The chief executive of the Secure Bank Trust, Paul Lynam, has complained that 90% of the claims that his bank receives aren’t held up the the Financial Services Authority (FSA), and says that this draws away valuable time and resources from the bank, ultimately resulting in a loss of money that could be used for lending instead.
There have been calls recently for the claims companies to pay the £850 fee for launching a claim if the claim fails, and Mr Lynam has added his voice to them. Speaking about the PPI claims, he says that “it is costing us in excess of £100,000 a month to deal with these claims companies for almost no customer benefit whatsoever. I estimate if we had no claims management company-related costs over this past year, we would have been able to lend £10 million, or 20 per cent more than we have been able to.”
A study by Skipton Financial Services has found that the average UK family needs to have £24,801.51 a year in order to survive. The figure is arrived at by adding up things like mortgage payments, food bills, petrol bills, the cost of commuting and more. It also takes into accounts the bare minimum of spending for things like children’s clothes and things they’ll need for school.
However, what is left out of the report are any luxury items. The managing director of Skipton Financial Services, Andrew Barker, believes that pointing this out shows just how high the figure really is: “The worrying thing is that the report doesn’t include any luxuries whatsoever, the figures only refer to the money people need to survive. Don’t forget that £24,801.51 is the figure UK families need to bring home so, once income tax and national insurance has been taken into account, a basic rate taxpayer would actually have to earn well over £30,000.”
Lenders in the UK are trying to capture a larger and larger chunk of the profitable personal loan market at the moment, attempting to draw customers in with lower and lower rates of interest. The result is that two providers are now offering rates of just 5.4% on some of the loans they offer, which is certainly appealing to anybody looking to get their hands on some cash for a holiday, car, redecorating or anything else.
However, the banks and building societies are still unable to compete with the emergence of social, or peer-to-peer, lending, which is drawing in ever more of the market. Although the vast majority of lending is still done through traditional means, there is a lot of scope for this more personal finance offering to grow.
The policy of buying assets from banks has been put on hold by the Monetary Policy Commission of the Bank of England, suggesting that they believe the economy may be strong enough to support itself on its own for the moment, no longer needing the boost to lending that quantitative easing (QE) provided.
The policy has already seen £375billion printed and given to the banks, and this pause is being welcomed by those who thought that QE was pushing up inflation and causing savers to lose out. The director general of Saga, Dr. Ros Altmann, was one of those who felt QE negatively impacted savers, particularly pensioners, and said the following after this pause was announced: “The Bank itself has always admitted that Quantitative Easing is a drastic policy experiment which it has introduced because “conventional” policies had been exhausted.
Whilst lots of attention is being given to the increased prevalence of payday loans at the moment, with more and more people looking for money to support them between pay-cheques, some people think they’ve found a way around the issue by dipping into the overdraft on their bank account for the small amount of time it takes for the next lump of cash to be given to them.
However, in the vast majority of cases, these people will find themselves paying far greater fees than they would have with a short term loan and are likely to discover the additional charges only a month or two after they have made use of the overdraft.
Whilst it may be tempting to use a few extra pounds, most bank accounts have huge charges that they will levy on people who use an overdraft without warning. Some of them will even charge administration fees if you even try and go into your overdraft, without actually letting you have the money in the first place.
A series of emails have been published by the US banking regulator that demonstrate the attitudes to serious offences that traders within Barclays held, with them swearing, laughing and joking about rigging energy markets and manipulating the price of electricity in order to generate a profit.
Barclays are denying that they were involved in any wrongdoing and have promised to appeal against the decision by the regulator to fine them. In a statement, the bank said it “strongly disagrees with the allegations […] We believe that our trading was legitimate and above board and intend to vigorously defend this matter.”
However, the emails appear to show a different story, with traders flaunting the fact they are engaging in rate manipulation and saying how much fun it is. MP on the Treasury Select Committee, John Mann, says that it’s indicative of the problems with modern finance: “This just shows how the rotten culture of casino banking that was built up under Bob Diamond went all the way through Barclays. Traders were clearly programmed to do anything to make a profit.”
The latest figures released by the Bank of England show that the number of loans and lending approved for households jumped in September, which can be interpreted as an increase in confidence among not just lenders, but among the consumers who decide to take out these loans as well.
There isn’t just one sector that has risen either, with mortgage lending, credit card lending and approved loans and overdrafts all seeing big increases. It’s resulted in a total of £1.7billion being lent out to households during September, which could fuel a real economic recovery as consumer spending increases, especially in the housing market.
However, business lending has failed to achieve the same increase, and business were in fact lent £900million less than in the previous month.
The UK economy has had a shock rise in the third quarter of this year, with the Office for National Statistics (ONS) reporting a 1% rise in GDP for the start of July to the end of September. Although many had predicted growth in this quarter, most estimates put it at around 0.6%, so the reported jump by an entire percentage point is very welcome news.
The growth is almost enough to negate the 1.1% contraction that’s been seen from October 2011 until July 2012, which is great news. It’s worth pointing out, however, that previous figures about GDP from the ONS have been revised again and again in the following months, so this current 1% growth could go down (or even up) as the information becomes clearer.
After all the anger there has been over the huge bonuses bankers get in the last few years, it seemed that some people in the industry were finally starting to listen when Lloyds, one of the banks that was given huge sums by the tax payer to ensure it didn’t collapse, announced it was considering massive reforms to how it paid out its bonuses.
Now, however, the bank appears to have changed its mind, with a spokesman saying “we keep our remuneration plans under review at all times but have no current plans to change our structures and do not expect to do so in the foreseeable future.”
The argument for bonuses that the bank uses are that they are expected within the industry and that Lloyds has to offer competitive bonuses in order to draw in the best talent.
The Bank of Scotland has been fined £4.2million by the Financial Services Authority (FSA) after failing to keep an accurate record of compensation due to mortgage customers. The bank is part of the Lloyds Banking Group, meaning that this is yet another blow to one of the biggest players in the financial services industry.
Halifax, which is owned and operated by the Bank of Scotland, had kept incorrect records on numerous borrowers, which then resulted in 160,000 home owners not receiving the compensation they were entitled to after the bank failed to inform them of changes to their loans. The customers, who had found their repayment system altering with no warning, were supposed to receive a good will payment from the bank to make sure they weren’t adversely affected by the lack of communication, but it never reached them.