Posts Tagged ‘money’

Directors bonuses must now be justified

September 17th, 2014 No Comments By Mof Gimmers

fat cat rich man 300x300 Directors bonuses must now be justifiedAre you one of those people on the internet who likes hitting out at ‘fat cats’? Like griping about those who make loads of money because you  can’t stop mentioning your socialist leanings down the pub, much to the mild irritation of your pals?

Well, get this – all companies (so, not just banks) will have to be able to prove that director’s bonuses are linked to their performance thanks to a new City code.

You see, there’s a review of the corporate governance code and it has been decided that companies are going to have to provide more information for shareholders. This will include all manner of performance things, as well as details on the risks being run and details about how long a business would be able to run for under their current financing arrangements.

Unbelievably exciting isn’t it?

The Financial Reporting Council (FRC) have told the City that the next review is going to tackle diversity in the boardroom and they’ve got two years to make some changes.

“Diversity can be just as much about difference of approach and experience. The FRC is considering this as part of a review of board succession planning and will consider the need to consult on these issues for the next update to the code in 2016,” it said.

More pressing changes ask for an extension of clawback arrangements which bankers are already working to. Basically, this new code says that companies should have arrangements to allow them to “recover or withhold variable pay when appropriate to do so”. It’ll also require companies to look at how long a director should wait before receiving any bonuses and that any extra pay should be link to performance.

“The changes to the code are designed to strengthen the focus of companies and investors on the longer term and the sustainability of value creation,” said Stephen Haddrill, chief executive of the FRC. ”The changes on remuneration also focus companies on aligning reward with the sustained creation of value rather than, as before, simply on retention – a focus that has tended to promote pay escalating and leap-frogging.”

So, from now on, companies will make two statements: One will be based on accounting rules and the other will require directors to assess their ability to stay in business for more than 12 months. Could play havoc with our Deathwatch articles, but there you go.

Either way, those ‘fat cats’ are going to have to justify their bonuses now, which they inevitably will be able to, much to the chagrin of those who can’t abide these upwardly mobile swine.

Britons: rubbish at pensions

September 12th, 2014 No Comments By Mof Gimmers

pensiner 300x225 Britons: rubbish at pensionsAround most half of Britons who are not yet retired aren’t very good at preparing for the winter of their lives, according to some musings by the Office for National Statistics.

These figures show that 45% of men and 49% of women did not have any private pension savings, which means in the future, there’s going to be a lot of old people complaining about freezing to death while living in a McDonald’s bag on a hard shoulder, on social media.

Barnett Waddingham’s senior consultant Malcolm McLean said: “The figures released by the ONS this morning paint a worrying picture of the state of unpreparedness for retirement of a significant proportion of the working age population.”

‘Unpreparedness’ there. We were hoping he would’ve gone for ‘unpreparedity’ or something. Anyway, the there seems to be some areas of employment where people are more clued-up about their future years in the wilderness.

In the accommodation and food service industries, 95% of men and women didn’t pay into a private pension, while those working in public administration, defence and social security, only 7% of men and 9% of women choosing not to contribute to a private pension.

McLean continued: “This illustrates how important that particular government initiative is to secure an improvement in this situation. Not surprisingly perhaps, wealth is also unequally distributed – with those households with a private pension being seven times more better off than those without.”

So there you have it. Stop buying Maoams and cans of gin and tonic and go sort yourself out a pension.

The Big Six to return £153m to overpaying customers

September 10th, 2014 No Comments By Mof Gimmers

energy The Big Six to return £153m to overpaying customersThe Big Six energy companies have launched an initiative which aims to give former customers £153m back that’s been sitting in their coffers as unclaimed credit from closed accounts.

The scheme is called MyEnergyCredit and has been launched by Energy UK and comes about thanks to a demand from Ofgem back in February.

Energy UK said that they want customers who have switched suppliers or moved home without leaving a forwarding address to get in touch with their old company if they suspect that they left money in an old account.

So basically, the initiative is: We’ve been sitting on your money for no reason so would you come and get it because we couldn’t be arsed giving it you back at the time.

That said, Energy UK announced changes to try and stop this from happening in the future, but as of now, there’s going to be a two-year deadline for collection of credit. If you don’t claim it, they’ll keep it. The Big Six say they’ll give the money to vulnerable customers, but don’t hold your breath.

Energy UK’s chief executive Angela Knight said: “We are urging former customers to come forward and make a claim. Customers who think they haven’t left a forwarding address or a final meter reading when they moved or switched should contact their old supplier.”

“The web site myenergycredit.com will help you do this. Inevitably, there will be some former customers who will not be found and so the major suppliers are announcing what will happen to credit balances from now on.”

“In future, after two years, the credit balance will be used to help vulnerable customers – and suppliers will make it very clear what is happening.

“By 2018, these new arrangements are expected to add up to around £65m of help to those in difficulties. The suppliers will kick start this process now by donating £38m for the first two years combined.”

Ofgem chief executive Dermot Nolan said: “Today’s industry announcement is an encouraging first step by the six largest energy companies to address Ofgem’s call to reunite customers with their cash. It is good news for consumers and if you think you could be owed money we recommend that you contact your previous supplier.”

“This issue is part of a wider challenge of delivering good customer service that the industry must crack if they are to rebuild customer trust and confidence. Failure to deliver on the initiatives announced today could trigger further action by Ofgem, including enforcement.”

No more loyalty points with Amazon credit card

September 4th, 2014 2 Comments By Mof Gimmers

amazoninstant No more loyalty points with Amazon credit cardHave you got an Amazon credit card? Well, you might want to switch to another reward card because, as of this month, you won’t be able to reap loyalty points to spend with them.

Why? Well, MBNA – who issue the Amazon.co.uk MasterCard – said that their relationship with the internet behemoth is “coming to an end” from 30th September. Customers have been written to, but if you missed, or indeed, where eyeing one up, you might want to consider your options.

An MBNA spokesperson says: “The partnership between MBNA and Amazon will come to an end on 30 September. We have had a very successful relationship with Amazon.co.uk since 2009 and have been issuing Amazon.co.uk credit cards to customers in the UK for almost five years.”

After this month, you’ll be switched to MBNA’s Standard or Reward credit card.

Mercifully, if you’re switched over, the current interest rate you pay, promotional rates, credit limits, PIN number and any fees will stay exactly the same and you’ll get a new card in the post by the 31st October.

Sadly, you’re not going to be able to choose which card you receive and, in some cases, customers won’t be offered one at all. MBNA have been reviewing customers, so if you’ve been having any bother with payments or whatever, you might not be eligible for a new account.

MBNA’s Standard card is basically the same as your Amazon card, however, it won’t give you loyalty points when you spend. The Reward card gives you two points for every £1 spent on it during the first three months and one point per £1 after, which can be spent on the High Street, but not with Amazon.

If you have points, spend them now. If you don’t, then they’ll be converted into a gift certificate and emailed to you.

Of course, there’s a load of reward cards on the market where you can get supermarket points and airmiles and all that, so if you want treats for spending, then shop around and have a look at, for example, Santander’s 123 Cashback card or the American Express Platinum Everyday card.

PPI complaints drop, but don’t let that fool you

September 2nd, 2014 No Comments By Mof Gimmers

ppi 300x202 PPI complaints drop, but dont let that fool youComplaints about PPI (payment protection insurance) have fallen from last year’s figures, which may sound like good news, but according to the Financial Ombudsman Service, it is still at a historically high level.

Basically, this drop isn’t particularly good news as it is akin to saying ‘man only kicked you up the arse 40 times last year, down from the previous year’s 57 buttock assaults.’

The figures are still officially ‘whopping’. The FOS said it took 133,819 PPI complaints in the first six months of the year, compared with 193,054 in the previous six months and these complaints still account for around 70% of the all the cases that the ombudsman receives.

The FOS said: “Around 5,000 people a week are currently asking the ombudsman to look into their PPI complaint. This is down from the highs of 2013 when we were receiving over 12,000 a week, but still significantly more than any other financial product.”

This year, the FOS took on just shy of 400,000 new cases and since 2011, banks have coughed-up £16bn to customers in compensation, and they’re going to be paying out more.

The FOS’s chief ombudsman, Caroline Wayman, said: “Responsibility for sorting out the mass mis-sale of PPI is still the major part of the ombudsman’s workload. We’re seeing more and more people turn to us in frustration where they feel their bank or insurer simply doesn’t understand or really care.”

And get this – complaints are likely to rise even further because the FCA ordered the banks to reopen a further 2.5 million complaints.

RBS fined £14.5m over lousy mortgage advice

August 27th, 2014 No Comments By Mof Gimmers

rbs RBS fined £14.5m over lousy mortgage adviceThe Royal Bank of Scotland has been fined £14.5m by the Financial Conduct Authority (FCA) after they failed to ensure that they were giving good mortgage advice to customers.

The FCA said: “Two reviews of sales from 2012 found that in over half the cases the suitability of the advice was not clear.”

The could’ve said: ‘As if there wasn’t enough reasons to loathe them.’

Of course, RBS was quick to apologise, with chief executive Ross McEwan saying that these failures are “unacceptable and should never have happened”.

After their investigation, the FCA discovered that RBS and their NatWest buddied had failed to take the full extent of a customer’s budget into consideration when they were making a recommendation.

On top of that, the banks didn’t give proper debt consolidation advice as well as completely failing to advise customers which mortgage term was best suited for them, according to the watchdog.

“Only two of the 164 sales reviewed were considered to meet the standard required overall in a sales process,” the FCA added.

RBS chief executive Ross McEwan said: “Taking out a mortgage is one of the biggest moments in our lives, and our customers have every right to expect the very best service when making this decision. It is clear that in the past the bank just didn’t get this right, this was unacceptable and should never have happened.”

“When I joined the bank we completely overhauled our processes, and took all our mortgage advisers off the front line for an extensive period of time to get the training required.”

Looks like they didn’t give the advisers enough training when it comes to treating customers fairly in a financial agreement that could potentially be for life, and indeed, ruin a family financially. Considering that taxpayers own 80% of the bank, thanks to previous bad behaviour from RBS, you’d hope that at some point, they’d try and up their game.

RBS have already mis-sold loads of insurance (to which they’ve put £3.2bn aside for when that bites them on the arse) and were hit with a £390m fine for their role in the Libor rate fixing affair.

Anti-deathwatch: Salaries

August 26th, 2014 1 Comment By Ian Wade

wages 300x199 Anti deathwatch: SalariesSalaries are showing signs of increasing for the first time since the financial crisis, says obscure-ish jobs search engine Adzuna.

The average salary has had an 0.9% advance on the previous year while the number of vacancies were up by a quarter to 872,629, said the report, which comes based on online job vacancies from more than 300 sources.

They’ve even broken their findings down into areas of the UK, which showed that all parts of the country benefited from a salary rise, except London.

The biggest rise in salaries came in Wales with 19%, with south-west England 7% and 6% in north-east England. London actually recorded a 1% fall in salaries.

The coincidentally named Andrew Hunter of the job hunter website Adzuna said:

“The UK job creation boom has become a double-edged sword, creating record highs in employment rates at the expense of stagnating wages. For once we can see good levels in both job creation and wage increases. And as the UK motors on towards full employment, we may well see wages increase at a higher rate as employers begin a bidding war for skills.”

It’s all quite good news isn’t it? People no longer having to sign on and that.

Co-op announce losses of £75.8m

August 22nd, 2014 No Comments By Mof Gimmers

Co op Co op announce losses of £75.8mThe troubled Co-operative Bank have announced pretax losses of £75.8m for the first six months of this year. Losing that amount of money is not a thing to be sniffed at all.

They’ve said that “much needs to be done” in turning around the company, and hopefully, someone was on-hand to give them an award for stating the obvious.

That said, it isn’t all gloom – this is a significant reduction on the £844.6m loss during the same period last year, but at the same time, customers clearly aren’t happy as the bank said they’d lost 28,199 current accounts in the six months to 30th June.

Chief executive, Niall Booker, said the “deep-rooted issues” would continue to impact on the company’s performance for a while yet.

“Considering the scale of the challenge we faced a year ago we are encouraged by the progress made to ensure the stability of the bank. By the measures of capital and liquidity the bank is considerably stronger than it was a year ago. We are ahead of schedule in the disposal of non-core assets and have improved governance, particularly at board level. However, the issues we continue to face in building a sustainable business are deep-rooted and there remains much to be done,” he said.

“Transforming the organisation into a viable and profitable business which generates capital in the long term still requires significant change – both operationally and culturally.”

“The core bank continues to remain stable. In the first half of the year more people switched into the bank than in the second half of 2013. Although we have also seen an increase in the number of people switching out of the bank, the net numbers remain small relative to our total number of current account customers whose continuing loyalty is deeply appreciated. Recent trends suggest this net outflow of retail customers has slowed.”

One thing working in their favour it seems, is that for the most part, people just can’t be bothered to switch their current accounts.

Interest rates: no need for rise

August 20th, 2014 No Comments By Ian Wade

British high street 300x180 Interest rates: no need for riseThanks to supermarket price wars and sales on the high street this summer, there’s been no need for the Bank of England to go ahead with early interest rate rises. Hurrah!

The consumer prices index, or CPI, went from 1.9% to 1.6% last month, which means it is still below the Bank’s 2% target for the seventh month on the trot.

The Office for National Statistics reckon this is down to a third month of falling food costs, which is due to the supermarkets scrambling for what customers they can get with all manner of discounts and offers.

The July RPI figure, which they use to set next year’s regulated rail fares, came in at 2.5%, which hopefully is good news for commuters expecting a massive price increase in the new year.

The City was a bit freaked out by the drop in CPI. Experts said the lack of evidence of inflation would stay the hand of the Monetary Policy Committee from a first rate since 2007.

There’ll no doubt be more exciting news like that when the Bank publishes the minutes of its August meeting, but otherwise that’s all quite optimistic news isn’t it?

Please say it is.

pensioner 242x300 You can benefit from next years pension changes even if youre retiring nowThey don’t make old people like they use to do they? Once upon a time they were all hunched over and angry, and now they’ve all got tracksuits and dancing lessons.

Either way, if you’re old and planning to collect your pension next year, you’ll have more options than ever to take your cash and run. If you’re retiring this week, you can also benefit from the new rules that are coming in next year.

There’s a relaxation in pension rules from next April, which means it is easier for old people to take their entire pot in cash (income tax pending, naturally). If you’re retiring before April you can still take advantage if you rest your cash in a ‘capped drawdown’ scheme until next year.

What’s that when it’s at home?

Well, capped drawdown pays out income from a pension based on the GAD rate set by the Government Actuary’s Department (GAD) and at the moment, allows retirees to take 150% of the equivalent annuity rate.

A company called Hargreaves Lansdown has launched a simplified capped drawdown plan called ‘retirement bridge’ (don’t worry, there’s not many steps for you to walk up) which provides you codgers access to your money, with a 25% tax-free lump sum and access to income if you need it (that’ll be taxed though).

Tom McPhail, head of pensions research at Hargreaves Lansdown, said there were many people retiring who want to take advantage of next year’s flexibility, but didn’t want to buy a pricey drawdown product or short-term annuity.

“There are relatively few ways for people to access some, or all, of their pension now,’ he said. “Insurers have come up with temporary solutions [such as short-term annuities] but in the main you need to go through an independent financial adviser and the costs of doing that are not insignificant.”

“I am quite concerned that a lot of people are hitting retirement today who are not being offered this option,” he said. “They think their options are either annuity or [full] drawdown, which will be complex and expensive. There are a huge number of people just treading water who are not sure what their options are. Some people do need to access the money… and others are waiting to see what happens and are reluctant to commit until they know what the rules are.”

Check the charges though – if you have a smaller pension, drawdown might not be the thing for you.

You should check your pension contracts before moving your money around though. Some older pensions have guarantees that can offer good annuity rates or the ability to take more than 25% tax-free cash, which you might lose if you move your money.

Always check your old policies before doing anything and phone up your provider and ask them if you can have the tax-free cash and leave the balance of your pension in scheme.

Legal  General Legal & General go it alone: what now for the Association of British Insurers?The future of the Association of British Insurers is an uncertain one after one of the main players in it – Legal & General – decided to go solo. L&G decided that it would be in the best interests of shareholders and policyholders if they cancelled their membership.

A few weeks ago, the company said that they wanted the trade body to be “a more forward-looking organisation”, so it isn’t too much of a surprise.

Nigel Wilson, Legal & General’s chief exec, said: “Our public policy work increasingly involves sharing commercial aspects of our business with government, which, for very obvious reasons, not least competition law, we cannot share with competitors.”

“We believe that, increasingly, engagement with government, regulators, quangos and other external bodies will be on a case-by-case basis going forward.”

The ABI have been having a rough time lately as it is, with the insurance industry looking at huge regulatory changes, which include reforms in the last Budget which promised structural changes to the insurance sector.

For the time being, Admiral and Allianz have no plans to ditch the ABI, and it looks like Axa will be sticking with it for the foreseeable future. Aviva and Prudential haven’t given their thoughts on the matter, but if Legal & General start making serious money and having more freedom, are we going to see the insurance equivalent of a Premier League breakaway where they can all start calling the shots more frequently?

Would that be good for consumers? It could go either way.

goldengirls 241x300 Boost your pension by 258% with this one clever trick No, it’s not a dodgy Facebook ad – it’s TRUE. People in their 50s and 60s can stand to triple their pension pot by joining new company pension schemes and boosting their contributions.

Many older people don’t bother with new pension schemes, thinking that they’re too old to get the benefits. But new pension reforms mean that they can up their contributions by 258% in just a few years and take out all their money without paying any tax. Woohoo!

Here’s how it works. In the last 2 years companies started automatically putting their employees on a pension scheme. Once you’re enrolled, your contributions are deducted from your payslip, your employer contributes something and you get tax relief from the government.

But people who were over 50 tended not to bother with it. WRONG.

If you do it, under the new reforms you can take all your wonga out of these schemes when you retire, rather than bothering with boring, stifling annuities.

Here’s the maths. (Theoretically.)

If you earn £24,000 a year this year, make an increase in contributions in 2018, and get a small pay rise every year – and there is a rate of 5 per cent annual growth – a 55-year-old could make £14,134 by the age of 65.

So get on it, silver foxes! That cruise ship buffet is waiting…

Could the banks be broken up by watchdog?

July 18th, 2014 2 Comments By Mof Gimmers

bank sign Could the banks be broken up by watchdog?Britain’s big four high street banks – Lloyds, HSBC, Barclays and Royal Bank of Scotland – could be broken up in to little pieces after the Competition and Markets Authority announced they’ll be launching an 18 month investigation into them all.

The big four currently control 77% of current accounts and 85% of small business (SME) current accounts, but customer satisfaction is low and the banks themselves are seemingly reluctant to change the way they do business.

The CMA was launched in April to replace other competition watchdogs.

“Competitive personal and SME banking markets are essential to households and businesses throughout the country, and to the success of the UK economy. However, our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks,” said Alex Chisholm, chief executive of the CMA.

This is a political hot potato (catch!) with all parties promising to do something about it all.

Ed Miliband, bless ‘im, has said that he’ll launch a competition investigation if elected next May. Meanwhile, his pal and shadow chancellor, Ed Balls, added: “As we said earlier this year, in the next parliament we need to see at least two new challenger banks and a market-share test to ensure the market stays competitive for the long term.”

The coalition themselves have also looked at ways of bolstering competition, including ideas to make it is easier for people to set new banks up.

No-one’s happy though.

“We note, in particular, that the larger banks, with relatively lower satisfaction levels, have not significantly lost market share, while banks with higher satisfaction levels have not been able to gain significant market share, which is not what one would normally expect to find in well functioning, competitive markets,” the CMA said.

However, there’s been loads of analysis into the market. When Gordon Brown was chancellor in ’99, he ordered an investigation into the banking sector. This will be the 10th occasion, and you have to wonder if anything will happen with this, given that nothing ever seems to get corrected.

Are the CMA going to be robust enough with our financial institutions? Don’t hold your breath.

barclays bank limited 300x300 Robbery! Robbery! Ha ha ha, Ive got all the money! Poor, dumb Teslim Adedibu. He was £9,000 in debt and thought his benefits were being slashed, so he decided to do something about it.

No, he didn’t call Step Change, or email the Money Advice Service. Instead he went to the flagship branch of Barclays in Piccadilly, kicked over a security screen and stole a piffling £910.

While yelling ‘Robbery! Robbery! Ha ha ha, I’ve got all the money!’ packets of dye he’d also accidentally pocketed went off in his rucksack – and he ran down Shaftsbury Avenue in a cloud of fetching red smoke.

Before he kicked down the screen and made his rather fabulous ‘getaway’, unemployed Adedibu had tried and failed to get money out over the counter because he was in thousands of pounds of debt.

So, thinking up a novel way to pay off his overdraft, he turned up five minutes later and demanded £10,000. He was caught the next day after his details were traced from his original (failed) transaction.

‘I’m sorry,’ said a now subdued Adedibu, as he was escorted to jail for 18 months. Bless him.

bank sign 1 in 4 want digital banking, says inconclusive survey 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?