Posts Tagged ‘money’
Tim Weller was the last senior executive at the payday lender who was appointed by Errol Damelin, the company’s controversial founder who jacked it all in back in June.
Andy Haste has now taken over the day-to-day management of Wonga, and he says: “At a critical time for Wonga, when we will complete our forbearance programme, prepare to apply for FCA authorisation and introduce a cap-compliant product, I’m taking an even more active role in leading the business.”
“Tim Weller therefore stepped down as CEO in October. This was a mutual decision, following a comprehensive handover, and will ensure clear leadership in the weeks and months ahead. I want to thank Tim for his three years in the business as chief financial officer.”
“Our search for a permanent group CEO is well underway and Tara Kneafsey, our new UK managing director, will join us in December.”
Running Wonga is a tough gig at the moment as, only last month, they were forced to write off £220m of customer debts after they admitted they’d be wrong in lending money to some 330,000 people. While they were at it, they also axed interest charges for another 45,000 customers.
We wrote about RBS getting fined by the Financial Conduct Authority, speculating that they’d be hit with a £50 million fine.
Well, we weren’t far off as regulators have slapped the bank with a fine of £56m after their software malfunction saw millions of customers unable to access their own money in their bank accounts in June 2012.
The fine is actually a twofer, with a £42m penalty coming from our pals at the Financial Conduct Authority and another fine of £14m being served by the folks at the Prudential Regulation Authority.
RBS chairman Sir Philip Hampton said the problems “revealed unacceptable weaknesses in our systems” and that it ”caused significant stress for many of our customers,” adding: “As I did back then, I again want to apologise to all customers in the UK and Ireland that we let down two and a half years ago.”
“Modern banking depends on effective, reliable and resilient IT systems,” said Tracey McDermott, director of enforcement and financial crime at the FCA.
“The banks’ failures meant millions of customers were unable to carry out the banking transactions which keep businesses and people’s everyday lives moving. The problems arose due to failures at many levels within the RBS Group to identify and manage the risks which can flow from disruptive IT incidents and the result was that RBS customers were left exposed to these risks.”
The FCA said the fine was down to the problem which saw customers unable to use online banking facilities to get at their accounts. obtain accurate balances from ATMs, make mortgage payments, access money abroad and, on top of all that, RBS Group’s banks applied incorrect credit and debit interest to accounts. As well as the aforementioned, some businesses weren’t able to pay their staff as a result of this cock-up.
The youth of today won’t remember what it was like back when you had to use your own bank’s cashpoint* to get your money out. If you were a Lloyds’ customer, heaven help you if you wanted to use an HSBC cash machine. Or at least, you’d be charged somewhere between £1.50 and £3 for the privilege.
Before long, however, some banks ganged together so you could all use each other’s machines, with rival bank- gangs facing off until it became the free-for-all it is today.
Or at least it’s now mostly free. Now just three in 10 cash machines levy charges, which is the lowest proportion in a decade and is down to people power and increased competition between providers. Back when we were all happy to pay charges, there were loads of fee-paying machines, now we’ll just walk a bit further to find a free one.
What’s interesting, though, is that more than half of the cash machines in Britain are currently owned by independent operators- 34,733 of the total 68,630 machines are now run by businesses other than banks or building societies. You might think that independent machines would be more likely to charge, being as they don’t have a myriad other ways to extract money from you same as your bank. However, the spirit of free competition has come to the rescue, with operators banking on low margin/high volume beating those £3 fees.
How cash machines work for independent operators is that each time someone makes a withdrawal, the operator is paid 25p by the customer’s bank. This fixed fee covers the operator’s costs, such as employing someone to put money in the machine and paying a “rent” fee to the landowner. If you get enough 25ps, you will be laughing all the way to the bank, which is why operators are positioning new machines in the middle of busy pavements or pedestrian areas.
Graham Mott of Link, the industry body for cash machines, said: “Independent providers have realised that if a rival is charging a few pounds for withdrawals down the road, they can install a free machine and lure customers away.”
“Free cash machines are a real asset for shops, too, as customers are more likely to visit and spend in store, so many retailers are requesting that option.”
There are now more than 48,000 free cash machines in the UK, up from 32,729 in 2004, according to Link.
James Daley of consumer website FairerFinance.com said: “People hate paying to get hands on their own money, so this is good news for the consumer. Yes, it’s cheaper for banks if you used their own machines and they are always looking for ways to steal a little more from customers. But banks are making such large margins that there would be no excuse to pass on the extra costs of people going to independently-run machines.”
* actually, you can’t call them a cashpoint unless you are specifically talking about a Lloyds machine. They own the word. Fortunately cash machine works just as well.
The Financial Conduct Authority – the finance watchdog for the UK – has been looking at payday loans and rejigging the rules so that borrowers are never forced to repay more than twice the amount of the loan they initially took out.
The FCA said interest and fees will be capped at 0.8% a day and that the total cost of a loan will be limited to 100% of the original sum. The default fees are to be capped at £15 also.
We’ll see these changes coming into play on 2nd January 2015, which means that, if you borrow £100 from a payday lender for 30 days, you’ll not pay more than £24 in fees and charges (provided you pay off your loan on time).
Some quarters think that the FCA haven’t gone in hard enough, but the watchdog has said that they don’t want to be running anyone out of business.
Martin Wheatley, the FCA chief executive, said: “I am confident that the new rules strike the right balance for firms and consumers. If the price cap was any lower, then we risk not having a viable market, any higher and there would not be adequate protection for borrowers. For people who struggle to repay, we believe the new rules will put an end to spiralling payday debts. For most of the borrowers who do pay back their loans on time, the cap on fees and charges represents substantial protections.”
The Competition and Markets Authority proposed the investigation in summer, and have now vowed that they’re going to look at the difficulties customers face when they want to switch banks. One of the things they’re concerned about is the lack of smaller competitors to the big banks on the High Street.
Barclays aren’t happy, saying that this probe is “not appropriate at this time”, adding: ”Various developments, innovations and stimuli are changing the competitive landscape in in relation to both [personal current accounts] and [small and medium enterprises] banking, and these must be given time to mature.”
The BBA – they represents the banking sector – aren’t phased at all, saying that the industry would co-operate because: ”Banks are pro-competition – they compete for business every day.”
The CMA will be looking at these things concerning bank services in the UK.
- Very few customers switching banks or shopping around for the best rate
- A lack of transparency and difficulties in comparing services from different banks
- The hurdles faced by smaller banks trying to enter the market
- The continued dominance of the “big four” banks
We should have some answers from the inquiry in around 18 months time and the CMA added that it would review the 2002 report by its predecessor, the Competition Commission, to see if their findings are relevant to the state the banks are in, and to their own investigations.
The employment appeal tribunal have ruled that employers must include overtime when they’re calculating their staffs’ holiday pay. This could see payouts for up to a sixth of the UK’s 30 million workers, which is absolutely mental.
However, some companies are worried that the size of the bill could put them out of business, but there’ll be a good number of people who think that they should’ve thought of that before now.
The Employment Appeal Tribunal ruled on two cases relating to the UK’s understanding of the Working Time Directive, including one involving electricians, scaffolders, and semi-skilled operatives who worked on a project at a power station in Nottinghamshire. Union, Unite, said that these employees consistently worked overtime, but that wasn’t included in their holiday pay, meaning that, the money they got was “considerably less” than their normal pay.
Howard Beckett from Unite, said: “Up until now some workers who are required to do overtime have been penalised for taking the time off they are entitled to. This ruling not only secures justice for our members who were short changed, but means employers have got to get their house in order.”
“Employers will now have to include overtime in calculating holiday pay, and those that don’t should be under no illusion that Unite will fight to ensure that our members receive their full entitlement.”
Unsurprisingly, the businesses themselves aren’t too happy. Mike Cherry, policy chairman of the Federation of Small Businesses, said: “The government must bring in emergency legislation to prevent the backdated claims. [If they don’t act] hundreds of businesses will shut down and that will lead to thousands of employees being laid off.”
“Business has done everything it could to comply with the law at the time and now to have it changed is totally wrong. Our members are very clear about this – it could have severe implications.”
The Government actually support the employers and don’t want to see these payments being made. A spokesperson said: “We understand the deep concern felt by many employers and have intervened in the employment appeal tribunal cases to make our views clear.”
So what’s the way out of this tricky situation? Is backdated holiday pay any good to you if your job is going to vanish along with it? Depends on how much money is being offered per person. Either way, there’s going to be some arguments about this.
Sometimes, it is almost exactly like mortgage lenders are making everything so needlessly confusing that it puts consumers off from being able to work out what works best for them. Almost exactly like that.
Well, research has shown that homeowners are likely to be paying more than they need to because it is too difficult to compare mortgages.
The folks at Which!!! did a survey and they found that a paltry 3% of people were able to rank five two-year fixed mortgage deals in price order.
It looks like borrowers aren’t being given clear information about mortgages and that lenders are charging a huge array of fees which are baffling everyone. These sneaky fees are one of the biggest problems in getting a mortgage that works for you.
Borrowers are faced with over 40 different fees and charges from lenders, from arrears fees to set-up costs, right through to final repayment charges and more. Administration costs will hit a borrowers account multiple times and arrangement fees are getting increasingly more expensive, doubling in the past five years, now averaging at £1,588.
Of course, lenders aren’t helping as they’re using different terminology and names for all these fees, which adds to the confusion for those trying to get a mortgage.
So while you’re looking at one lenders’ APR, it might appear cheaper but all the hidden costs actually make it far more expensive than another.
George Osborne clearly needs to utilise the Autumn Statement to make mortgage price comparison easier for customers and enforce rules which make the full cost of mortgages much, much clearer.
Remember the RBS IT cock-up a couple of years ago that made things difficult for their customers? Recall the group then admitting that they hadn’t invested in their systems in ‘decades’?
Well, all that is about to bite them on the behind.
The Financial Conduct Authority (FCA) is going to fine RBS tens of millions of pounds for their failure. For a system-problem, this will be a record fine. The banking group had previously said that they’d put aside £175m to sort this out.
As ever with these fines, if the RBS settle up within 28 of the FCA imposing a fine, they’ll get a discount of up to 30%, which seems peculiar, but that’s the world of finance for you.
Sources put the scale of the likely fine to be imposed on RBS at “several tens of millions of pounds”, which would rank it among the largest ever handed out by the City regulator for offences unrelated to the manipulation of financial markets.
You may remember that RBS had another systems outage on the busiest online shopping day of the year, last December, which meant that customers weren’t able to use their cards, cash machines and online banking services. Since then, RBS have vowed to plough over £1bn into their digital capabilities and IT systems.
Clive Adamson, director of supervision at the FCA, said earlier this year: “To access and manage our money we depend on the banks’ IT systems being reliable. But IT outages continue, interrupting key banking services. We want to make sure that the banks have resilient IT systems in place that are able to cope with consumer demand, so customers aren’t left financially stranded or disadvantaged.”
We can only hope that this fine acts as a kick up the arse to other finance companies.
This time, Tesco Bank are in a mess, after having to pay out £43 million in compensation, after a loan statement removed cash from 175,000 customers. The bank has issued an apology, wherein they claim a technical breach was behind the cock-up.
Online Tesco Bank went and admitted the breach of industry rules which breached the 1974 Consumer Credit Act – and those who accrued interest on loans during that time must now be refunded – with an average payout of £228. That’s a load of people having a nicer Christmas, eh?
Various customers have tweeted about receiving cheques for cash, because there’s nothing quite like an overshare on social media about personal finances. Under the Consumer Credit Act, failure to provide prompt ‘post-contractual’ information is viewed as a statutory breach. Any money vendor then has to refund any charges or interest incurred during the period the bank couldn’t be arsed.
An understandably nameless Tesco spokesman said: “‘As stated earlier in the year, we have put in place a redress programme to return interest and charges to customers who did not receive documentation in line with the requirements of the Consumer Credit Act.”
“This redress programme has commenced and we are writing to all of those customers affected. Customers do not need to take any action however if they do have questions they can contact us as normal. It’s not an incident of mis-selling. This is an industry-wide issue.”
The bank has already had to set aside £240 million for customers who were miss-sold payment protection insurance.
The building society has been slapped with a £4.1 million fine, for being shits to customers facing financial difficulties.
The findings were found after a City regulator noticed that call handlers at Yorkshire had failed to implement the right payment solutions, making it even worse for customers having a struggle.
The building society has agreed to refund all mortgage arrears fees, plus associated interest, charged to customers since January 2009.
This redress scheme, announced in February, is currently under way and about 33,900 customers will be repaid a total of £8.4m.
Those customers with an existing mortgage will have their loan credited, while former customers will be sent a cheque. Cor! A cheque. How modern. A Yorkshire spokesman named anonymous, reckons that all affected customers will be refunded by the end of 2014.
The Financial Conduct Authority (FCA) had said that while Yorkshire viewed repossession as a last resort, it failed to recognise that delays in reaching long-term payment solutions meant that some customers incurred increased fees and interest.
These failures happened between October 2011 and July 2012 as is the company’s second fine for being devious arses.
The regulator noticed that in 64 out of 87 cases reviewed, showed that the consumer was treated shoddily.
Tracey McDermott, director of enforcement and financial crime at the FCA, said: “Customers in financial difficulty need to be treated fairly and sensitively. Firms must ensure that they are taking into account the particular circumstances affecting customers who find themselves in difficulty. Firms need to be dealing with these customers proactively, without delays, in order to ensure they are not losing out.
“By allowing cases to drift without agreement, Yorkshire’s actions meant that customers in vulnerable circumstances risked falling into further financial difficulty.”
Chris Pilling, chief executive of Yorkshire Building Society, apologised to customers using the ‘inflatable school’ joke as an apology. “We are very sorry for letting them down,” he said.
This is Yorkshire’s second fine in 2014. In June the FCA issued a £1.4m fine for exaggerating the returns that investors could expect from stock-market-linked bonds.
Fortunately none of them are UK banks. PHEW.
The 24 banks now have nine months to get their act together or face being shut down. The review was based on the banks’ financial health at the end of 2013.
Ten have already taken steps to bolster their balance sheets in the meantime. All the remaining 14 banks are in the eurozone. The health check was carried out on 123 EU banks by the EBA to determine whether they could handle another financial crisis.
The list of 14 includes four Italian banks, two Greek banks, two Belgian banks and two Slovenian banks.
The worst offender was Italian bank Monte dei Paschi, which showed a capital shortfall of €2.1bn. Bloody Nora. Admittedly banks are in a better place than they were in 2011, when the last stress test was taken. Although various analysts question the validity of these tests as they failed to spot the collapses in Ireland and Belgian bank Dexia.
But now that’s all changed, as the profits that banks are allowed to make through a future financial crisis are capped. Net income is slashed by 20% and there is greater transparency around how the data is used, giving more certainty to investors.
Also, the introduction of the Asset Quality Review looks at banks’ loans and their governments debts, which has lead to a more sturdy assessment.
The banks that still need to raise capital:
Austria: Oesterreichische Volksbanken
Belgium: AXA Bank Europe, Dexia
Cyprus: Hellenic Bank Public Company
Greece: Eurobank Ergasias, National Bank of Greece
Republic of Ireland: Permanent TSB
Italy: Banca Carige, Monte dei Paschi, Banca Popolare di Milano, Banca Popolare di Vicenza
Portugal: Banco Comercial Portugues
Slovenia: Nova Kreditna Banka Maribor, Nova Ljubljanska Banka
Earlier this week, Lloyds decided that they could downsize by getting rid of 9,000 jobs, which is a tenth of their entire staff. They also plan to get rid of a number of branches, which is becoming a common attitude in the finance world as customers rely less on having to actually stand in a branch and talk to humans.
Other banks in the UK have closed in excess of 350 branches in 2014, which leaves just over 9,000 in total according to figures from the Campaign for Community Banking Services. Barclays are hoping to close around 1,600 branches and cut 19,000 jobs while Royal Bank of Scotland is also ditching tens of thousands of jobs.
According to the British Bankers Association, footfall has fallen 10% year-on-year, while at the same time, the number of transactions being completed online has doubled.
Of course, banks need to start saving money somewhere after many of them have been slapped silly with fines for misselling and the like.
“If we don’t change the fundamentals and improve for our customers then our business will be eaten away,” said RBS chief exec Ross McEwan. “That might be through greater competition, increased scrutiny from regulators, or through intensifying innovation, or a combination of all of these.”
There’s growth in new banks that adopt a digital method, such as Atom Bank and Metro Bank, which are branchless. The banking world is weighing up the threat of new currencies too, such as Bitcoin. These new companies have much lower overheads than trad. arr. banks. And of course, Apple have just launched their own payment service, which is yet another challenge to the banks dominance in finance.
In addition to all this, the UK competition regulator is launching a full inquiry into the banking sector in a bid to create more competition for the old guard.
It goes without saying that some branches are needed, especially for older customers, but consultancy reports have predicted that, in 10 years time, the UK could easily be served by as little as 500 physical branches as everyone migrates to online services. Bad news for bank robbers who will have to ditch the notion of putting tights on their heads and pointing guns at people – they’re going to have to start getting computer savvy, and fast.
Those beloved banks of ours aren’t making as much money as they’d like, so they’re saying that they’re going to have to cut everyone’s pay. This is according to a senior regulator at the Bank of England.
Sir Jon Cunliffe, the central bank’s deputy governor for financial stability, said that it’s all well and good that shareholders have suffered since the financial crash, but salaries and bonuses are still far too high.
He said: “It is noticeable that, since the crisis, for the industry as a whole, employees have received a larger share of a smaller pie relative to shareholders. In the new world, pay bills may well have further to adjust.”
Cunliffe said that in the decade before the crash, profits attributable to shareholders were around 75% of total pay at UK banks and 60% for global banks. “Since the crisis that picture has changed markedly,” he added. Shareholders in global banks get 25% of total pay now.
“Across the big UK banks in 2013, the fraction had fallen to just 2% – i.e. to 2 pence per pound paid to staff,” said Cunliffe. He added that it is “unlikely that we will see or want to see again” the kind of returns that were being made before the crisis, with respect to the tougher rules brought in to make banks safer.
“It is important, in seeking to restore returns, that banks and investors do not think in terms of back to the future” he added; “with less leverage and more liquidity in banks, required returns ought generally to be lower than prior to the crisis. Trying to offset that by taking excessive risk or evading regulation will not, I think, be tolerated in the new world.”
All in all, we can expect that this will be passed on to the customer because, when banks want to find more money, overdraft charges and the like will suddenly start working against customers.
Sounds good doesn’t it?
Pensions minister, Steve Webb said he wants to help those tied to poor-value annuities: ”I know many people who have locked into an annuity are feeling rather bitter that they came just the wrong side of the line.”
“It’s been gnawing away at me and I want to say to those affected: I know how you feel. If it were possible for people who would rather have a capital sum than a regular income, in principle I would like to be able to help, and this is something the next government should have a look at.”
The government have pledged that, as of next April, savers who are about to retire will be given full discretion as to how they use the funds from their pension. If you’re over 55, you will be allowed to treat your pension like a normal bank account. Don’t spend it all at once though eh?
However, there’s a problem with those who have already bought annuities because they’ll be excluded from this rule as it stands. Webb continued: “If we accept the annuity market was broken, we also must accept it was so 10 years ago.”
The thing here is that Webb’s views haven’t turned into proper policies yet, so if you’re a codger, don’t get out the celebratory vodka just yet.
There’s also talk of policing the pension sector to ensure that savers get a fair deal and that something needs to be done about the high charges that chip away at funds during retirement.
Ever get the feeling that the government might ‘fix’ all this by simply putting the retirement age up to 230, so no-one has to worry about it?
The state of the world’s financial markets suggests that a break is about to happen at any point! We’re doomed!
The Bank of International Settlements said that suspiciously low levels of volatility in the markets seen this year, suggest a lack of liquidity that could trip up investors who assume they can dispense of assets when a sell-off begins.
These remarks follow as the FTSE 100 index suffered another day of losses, dropping 2.8% and mirroring falls across Europe. Guy Debelle of BIS said global investors were buying assets on the misguided presumption of liquidity that does not exist and that in a possible sell-off, volatility and price movements “will be exacerbated by the reduced capacity and inventory of market makers”.
Despite the world issues flying around causing markets to wobble, the BIS observed that volatility in fixed income, equity and foreign exchange markets has fallen to historically low levels.
Debelle, who is also an executive at Australia’s Reserve Bank, said: “While there is more forward guidance from central banks in place than in the past, investors do not have to believe it. I find it somewhat surprising that the market (in aggregate at least) is willing to accept the central banks at their word and not think so much for themselves”.
Referencing the US bond crash of 1994, Debelle warned that exits in the present bonds market could be even more violent in future with “a fair chance that volatility will feed on itself”.
It’s all somewhat worrying isn’t it?
In his speech, Debelle also referred to tightened regulation in the sector introduced in the wake of the financial crisis, adding: “Regulatory changes have, as intended, increased the cost of market-making, and hence shifted some liquidity risk to end investors. There have also been some strategic decisions taken by institutions and internal constraints have been imposed which have reduced capacity”.