Posts Tagged ‘money’
If you want a mortgage, you’ll soon have to endure an intrusive THREE HOUR INTERVIEW with your bank, who will ask you a gazillion questions about your personal life, such as whether you’re trying to have children.
The FCA has introduced a serious of tedious checks, which will apply both to first time buyers and long term borrowers, and the application process sounds like that tense scene in Green Card where Gerard Depardieu has to remember the name of Allie McDowell’s face cream. (What do you mean you haven’t seen Green Card??)
You’ll need to provide minute details of your income and outgoings, and you also have to prove whether you’ll still be able to afford your home if interest rates go up. Some banks will ask if you can afford a 1% rise – but if you’re borrowing big – up to £250,000, you’ll have to prove that you can cope with a whopping 7% rise – £500 more a month than you actually have to pay. So even if you could afford the actual mortgage repayments, you may be refused a loan.
Obviously, this test is an attempt to futureproof borrowers when interest rates inevitably go up, and to force lenders to re-examine the short term deals they offer. But it also seems like a cruel dashing of home owning dreams, especially if people can technically afford the repayments.
The new application process starts on Saturday. Apparently, you’ll also have to balance an orange on your head and walk on your hands in a straight line. Oh, and tell them what colour and texture your stools are.
According to a survey by Lloyd’s bank, our essential household spending slowed down last month, growing by less than 1%. Food costs have eased, and the fall in petrol prices has helped. This is also causing inflation to go down: in March it fell by 1.6%.
So should we all be breathing a sigh of relief?
Well, Lloyds are optimistically seeing this slowdown as economic improvement, rather than desperate cost-cutting measures by people who can’t actually afford to buy food or to run their cars. Patrick Foley from Lloyds, no doubt wearing a striped shirt from Thomas Pink and leafing through a copy of Top Gear magazine, said:
‘The economic backdrop for consumers continues to improve, as ongoing growth in employment, and pay growth that finally begins to keep pace with inflation, feeds through to rising confidence.
As pressure on consumer wallets from essential spending continues to ease, both the willingness and capacity to undertake discretionary spending is likely to rise in the months ahead.’
Er, maybe hold your horses with your ‘discretionary spending’ on a gazebo and a new nest of tables, though – we’re not out of the woods yet. Energy bills still went up by 3%. Meanwhile, 71% of people surveyed in the Lloyd’s Spending Power survey said that the financial situation in Britain was ‘not good at all’. And pretty much everybody in the North East is unemployed and feeling very bleak indeed.
But apparently we’re slowly paying off our debts and consumer confidence is gradually improving. Unless you’re on the dole and eating your own hair, that is.
That’s not living on the edge in an exciting rock and roll kind of way, like say, Jon Bon Jovi or Axel Rose. Instead, we’re barely making ends meet, and according to debt charity StepChange, it’s not just a problem for the scrounging, big screen telly-watching, Bingo playing underclass – millions of ‘hardworking families’ are falling behind on bills, relying on credit and suffering anxiety about job security.
Stepchange say that three million people are in ‘a spiral of debt’, borrowing to keep up their credit repayments. And a separate survey, by mortgage insurer Genworth, said that there are twice as many financially vulnerable households in the UK than solvent ones. Also, 41% of those surveyed said they were stressed about money.
And, Stepchange has also discovered that 13 million people would not have enough savings to last for a month, even if their income dropped by just a quarter.
*expires face down in a bowl of gruel*
Since the switching guarantee scheme came in, over half a million people have decided to move their accounts, rather than slavishly sticking with the same crap bank for life. That’s according to the Payments Council, who counted 609,300 switches in the six months to the end of March – up 14% from a year ago.
Before the Switching Guarantee, customers were basically held to ransom by their banks. It took 30 days to switch, they would bombard you with tearful ‘please come back’ calls, and it was easier to stick with the same old, same old than venture forth and move your money.
But is it enough to open up the banking industry?
Even so, the Payments Council was delighted with the news. Gary Hocking, its managing director said:
‘By making the Current Account Switch Service quick, hassle-free and removing the fear factor, we’ve taken away the barriers customers told us they had when it came to switching. There’s also been a noticeable surge of advertising activity from current account providers, big and small, suggesting that the new service is helping foster competition and choice for customers.’
But critics say that 14% doesn’t exactly herald a competitive banking market. Consumer Batman Ricardo Lloyd of Which!, is taking a very dim view.
‘Despite an increase in public awareness and confidence, switching levels are still low, suggesting that the new seven-day service is not the game-changer that can significantly increase competition in banking.’
I know what’ll stimulate competition. Barclays’ new and outrageously steep overdraft charges, due to be introduced in June, will have customers flocking to switch to ANYWHERE ELSE.
Notice anything different about today? Just an average Thursday, isn’t it? It’s not Black Friday, or Terrific Tuesday or Super Saver Saturday. Just an ordinary day.
Ha Ha – fooled you! Yes, the relentless trying-to-make-days-happen machine has been cranked up again, and today is MORTGAGE FREEDOM DAY!
Does that mean we don’t have to pay our mortgage and we can just sit in the park taking the air and kicking pigeons? Well, no. This particular day – made up by the Halifax – represents the day of the year when the average new borrower has earned enough to pay off the annual cost of their home loan. This is based on the average annual mortgage repayment cost of £6954, and the average earnings of £25603.
However if you live in London, you won’t get a mortgage freedom day until May 20 – or the end of time – depending on where you live.
Craig McKinlay, mortgage director at the Halifax says:
‘Our research shows that today, if people had put everything they’d earned since the start of the year towards their mortgage, the average homeowner would be mortgage-free for the remainder of the year, which is a reassuring thought.’
But nobody would be able to put everything they earn towards their mortgage anyway, because there are massive amounts of bills to pay. And is this really ‘a reassuring thought’? Or is it just a random and entirely hypothetical load of billy bollocks to try and allay our fears about the housing bubble?
There’s not even a cake or balloons. GO AWAY MORTGAGE FREEDOM DAY. YOU SUCK.
Former Metro Bank chairman Anthony Thomson and Mark Mullen, who until last month was chief executive of First Direct, HSBC’s online portal are creating Atom, which they plan to launch next year to be an online only affair.
It will have a full range of services, including savings accounts, loan products and credit cards.
There will be a helpline for customers experiencing technical difficulties, but they will not be able to do bank things on it.
Talking about the reasons behind Atom, Thomson said: ”Telephony as a means of accessing bank accounts is in decline. All of the explosive growth is in digital generally and mobile in particular.”
“Designed entirely for the digital age and with none of the legacy issues of the past, Atom will be UK’s first real alternative to the established banks. Atom will be led and governed by an experienced and imaginative team who have a passion for people and know what it takes to put the customer at the heart of an organisation.”
There’ll be no physical branches and there will be an HQ based in the north east of England, should you become so angry you want to do a dirty protest around actual humans.
Wonga is in hot water again, this time for an ad that claimed that their flabberghastingly high APR of 5853% wasn’t really that important and you should just forget about it – la la la.
The rubbery puppets of doom are shown ‘simplifying’ the terms of Wonga loans, thus: ‘Right, we’re going to explain the costs of a Wonga short-term loan. Some people think they will pay thousands of per cent of interest. They won’t of course – that’s just the way annual rates are calculated. Say you borrowed £150 for 18 days, it would cost you £33.49.’
BUT, 31 people complained to the ASA, saying that they were misleading customers with a confusing message which encouraged them to disregard their insane interest rates.
Wonga said that they were only trying to give a transparent example of a typical Wonga loan but they regretted confusing customers.
However, the ASA said they understood that APR did not apply for the time period for a short term loan, but banned it anyway, because it irresponsibly encouraged people to take out loans without considering the APR. They said:
‘We considered that, though it attempted to clarify the costs associated with a Wonga loan, the ad created confusion as to the rates that would apply. On that basis, we concluded that the ad was misleading.’
Maybe if Wonga are looking for an example of a representative loan, they could show the puppets struggling to make ends meet and turning to rubbery prostitution to pay it back?
A financial advisor’s job, is to advise you about your money, and which ways are best to maximise it, right? Well, looks like this might not be the case as it transpires that customers may well be getting misled by around three-quarters of financial advisors who are failing to give the necessary information about the cost of advice.
This is according to the regulator, the Financial Conduct Authority (FCA), who note that new rules say that advisers must quote fees up-front and explain charges to customers.
These reforms are known as the Retail Distribution Review, which also state that advisors and sales staff aren’t allowed to be paid commission by the firms whose policies they were flogging and that businesses must be honest about whether they’re really independent or restricted to only selling policies from certain financial groups.
The investigation shows that 58% of companies failed to give clear information on the cost of advice, with 50% of advisors not giving clear confirmation of how much advice would cost. Meanwhile, 58% did not explain extra details about charges and 31% of firms sold a restricted range of products without telling the customer. 34% of businesses weren’t clear with their explanation about the service they offered for a fee and customers’ right to cancel.
Private banks and wealth managers were the worst according to the FCA.
“While we have seen a lot of positive progress and willingness by advisors to adapt to the new environment, I am disappointed with the results of our latest review,” said Clive Adamson, director of supervision at the FCA. ”These results are a wake-up call and we expect the industry to respond.”
The FCA said that they’re going to be paying special attention to the ways providers do their business with customers who are borrowing money to survive and will investigate cards issued with low credit limits of a couple of hundred pounds and high interest rates.
Speaking at a credit summit the FCA chief executive Martin Wheatley said: “The key priority here has to be those in the most vulnerable circumstances. Many of whom are struggling to manage their credit card commitments, as well as other bills.”
“Is there sufficient debate at the margins of the industry, particularly where we see cards issued with low credit limits of a couple of hundred pounds and high APRs – payday loans with plastic, if you will?”
Apparently, the investigation won’t follow a specific agenda, but said a vital question to ask the industry is: ‘Why are card issuers providing the means, in some cases, for the most indebted consumers to escalate their way into further debt?’
With research showing that nearly a third of Britons having unsecured borrowing, and many of those paying for day-to-day costs with their cards, there needs to be some conversations in a bid to break people’s habits and ensure that finance companies aren’t exploiting the situation.
Richard Koch, head of policy at the UK Cards Association, said: ‘We have been working with the FCA as the new regulator comes into existence, and it’s no surprise that officials want to explore how a market as important to consumers as this one is working. The industry has a long-standing commitment to responsible lending and transparency, with a number of recent changes on credit limits and repricing of debt, improved transparency, and forbearance for those who find themselves missing repayments.”
“That said, we are not complacent about the small number of customers who find that changed circumstances, such as illness or redundancy, mean they need more support with managing their debts, and we welcome all conversations about how we can ensure we are doing everything possible to support these cardholders.”
Going into your local branch and chatting away the morning with a nice lady called Linda is going the way of housekeeping money and writing cheques made out to ‘Cash’. Increasingly we’re choosing to do our banking on our phones, rather than experience face to face service.
The British Bankers Association say the amount of mobile transactions has doubled in a year. Now there are 1800 transactions a minute through banking apps on smartphones, with 12.4 million of us downloading banking apps to check balances and do banking on the move.
The BBA called the shift to mobile banking ‘mind boggling’. Its CEO Anthony Browne said:
‘Several senior bankers I have spoken to say they are astonished by the strength of take-up of this technology, which has already led to a noticeable dip in customers contacting call centres. If you grew up in the Seventies or before you have every right to be astonished by how much change there has already been.’
(Ooh, it used to be all fields and branch transactions when I were a lad. And aren’t the policeman looking younger these days? Do you remember Spangles?)
So will the popularity of mobile banking apps mean the death of the high street bank? Well, although Browne says there’s been a ‘seismic decline’ in branch transactions, he thinks there’s still a place for the traditional counter. He said they will become places for ‘big moments’, such as sorting out a mortgage or getting a credit card.
But with big banks like Barclays doing away with counter staff left right and centre, it might only be a matter of time before Linda at your local branch is replaced by a hologram.
How much money do you think you’re worth? 25p and a piece of fluff? Well, according to a survey by solicitors Irwin Mitchell, the average Briton is worth quite a healthy £150,000. But half of us have no idea about the sum total of our assets, with 42% saying that they’re probably worth less than the price of a packet of Wotsits.
But. When you add up pension pots, mortgage equity, current account balances, cars and home contents, the figure comes to £147,134. That’s assuming that on average we have a £30,000 pension, £75,000 mortgage equity, £1,348.16 in our current accounts (HAHAHAHA), £5608.98 in a savings account (LOLZ) and £3,712.65 in an ISA. (You are JOKING.) When you add on the average worth of your car (£6706.55) and your home contents (£15,077.90), then you’re worth a pretty penny.
However, out of the 2000 people surveyed, six in ten didn’t even have a will, while a third had no plans to make one.
Still, although we’re gung ho about our personal assets, someone out there must be doing very well indeed to make those the average figures. Because when we die, surely quite a few people will be leaving behind overdrafts, credit card bills, Wonga loans, a 1990 Mazda and a rented hovel with black mould on the ceiling…
Do you have an overdraft with Barclays? Well, watch out for their new charges, introduced in June, which could see some customers paying up to £93 a month just for using their authorised overdrafts.
Under Barclays new charges – which will replace interest – if you spend most of the month in your overdraft but don’t exceed your limit, you could be a lot worse off than if you regularly go over your overdraft limit. Because that makes sense, eh?
Barclays say that 70% of its customers will benefit from the changes, but an estimated 5.5million customers will be worse off. If you have an overdraft of over £1000 which you’re regularly in, (because you’re SKINT and Barclays happily gave you an overdraft in the first place), you could find yourself penalised with charges of between 75p and £3 a day.
At the moment if you’re overdrawn by £1200 during 10 days a month you pay £76.14 over a year. But with the new charges, that will go up to a whopping £180.
Barclays say they’re giving the customer what they want – more transparency on charges. They say that customers prefer a fixed fee rather than complicated interest charges. But many people will be worse off. And although they’re being nice and upfront about it, and introducing text alerts to keep you out of the red, if you’re already IN the red with no chance of getting out, it seems that it’s a case of the hand that once giveth is now taking away-eth, leaving us in the bleedin’ lurch.
So if you’re a Barclays customer, please note- other banks are available.
Santander has been fined over 12 million by the Financial Conduct Authority for giving customers bad advice on investments, which is the largest fine ever given for this particular kind of incompetence.
The FCA said that Santander had ‘let customers down badly’ by giving customers duff advice. It claimed that the bank had not considered the risks customers were prepared to take with their investments, and gave them unclear advice.
They also rapped them for failing to train their new advisers properly, and not making the necessary checks to ensure they gave the correct advice.
Santander stopped giving in branch investment advice in 2012, and when confronted, the bank tried to make it sound like it all happened hundreds of years ago, under the reign of Henry V.
‘We regret that elements of Santander UK’s historic branch-based investment sales processes did not meet the required regulatory standards and apologise to any customers who have concerns.’ A spokesman said.
Tracy McDermott from the FCA countered: ‘Customers trusted Santander to help them manage their money wisely, but it failed to live up to that responsibility. If trust in financial services is going to be restored, which it must be, then customers need to be confident that those advising them understand, and are driven by, what they need.’
Allegedly, Lloyds Banking Group – who have never been known not to serve themselves first – have been withholding millions of pounds of PPI compensation, thanks to a loophole in the law.
The Financial Ombudsman Service say Lloyds is using an ‘alternative redress’ scheme, which complies with the Financial Conduct Authority’s rules, as a way not to give customers their full payouts.
The alternative redress scheme is an obscure, generalised rule that assumes that customers took out regular premium policies – and that they must be reimbursed for that.
But some customers didn’t take out regular premium policies. They were sold single policies on more than one loan. So Lloyds have been deducting the cost of a cheaper regular policy from the payouts, even though some customers are owed more.
For example, one Halifax customer with 2 loans was offered £2300 PPI compensation. But when she brought the case to the Financial Ombudsman, Lloyds were asked to pay her an extra £1200.
Lloyd’s said yes, it WAS using the alternative redress system, but argued that it had done nothing wrong, saying: “The FCA handbook is very clear that in these specific circumstances, the provider should give redress that puts the customer in the position they would have been in had the customer taken a regular premium policy.’
If you want to watch Lloyd’s squirm on TV, a BBC special about the PPI compensation, ‘Britain’s Biggest Banking Scandal’ is due to air tonight.
The beleaguered bank is hoping to raise money by issuing a new round of shares, after discovering that their finances are in a bit of a state, according to the BBC.
The Co-op blames this on misconduct and poor documentation, as well as PPI mis-selling and mortgage palavers.
The bank said the discovery meant it would make a loss of £1.2bn to £1.3bn for 2013, when it releases its full accounts next month.
“The starting capital position of the bank for the four to five year recovery period is weaker than in the plan announced last year,” said a possibly deeply embarrassed chief executive Niall Booker.
The bank had to be rescued last year, when it was left with a £1.5bn capital shortfall, and a lot of the bank’s troubles began when they merged with Britannia building society in 2009. And then in November, it announced that a group of private investors, made up mostly of hedge funds, would inject nearly £1bn into the bank in exchange for a 70% ownership stake.
Then of course there was all that business with chairman Paul Flowers and the meth and rent boys. To hopefully help matters, the bank is cutting staff and selling parts of its business to try and survive. But can it?