Finance Matters

• 27Jul

  Ban on raiding funds to pay fines

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  From The BBC:

  Insurance companies have been told by the City watchdog that they must no longer fund compensation from their with-profits investment funds.Fines and compensation from operational failures might previously have come from surpluses in policyholders’ funds. But the Financial Services Authority (FSA) has ruled that shareholders must pick up the bill from 31 July. However, the consumers’ association Which? has said the new rules have been watered down from earlier proposals. It wanted the rules to cover retrospective cases of mis-selling. SurplusesSurplus funds, known as inherited states, have been built up over many decades in the “with-profits” funds of life insurance companies. They have been used to pay compensation and fines, of millions of pounds, imposed on companies as a result of policies being mis-sold. A Which? spokeswoman said that consumers were effectively paying for the companies’ mistakes. Any mis-selling that occurs after 31 July could no longer be compensated using funds…

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• 27Jul

  ‘Customers pay’ as banks rebuild

  Money No Comments

  From The BBC:

  Banks and building societies are trying to rebuild their profits at the expense of customers, according to Moneyfacts.The price of borrowing has continued to rise significantly, even though the Bank of England’s base rate has stayed at a record low, new figures show. Mortgage rates have seen the sharpest rise. Three months ago, the price of a typical two-year fixed mortgage was 4.65%. Now it’s 5.17%. Interest rates on credit cards have also risen, though by a smaller amount. The charges on cash loans have been steady since the start of the summer, although they are up by more than 2% since this time last year. Rebuilding ProfitsMost experts believe that banks are using the relatively low level of competition in the mortgage market to rebuild their profits.
  At the moment just eight or nine big lenders are supplying the vast majority of mortgages. Michelle Slade, of the financial information website Moneyfacts, said lenders’ potential profit margins were the largest they had seen since…

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• 27Jul

  EDF fined £2m for ‘poor’ service

  Money No Comments

  From The BBC:

  EDF Energy Networks has been fined £2m for poor customer service, industry regulator Ofgem has said.It said that the company had failed to meet the required timescales for connecting customers. EDF had taken steps to improve its connections service but this should have been done earlier, Ofgem said. Electricity companies have to provide an offer to property developers about the cost and details of connecting new premises to the network within 90 days. The company, which completed more than 10,000 connection projects last year, said it “greatly regretted” the delays. DevelopersEDF Energy Networks has three electricity distribution networks and is the monopoly provider in certain areas of the country.
  If new homes or business premises are built, the developer makes a request to the company for these properties to be connected to the electricity network. As part of its licence, EDF Energy Networks is required by the regulator to make an offer on the cost and details of the connecti…

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• 27Jul

  Savings ‘postcode lottery’ claim

  Money No Comments

  From The BBC:

  Customers have faced varying rates of return on their savings depending on where they lived in the UK, an academic has claimed.Banks and building societies based in Northern Ireland, Yorkshire and the east and north of England offered lower returns between 1992 and 2006. Better deals were available in the North East and South West of England and the Midlands. John Ashton, of the University of East Anglia (UEA), assessed 1,225 accounts. “The findings indicate that geography is only one of many factors which influence interest rates set by banks,” said Dr Ashton, of the Economic and Social Research Council Centre for Competition Policy at UEA. Account accessThe academic, whose research was published in the Applied Economics Letters journal, points out that many of these financial institutions had different business models. Using data from financial information service Moneyfacts, he analysed instant access and notice deposit accounts from 167 providers. Most providers offer the same inte…

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• 27Jul

  Fuel scheme ‘failing the poorest’

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  From The BBC:

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  Mervyn Kohler, Age Concern and Help the Aged: “It is absolutely scandalous”
  A scheme aimed at improving households’ fuel efficiency and cutting fuel poverty is “failing the poorest and most vulnerable”, MPs have said.Nearly a fifth of the funding for the multi-million pound Warm Front scheme was going to households that were already energy efficient. And £15m was spent on measures that did little to pull households out of fuel poverty, the committee of MPs said. The government is aiming to end fuel poverty in England by 2016. ‘Focus’More than four million UK households are estimated to be in fuel poverty – defined as a household that spends more than 10% of its income on energy bills.
  But the Public Accounts Committee report concludes that only a third of the genuinely fuel-poor qualified for help under the Warm Front scheme. This was partly because they needed to claim all benefits to be eligible for the Warm Front…

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• 27Jul

  Ofwat calls for lower water bills

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  From The BBC:

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  How a water meter and rainwater butts can result in bills of £10 a month
  Water companies’ bids to raise prices between 2010 and 2015 have been snubbed by regulator Ofwat, which wants average household bills to fall instead.Taking out the impact of inflation, the regulator wants the typical bill in England and Wales cut by £14 to £330. According to the regulator, the proposals will allow water companies to invest £21bn in improving services over the next five years. But companies suggest that customers might suffer as a result of the plans. Every five years, Ofwat sets limits on prices that water companies in England and Wales can charge.
  Water and sewerage services in Scotland and Northern Ireland are regulated separately. ‘Value for money’Water companies submitted their business plans to Ofwat in April, and the regulator has now set price limits as well as suggested investment levels for each individua…

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• 27Jul

  Banks ‘approve more mortgages’

  Money No Comments

  From The BBC:

  Mortgage approvals by the major banks increased to a 15-month high in June, according to the British Bankers’ Association (BBA).Some 35,235 mortgages were approved for house purchases in June, up from 31,919 the previous month, the BBA said. The figures reflected the banks’ increased ability to lend and was 65% up on the same month a year earlier. However, the appetite for remortgaging and for borrowing with other loans remained subdued, the group said. Typical loanThe increase in mortgage approvals raises hopes that there will be subsequent rise in activity in the property market. David Dooks, the BBA’s statistics director, said that approvals were recovering from a very low level since last November, but he suggested that the pick-up in mortgage lending by the major banks was in sharp contrast to a contraction in lending by other home loan providers. Andrew Montlake, director of mortgage broker Coreco, was not convinced that there had been a significant shift in the housing market. “…

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• 27Jul

  Big jump in retail sales in June

  Money No Comments

  From The BBC:

  Sales in UK shops shot up 1.2% in June following a sharp fall in May as hot summer weather boosted clothing purchases, official figures show.The jump was much more than the 0.3% rise expected by economists. Retail sales had fallen 0.9% in May. The Office for National Statistics said that sales rose 2.9% from June 2008. Shops have also brought forward their summer sales, which along with the effects of last month’s heatwave, enticed consumers to spend. Earlier this week, clothing retailer Next said the good weather had bolstered its sales, allowing its to raise its profit forecast.
  The much better-than-expected retail sales figures lend support to the view that the UK is now over the worst of the recession. Economic growth figures due on Friday are expected to show that the economy shrank by about 0.4% between April and June, compared with a 2.4% contraction in the first three months of the year. However, retail sales are often volatile and analysts said UK households would continue to…

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• 27Jul

  Airline complaints ‘on the rise’

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  From The BBC:

  Complaints from customers about the airline industry have risen by 11% in a year, a consumer support group says.The Air Transport Users Council (AUC) handled 12,307 complaints and enquiries in 2008-9, compared with 11,077 the previous year. Cancellations, delays and mishandled baggage topped the gripes list but new technology has also led to new types of complaints, the AUC said. It accepted that complaints came from a “tiny” minority of passengers. CompensationThere were more complaints about cancelled flights than any other issue, with the numbers rising slightly to 3,770 in the last financial year.
  The AUC said it had been difficult to win compensation for passengers in these cases because on most occasions airlines claimed cancellations were the result of “extraordinary circumstances”, for which they do not have to pay compensation. The group won compensation for 120 complainants whose flights were cancelled compared with 60 the year before. Stricter legislation on passenger right…

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• 26Jul

  Darling warns banks on loan rates

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  From The BBC:

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  Alistair Darling: ‘We did not stabilise the banking system out of some charitable act’
  The chancellor is to quiz bank bosses over how much they charge small firms for loans, saying he is “extremely concerned” their rates may be too high.Alistair Darling said the cost of loans seemed to have risen, despite the UK’s record low base interest rate of 0.5%. He told the BBC that banks had a duty to restore lending levels, saying the government did not rescue the banking sector “out of some charitable act”. He has called a meeting with bank executives in Downing St on Monday. ‘Do their part’”The public will not understand it if they [the banks] don’t seem to be doing their part,” he told the BBC’s Andrew Marr Show. “I want them to rebuild their balance sheets… but at the same time, because of the particular circumstances we’re in now, because of the fact we’ve got this recession, we also need them to lend money,” said Mr Darlin…

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