Loans and Finance

Loans and Finance

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

Tuesday, February 27, 2007

BA Reservations II

It seems that I was not alone in experiencing problems accessing the BA Reservations call centre yesterday.

I tipped off the Times yesterday about my troubles, and they reported today that others had the same issues:

"More fun and games for British Airways customers, who discovered yesterday morning that the main number to make reservations, as specified on the website, didn't work. Nor did another number supplied by BA's Executive Club. The airline, which is by now convinced that I am deliberately persecuting it, admits to 'some call-routing issues' after weekend maintenance."

Despite the phone porblems not being a good omen, I will be flying to Beijing next week on British Scareways on business; let us trust they manage that aspect of their business a little better than they do their phone lines.

Monday, February 26, 2007

BA Reservations

Well done BA for further damaging their already badly soiled brand value.

I made a bold and futile attempt to contact their reservations line this morning, on 0870 850 9 850 (the number specified on their website).

Having pressed the various option buttons, and listened to the "tinny" music, I was informed that I had dialed the wrong number and was given a new number to dial.

Can you guess what that was?

Yes, that's right 0870 850 9 850!

I rang the Executive Club, and was told that in fact the number should be 0870 850 4 850 and that the BA website was wrong.

I rang the new number...

Guess what?

I had the very same experience.

Well done lads!

Friday, February 23, 2007

5,000 Complaints A Day

The financial ombudsman is receiving up to 5,000 complaints a day from angry bank customers, in respect of high penalty charges.

It seems that, as the numbers of complaints are rocketing, there is something of a "customer revolt" over bank charges.

A year ago the Ombudsman received about 100 calls a day from the public over bank charges.

The FOS said the number of complaints it is receiving is unprecedented.

A spokesman said:

"It has even eclipsed mortgage endowment complaints. We usually get 200 to 250 of them a day, so it has well surpassed that."

Martin Lewis, financial pundit, said:

"The campaign to reclaim has been given huge impetus this week by the angry response of UK consumers to the enormous profits being reported day after day by Britain's banks, who are taking money unfairly from people's accounts.

This week it hit tipping point, as a whole new band of Britons grit their teeth to get their money back
."

The banks are also waiting for the results of an investigation by the OFT on the issue of charges.

Earlier this week Barclays posted £7BN in profits, and analysts predict the "big five" alone will report more than £38BN in profits from last year.

Whilst the "consumer revolt" gathers momentum, those who manage to reclaim their charges should remember that banks are not charities. In the event that the banks are blocked from making money by levying charges for unauthorised overdrafts etc, the banks will find other methods of making money, such as abolishing free banking.

Thursday, February 15, 2007

Interest Rates To Rise

The Times reports that Mervyn King, the Governor of the Bank of England, has made it clear that there is likely to be another rise in interest rates.

Plan accordingly!

Wednesday, February 14, 2007

Mortgage Lending Down

Mortgage lending fell by 14% in December, compared to November, according to figures released by the Council of Mortgage Lenders (CML).

The CML said £28.6BN was lent by banks, building societies and others to homebuyers during the month; £33.2BN was lent in November.

The figures show that a typical first-time buyer would now expect to take out a home loan 3.31 times the size of their salary. This means that first-time buyers are struggling to enter the market, despite this they accounted for 36% of all home purchase loans in 2006.

Michael Coogan, director general of the CML, said:

"The monthly figures clearly show the cumulative effects of the gradual worsening in affordability for first-time buyers, and the ever-rising proportion of them who are caught by stamp duty.

Although the mortgage market performed extremely well in 2006, the effect of rising interest rates and the continuing decline in affordability are likely to dampen activity somewhat in 2007
."

As the first-time buyers are priced out of the market, so will the downward pressure on house prices increase. In other words, the housing market is due for a major correction in the next 18 months.

Tuesday, February 13, 2007

Administrations Jump

Deloittes have published figures that show a 26% jump in UK business administrations, when comparing 2006 with 2005.

Neville Kahn, reorganisation services partner at Deloitte, said:

"Many businesses have shown signs of distress over the past year. Our research shows that the worst hit were in the financial services, hospitality & leisure and recruitment and business support services sectors. The overarching theme of increased costs appears to have hit a large number of the businesses.

In the financial and recruitment sectors we have seen an increased regulatory burden and in hospitality & leisure - a typically high cost environment – we have seen businesses punished by their thin margins when volatility occurs. Overall, the figures suggest the economy is not as healthy as it might seem on the surface
."

The main sectors which saw increases in administration levels from 2006 to 2005 are:

-Recruitment and business support services saw an increase of almost 90%
-Hospitality and leisure businesses saw an increase of over 50%
-Financial services businesses saw in increase of nearly 50%

Lee Manning, reorganisation services partner at Deloitte, said:

"The costs associated with running an independent financial advisory business, such as FSA regulation and professional indemnity insurance, have increased significantly in recent years making it more difficult for the smaller businesses to absorb these costs."

Whether the culling of small firms is good news for the consumer is questionable.

Friday, February 09, 2007

Bank Leaves Rates on Hold

As expected, the Bank of England left interest rates on hold yesterday at 5.25%.

This came as no surprise to the majority of financial pundits. They do, however, predict that rates will rise in the summer.

Next Wednesday the Monetary Policy Committee (MPC) will publish its latest quarterly inflation and growth forecasts. These figures will help guide predictions for the coming months.

Thursday, February 08, 2007

FSA Publishes Business Plan

The Financial Services Authority (FSA) has published its Business Plan for 2007/8. The plan outlines the FSA's priorities, which includes a move towards more principles-based regulation (MPBR).

The FSA's Chief Executive, John Tiner, said:

"More principles-based regulation will produce significant benefits for firms, markets and consumers but we need to invest in our people and information systems to realise this change. This will result in an FSA that is better equipped to face future challenges and to deliver better outcomes for all our stakeholders.

In the year ahead we are also placing increased emphasis on and investment in our National Strategy for Financial Capability. Lack of financial understanding among consumers has been recognised as a priority risk by the FSA and the need for more confident, capable consumers who can take advantage of a more dynamic market place has never been greater. We have set out our targets: we need this additional investment to achieve them
."

He added:

"Those who pay our fees will benefit from having a regulatory system which focuses increasingly on achieving desired outcomes and from dealing with a more efficient, more responsive, better-focused organisation. Consumers will benefit from firms being more attuned to their needs and will receive appropriate information, while the financially excluded will benefit from a more active programme to increase their understanding of financial matters."

We shall see.

Tuesday, February 06, 2007

Chip and Pin Weaknesses Exposed

The BBC's consumers' programme, Watchdog, has exposed a security weakness in chip and pin technology that allows fraudsters to harvest security details.

Cambridge University researchers said that the details could be hijacked if a card is put into a doctored payment machine.

Details can then be sent wirelessly to accomplices and purchases made using a fake card with those account details.

A spokesman for UK payments association Apacs said there was no evidence the method had been used in the UK.

This of course is a totally meaningless statement; as it does not mean that this method has not been used, also it does not mean that this method might not be used in the future.

Monday, February 05, 2007

Interest Rates

The financial pundits are betting that the Bank of England will keep interest rates on hold next week, at 5.25%.

However, before people rush to crack open the champagne, the pundits have hedged their bets by predicting that there will be further rate rises later in the year.

Reuters note that 57 of 62 analysts that they polled, don't expect interest rates to rise to 5.5%. However, 46 of the 62 think that they will rise by the end of June.

Friday, February 02, 2007

Britain's Growing Debt Crisis

Britain saw an unprecedented rise in personal insolvencies in 2006, with a massive surge of 59%, according to figures released by the department for Trade and Industry (DTI).

Individual insolvencies in England and Wales were 107,288, the figure for 2005 was 67,584.

The Bank of England, by raising interest rates, has lessened the threat of inflation but has of course increased the costs of borrowing; this in turn creates an upward pressure on the number of insolvencies.

Louise Britain, head of personal insolvency at Baker Tilly, is quoted as saying:

"People are blindly taking on debt without thinking about how they'll repay it.

As a nation, we have totally binged. I think the numbers of insolvencies will continue to rise
."

Total outstanding debt reached £1.3 Trillion in December.

The surge in bankruptcies has been helped by the use of individual voluntary arrangements (IVA's), which allow individuals to write off most of their debt and make gradual repayments on the remaining amount.

The banks are fighting back, and are starting to reject more debt plans. Needless to say, as with many other financial products, some IVA's have been marketed to the wrong people.

However, the Bank of England's governor, Mervyn King, says that it's not very likely that debt will become a significant problem.

"It's a minority of households.

It's a major social issue, but the numbers aren't large enough to amount to a major threat to the overall level of consumer spending
."

I can't but help wonder what Britain he is living in.

Thursday, February 01, 2007

GE Capital Bank Fined For Mis-selling

GE Capital Bank (GECB) has been fined by the Financial Services Authority (FSA) a record amount of £610K, for failing adequately to protect customers from being sold insurance products that they might not need.

GECB was found to have insufficient safeguards against mis-selling payment protection insurance (PPI).

This is the largest PPI fine that the FSA has imposed to date, more are expected to be announced in the coming weeks.

GECB has said that it will now honour any PPI claims made by customers from 2005 onwards, even if they go against contract exclusion clauses.

Critics claim that the product is overpriced, difficult to claim on and mis-sold.

GECB's main business is providing credit finance through branded store cards, credit cards and sales finance. Its clients include Laura Ashley, Mothercare, BHS and Halfords.

Therefore it has somewhat of a captive market for selling the PPI add on.

In 2005 over 850,000 insurance policies, included PPI, were sold on its behalf to consumers.

In spite of the fact that the FSA had noted that GECB had failed to review and amend procedures for selling insurance, despite its own evidence of widespread non-compliant selling practices.

Margaret Cole, director of enforcement at the FSA, said:

"Millions of people take out store cards every year. They need to know that PPI is almost always optional and should consider whether they need it before signing up.

Our focus on payment-protection insurance will remain very high this year. We are determined to see significantly better practice in PPI sales, and will crack down where firms fail
."

The fine against GECB was going to be £870K. However, it qualified for a 30% discount by agreeing to settle early.

GE Capital Bank said:

"The main finding of the FSA relates to GECB policies sold in stores by sales staff.

GECB designed the sales procedure but failed, in light of emerging evidence, to fully review, amend and then effectively operate it.

As a result, relevant information about the insurance product was not provided to some customers at the time of sale.

In certain cases, the FSA found that staff had not followed the correct sales procedure by drawing customers' attention to the importance of reading the policy's summary of cover. GECB fully accepts responsibility for how the policies are sold.

GECB is continuing to take steps to ensure that no customer has lost out financially, and is honouring claims that would otherwise be rejected because of an exclusion
."

In the short term, this shot across the bows of the financial services industry may be seen as a victory for the consumer. However, in the long term, you can be assured that the financial services industry will find other ways to separate the consumer from his/her money.

Be vigilant!