Loans and Finance

Loans and Finance

Text

News and information about loans, money, debt, finance and business issues.

Wednesday, January 31, 2007

Migrants Better Than Natives

The Institute of Directors (IoD) has conducted a survey that concludes that migrant workers to the UK are seen as harder working, more reliable and better skilled than natives.

The survey found that employers believe immigrants outperform UK employees by “a large margin”.

Workers who have come here from abroad are believed to have better skills, education, work ethics and reliability.

Miles Templeman, director-general of the IoD, is quoted in the FT as saying:

"The UK workforce has got to raise its game on skills and performance."

This means that UK workers are going to find their current terms and conditions of employment under a strong downward pressure, as shortages and skill gaps are made up by employing in migrant labour.

The socio economic consequences of this to Britain will be serious, as to whether our current government has the abilitdesirere to manage this issue is another question.

Tuesday, January 30, 2007

FSA Calls For MEAF Refunds

The Financial Services Authority (FSA) has called for lenders to justify, and refund, their increased mortgage exit administration fees (MEAF's).

MEAF's are charged by lenders when borrowers pay off their mortgage early, or switch to another lender. The theory is that the MEAF covers the administration costs of closing the mortgage early. However, the FSA and others are becoming increasingly suspicious of the recent MEAF increases being foisted on mortgage holders by some lenders.

The FSA stated that, with regards to current customers, lenders must decide by February 28th 2007, whether they will charge no MEAF, the original or revised lower MEAF or their current increased MEAF.

Those that decide to charge the latter will be required to justify their decision.

The FSA also stated that past customers, who are unhappy with their MEAF charges, must be treated in the same way as current customers. Those who complain about an increased MEAF, should expect a refund of the difference between the actual MEAF paid on exit and the original MEAF.

"This is Money" claims that some lenders, such as Alliance and Leicester, have trebled their original MEAF (Alliance and Leicester's now being £295).

No doubt the possibility of being able to make claims for excess MEAF's will bring about the creation of a whole new claims industry, who will live off other's misfortune.

Monday, January 29, 2007

Banks' Underhand Methods

Banks were accused by Which? of using underhand methods to dissuade customers from seeking refunds, after they have been charged "unfairly" for exceeding their overdrafts.

Which? said that banks have threatened to close accounts, pass details on to debt collectors and charge for statements when customers challenge their overdraft fees.

Which? claims that it has heard of charges of up to £5 per page for duplicate statements. The law permits a maximum charge of £10.

One bank tried to charge £30 an hour labour charges to send duplicates, with a total bill of £360.

Doug Taylor, the personal finance campaigner at Which?, said:

"Banks are employing increasingly underhand methods to avoid their responsibility to treat their customers fairly and refund the charges."

Angela Knight, the chief executive designate of the British Bankers' Association, said:

"Which? is clearly trying to exploit its position as a consumer body by sensationalising what could be a useful piece of research.

The banking industry handles over seven billion transactions a year and occasionally something will go wrong that's human nature.

But the way in which Which? has approached this is also personally insulting to the front-line bank staff who do an excellent job serving their customers
."

As I have said before, banks are on this earth to make money they are not a charity. Try to stop them making money in one way, and they will find another way to charge you.

Customers would be well advised to help themselves lessen the banks' avenues for charging, by keeping their bank statements for at leastr 6 years.

Thursday, January 25, 2007

Council Tax Blunder

According to The Telegraph there has been a blunder in the council tax bandings, that may mean that many people may be entitled to claim a rebate.

The article notes that "hundreds of people are receiving money back from local authorities after challenging the council tax banding of their properties".

Seemingly many of the 1991 valuations were performed by estate agents who would just drive past the house, without so much as "poking their noses round the door".

You can check what your neighbours are paying on the Valuation Office Agency website (www.voa.gov.uk), which gives the band for any house in the country.

If there is a discrepancy, you can contact your local council and ask them to look at the banding.

However, be warned, there is a chance that may increase your tax banding!

I had someone round from the VOA yesterday, and will publish the result when known.

Wednesday, January 24, 2007

Credit Reports

As is widely known, credit reports compiled by companies such as Experian are a "public" record of an individual's financial deeds and misdeeds.

They are used by credit card companies, banks, loans companies, phone networks etc to provide an assessment of an individual's credit worthiness.

Those with a "poor" rating are deemed to be a greater risk than those with an "excellent" rating; as such, those with the "poor" score may have their application for credit refused, or have higher than normal charges imposed.

It well known that having negative items such as, ccj's, debt defaults and related negative issues on the credit report can damage an individual's rating. However, the converse is also true.

Where there are no positive comments from lenders, banks or other financial institutions the individual will also be given a low credit score.

I discussed this matter with Experian, and asked how do people get positive statements added to their credit file. Seemingly lenders and banks will do so where the customer has had a good credit history.

However, there is a catch, where the individual has had a relationship with a company such as a bank for many years; without defaulting, or any other negative incident, the institution will not record a positive comment in the individual's file.

Why?

Simple, a relationship going back so long will have meant that the individual at the time of opening his/her account would not have signed a form giving consent to share information with a third party.

The result being that those of us with a decade or more of excellent credit histories with the same institution are being penalised by those who access credit reference agencies, as there is no positive affirmation of our good credit history.

Financial Brokers Exposed

The Publican warns of two financial brokers who are scamming licensees:

"Gateway Finance.co.uk and Funds4Business, the brokers exposed by The Publican after ripping off licensees, are making it onto TV.

BBC South’s investigative programme Inside Out has been looking into their director Gary Thomas, and has interviewed victims of the financial broker.

The Publican unveiled the company in February 2005 following investigations, which revealed that licensees were left out of pocket after loans promised by the company failed to materialise. The company was also the subject of an investigation by The Mirror, following The Publican’s investigations.

Licensees claimed they had been promised a loan or mortgage, paid an administration fee of £350 and had not received the deal they have been promised.

Some have even paid arrangement fees of nearly £2,000 while others have paid for a valuations costing up to £1,600 and have still not been provided with the deal they were promised.

The programme will be shown on BBC 1 South Friday, January 26 at 7.30pm
".

Tuesday, January 23, 2007

FSA Fines Banks

In the coming weeks, ten banks and lenders will be fined by the Financial Services Authority (FSA) for mis-selling payment protection insurance (PPI).

It is expected that these, yet to be named, bodies will each receive fines of about £1M.

It is also expected that the news of the fines will prompt customers to launch their own compensation claims, for the mis-selling of these insurance policies. Some cynics dub the selling of these policies as a "protection racket".

In 2006 the OFT conducted a 5 month investigation into PPI, describing it as a type of insurance that failed consumers because too often it gave them a poor deal and offered less protection than they thought.

To date Regency, Loans.co.uk, and Redcats have been fined £781K between them for mis-selling the policies.

It seems to be an unfortunate fact of life that Britain's financial services industry seems to regard the Biriahs public as sheep ready for "financial slaughter". It is time that the public fought back.

Monday, January 22, 2007

UK's Second Largest Ever Islamic Finance Deal

The UK's second largest Islamic finance deal has just been concluded, with the purchase of the Grosvenor House Apartments Ltd by Park Lane Properties Ltd.

Park Lane Properties are co-owned by Kuwait based ADEEM Investment Company (ADEEM) and The Investment Dar (TID). The £100M refinancing was arranged with Lloyds TSB Corporate Markets.

The deal has been structured in accordance with Shariah principles, and using a series of sequential Murabaha transactions.

Mustafa Al-Saleh, Managing Director and Chief Executive Officer of ADEEM said:

"We are delighted to have secured such a significant deal with Lloyds TSB, allowing our vision for one of London's most historic buildings to be progressed. Working in strategic partnership with SPARC Group, our specialist Development Managers and Lloyds TSB Corporate Markets, we are now confident the building’s transformation into a super deluxe apart-hotel can be realised."

Rob Milne, property relationship director at Lloyds TSB Corporate Markets, said:

"This is a landmark Murabaha deal that required a specially tailored and individually structured finance package. We were able to bring together our commercial property experience, our track record in Islamic finance and our financial markets expertise to ensure we arranged the best deal for ADEEM."

Friday, January 19, 2007

FT For Sale

It is reported that the Financial Times (FT), or the "Pink 'Un" as it is known by those who work in the City, is up for sale.

Pearson, its owner, is reportedly looking for around £650M for the paper and its associated website.

The FT is now profitable, and 2006 year end figures are expected to show profits of around £10M.

It is rumoured that the US firm, Kohlberg Kravis Roberts may be interested buying the FT.

Thursday, January 18, 2007

Misleading Insurance Adverts

Those of you who have tried to claim on an insurance policy, only to be disappointed and have your claim rejected by the invocation of the small print, may raise a faint smile at the news that the Financial services Authority (FSA) have rebuked the industry for making misleading claims in their adverts.

The FSA reviewed the press advertisements of 57 insurance firms, and has subsequently warned companies in the home, travel and car insurance markets to stop using saving claims in their advertising that mislead consumers.

The FSA has also threatened regulatory action, after it found that 57% of motor insurance advertisements with savings claims were either unclear or misleading.

The FSA also noted that 25% of home insurance advertisements were misleading.

Vernon Everitt, FSA retail themes director, said:

"Most people rely on some form of insurance to protect them and advertising is a major influence on what they choose to buy. So it must be clear, fair and not misleading, leaving people with a balanced picture of what's on offer.

This work demonstrates that firms in the home, travel and car insurance markets must shape up and ensure that the claims they make don't mislead
."

However, Which? Claims that the FSA has not done enough.

Emma Bandey, personal finance campaigner at Which?, said:

"Why is the FSA consistently reluctant to name and shame firms?"

Which? needs to understand the reality of the financial services industry in Britain; it is here to make large sums of money for itself, not to provide a value for money service to its customers.

Wednesday, January 17, 2007

FSA Chief Quits

John Tiner, the CEO of the Financial Services Authority (FSA), announced his resignation yesterday.

He will leave in July 2007, having held the post for four years.

Tiner said that he was leaving because he wanted to take up a fresh challenge in the private sector, before thinking about retirement.

He joined the FSA in April 2001 as managing director of the consumer, investment and insurance directorate and was appointed chief executive in 2003.

FSA chairman Callum McCarthy said:

"He has been a leader in developing international regulation through his work in Europe. Within the FSA, he has been invaluable in developing and leading a management structure with discipline and enthusiasm."

Rather bizarrely Tiner will remain an employee of the FSA until January 2008, during which time he will be excluded from any work within the financial services sector or for any UK listed company.

Tuesday, January 16, 2007

Prudential's Inherited Estate

Those of you with shares in Prudential may find themselves a little better off in the future, thanks to the £9BN of inherited estate sitting in Prudential's books.

However, as with all things in the financial service industry, there is a catch; therefore don't crack open the champagne just yet.

The Prudential is now looking for a senior figure to represent the interests of policyholders, before making any move on the inherited estate. This is the first step required to free up the surplus funds.

The inherited estate is a dormant pot of money that has built up in the life fund over decades, that Prudential does not need to meet its obligations to policyholders.

However, in order to free it up, the Prudential would need the approval of the Financial Services Authority (FSA) which would need to be satisfied that policy holders have been fairly treated.

The next step would be for Prudential to count a proportion of it as capital, not move it out. This would give the Pru some more flexibility.

Analysts at Merrill Lynch claim that freeing up the inherited estate could be worth £2.5BN to shareholders, that's an extra £1 a share.

We shall see!

Monday, January 15, 2007

Free Financial Advice

The government will offer every adult, living in the UK, free basic advice about financial products within the next five years.

A nationwide scheme will be promised today by Labour, which is aimed at addressing the British people's lamentable ignorance with regard to financial matters.

Otto Thoresen, the chief executive of Aegon UK, has been appointed to lead a task force to design the scheme.

The task force has to report their findings and recommendations by the end of 2007.

In theory, the free service will provide advice about transactions; ranging from mortgages and pensions, to investing in the government's Child Trust Fund and baby bonds.

The theory is that there will be a national helpline, much like the NHS helpline, a website and network of new/existing local advice centres. The scheme will link to independent financial advisers and product providers.

The estimated £50M a year cost to run the scheme will be shared by the taxpayer and the financial services industry.

Ed Balls, Treasury minister, is quoted in the FT as saying:

"Financial decisions are difficult. Financial products are complicated and there is too much jargon. This puts people off, or they can end up buying something that is not right for them."

Maybe as an "add on", the government should also educate school children in financial basics? That way the problem is addressed from both sides.

Friday, January 12, 2007

Interest Rates Hiked

The Bank of England confounded the financial pundits yesterday, by hiking interest rates by 0.25%.

The base rate now stands at 5.25%.

It goes without saying that those people who have debts, loans and mortgages will feel the negative impacts of this rate hike immediately. However, those people with savings accounts will not feel the positive effects for some time (if at all).

Why is this?

Simple, the banks and loan companies will use the margin between borrowing and savings rates to squeeze every single penny from their hapless customers who hold debts or savings accounts with them.

Remember banks and loan companies are on this earth to make money, not to help people.

Thursday, January 11, 2007

Caveat Emptor

As if Britain's financial services industry did not have a bad enough reputation already, another nail has just been driven into it by the Financial Services Authority (FSA).

It seems that, according to the FSA, over 66% of mortgage advisors are failing to provide suitable advice in relation to mortgages, and some do not carry out the appropriate background checks required on prospective customers.

The FSA conducted a survey of 252 mortgage advice companies using; mystery shoppers, FSA visits and questionnaires.

Less than 33% of those surveyed had processes which ensured advice given was suitable.

The FSA said:

"We found significant failings in the advice-giving processes in a number of mortgage firms. Poor processes increase the risk of unsuitable advice being given.

It is essential that firms have robust processes in place, so that they treat their customers fairly and provide suitable advice. It is crucial that customer needs are assessed properly. Customers should consider what they can afford both now and in the future, taking into account any likely changes to their circumstances
."

Some companies have been "referred to enforcement", and face the risk of hefty fines.

These findings further damage the poor reputation of some mortgage advice firms. Less than 3 months ago one mortgage broker firm was fined £17K by the FSA for cold calling and mis-selling payment protection insurance.

Some mortgage brokers were also found to be misleading borrowers who had a poor credit history.

The old adage "caveat emptor", buyer beware, is as applicable today as it's always been.

You have been warned!

Tuesday, January 09, 2007

Self Appointed IVA Watchdog Under Fire

An organisation that claims to be the regulator for the "cowboy-plagued" IVA industry, has itself come under fire from the Department of Trade and Industry (DTI).

An IVA (individual Voluntary Arrangement) is being touted by the cowboys in the financial services industry as a panacea for people with excessive debts.

An IVA is a legal contract between debtor and creditor, supervised by a Licensed Insolvency Practitioner (who takes a fee), the purpose of which is to reach a compromise between debtor and creditor and avoid the consequences of bankruptcy.

The DTI is more than a little aggrieved that IVA.com, which launched its website earlier this week, claims to be a regulator and was displaying the logo of the DTI's official Insolvency Service without permission.

Unfortunately for IVA.com the DTI claims that it knows nothing about the organisation, and has requested that the logo be removed.

Evidently the British Bankers' Association (BBA) also looked into the company, as the BBA logo was used without permission.

Hardly a promising start for a "regulator"!

Wednesday, January 03, 2007

Famine Follows Feast

The old adage of "famine follows feast" still rings true, even in the 21st century.

The post Christmas hangover of overspending is about to be felt by 30,000 people, who are likely to declare themselves bankrupt in the first quarter of 2007.

That at least is the view of Grant Thornton, which predicted a third of such cases would be a result of excessive spending in the festive season.

Mike Gerrard, head of personal insolvency service, said:

"Last year, during the period straight after Christmas, when bills started to hit the doormat, we witnessed the highest ever number of people going into personal insolvency and this year things could be even worse.

Since last Christmas, several developments such as interest rate rises, sky-high utility bills and increasing unemployment have pushed more people into financial trouble
."

The figure of 30,000 insolvencies for the first quarter of this year is almost 9% higher than the third quarter total of 2006, and 25% higher than the insolvencies recorded during the first quarter of 2006.

A spokeswoman for Citizens Advice said:

"We do see evidence of a Christmas debt hangover, and this month we expect to exceed the 140,000 debt problems that Citizens Advice bureaux dealt with in January 2006."

Happy New Year!

Tuesday, January 02, 2007

House Price Prediction

Now that the New Year is upon us, the financial pundits are out in force attempting to generate some publicity for themselves and their products by making bold predictions about the coming 12 months.

One such prediction concerns that housing market. According to a poll in the FT, 30 out of 41 economists say that recent house price rises are sustainable.

11 think the market has risen too far and will fall.

Needless to say, there are others who disagree. Lombard Street Research (LSR), in a study commissioned by The Daily Telegraph, say that house prices are at their most overvalued for 15 years.

In other words, it depends on which way you want the market to go as to which survey you believe in.

Happy New Year!