £2.32bn spent by people waving their cards at machines, but it there’s some way to go before it comes close to matching the amounts we spend with chip-and-pin and good ol’ cash. Even so, that is a 255% increase on the previous year, and more than double the spending of the previous six years combined.
According to the Payments Council, they think that 2015 is going to be the first year where we see the amount of cash payments being made falling below the number of card transactions.
We’ll just have to wait and see about that. Either way – £30 limit! The next round is on you.
Those shopping at Morrisons found the holy grail of a machine that spits out more than you’ve asked for, meaning that there’s going to be some boozing done this weekend. The community-thinking people of Stanground soon passed the word around and soon enough, everyone was rinsing the glitchy machine.
According to Peterborough Today, two fellas went home and got every card they had so they could double their money. Thanks to this, the machine was mobbed. It was probably glowing bright red by the time it had been emptied.
A spokeswoman for Morrisons said: “We were quickly notified that a fault had occurred with the Link cash machine outside of our store. Our colleagues attended, switched the faulty ATM off and notified the bank. The Link bank is coming to repair the machine today.”
So if you know anyone in Stanground, now’s the perfect time to ask to borrow a tenner.
[Spotters badge goes to avid BW fan, Joffff]
Hurrah! Inflation is still at a record low 0.5%, which means that things still feel like they cost less while the cost of living is rising at a lower rate than wages. This is Good News, right? Well it might be, but in the Governor of the Bank of England’s latest report, there may yet be some clouds, or even more sunshine, on the horizon…
Every month, Governor Mark Carney has to write to the Chancellor explaining why inflation isn’t 2% (assuming it isn’t. Which it normally isn’t). While inflation was high and wages growth was low, we were all feeling the pinch. Now, while inflation is low and interest rates are also low, with the best and cheapest mortgage deals ever seen, we should all be celebrating. But cautiously.
Mark Carney, in his letter to the Chancellor, explained that inflation is basically artificially low at the moment owing to the impact of falling oil prices bringing down the ‘average basket’ prices. There are also grocery anomalies down to supermarket price wars on certain products. However, what no one wants to see is a cycle of deflation- although inflation is expected to dip over into negative for a couple of months and then remain static at around 0% for the rest of the year. While this is good in the short term, negative inflation for two successive quarters would mean we would be back in another recession, and no one wants that. Going back on previous suggestions, Mr Carney confirmed that any sustained deflationary period would be addressed by a potential reduction in interest rates. Yes, if things start turning black, interest rates could go even lower than the unprecedented 0.5% we have currently. Which is great news for borrowers, not so good for savers.
But what about if things don’t go down the inflationary drain,and inflation picks up and stabilises around the target 2%? If this does happen, then you can perhaps expect to see interest rates rising earlier than predicted. At the moment, analysts are pegging late 2016 as the first rate rise date, but after today’s forecasts, some are revising those predictions up to early 2016, given a rise in projected growth figures. Which could mean an earlier increased mortgage payment cloud on your horizon- unless you have tied into a fixed rate, that is.
The cheapest mortgages are now even lower than the interest rates offered on some savings accounts with prices so low that there’s 25 home loans priced below the best easy access savings deals.
That is, of course, if you can’t wait for the property bubble to burst, but close that is, is anyone’s guess.
Brian Murphy, of brokers Mortgage Advice Bureau, said: “The next six months are shaping up to be the best-ever window to secure a low interest rate if you are looking to buy or remortgage.”
HSBC put their lowest two-year fixed rate down to 1.19%, while the Chelsea Building Society is currently offering a five-year fixed rate at 2.19%. However, there is a catch – if you’re going to utilise these low rates, you’re going to need to put down a large deposit (normally somewhere around the 40% mark of the property’s value), which means, if you’re a first time buyer, you might need rich relatives, or you’re buggered.
There’s other problems for buyers to consider. A lot of borrowers are really struggling with the new, tougher application rules under the mortgage market review, which basically assesses whether or not you can afford a mortgage.
If you have a smaller deposit, the average rate on a 10% mortgage is currently around the 3.79% mark. If you have a 5% deposit, then it is higher at 4.79%.
Thanks to slow global growth, low inflation, slow growth in wages and a host of other financial factors in the market, is is thought that these interest rates will have to stay lower for longer. Some are suggesting that they’ll stay at this level for the rest of 2015.
So where at the best rates? Well, you’re advised to check out HSBC, who have their two-year fixed rate at 1.19% with a £1,499 fee and a 40% deposit. Chelsea Building Society have their rate of 1.24% which comes with a £1,675 fee while the Post Office has a two-year fixed rate at 1.37% with a £1,995 fee and the Norwich & Peterborough Building Society have a deal at 1.39% with a £795 fee.
Happy mortgage shopping, if you’ve got some savings hidden away somewhere.