Loans and Finance

Loans and Finance

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

Friday, June 29, 2007

New Chancellor

Gordon Brown, now the new Prime Minister, has finally had to relinquish his role as Chancellor after a ten year stint.

In his place he as appointed long time friend and associate, Alistair Darling.

Those of you expecting major changes in economic policy will be sorely disappointed. Darling's arrival in the Treasury confirms that there will be no major change in economic policy.

Darling was appointed as Brown's deputy in the Treasury 10 years ago.

In 1998 he was appointed Social Security Secretary, after Harriet Harman was fired and Transport Secretary in 2002 following the resignation of Stephen Byers. A year later he took on the additional responsibility of Scottish Secretary.

In 2005, he became Trade and Industry Secretary, again working closely with Mr Brown.

The message being, business as usual.

Thursday, June 28, 2007

Excess Charges Mass Hearing

Today will see a record number of people have their claims for the return of bank overdraft charges dealt with at Leeds Mercantile Court.

Around 200 cases have been scheduled to be heard, though some have been settled at the last minute.

Over the last 12 months there has been a surge in mass litigation, whereby angry bank customers have sued their banks for the return of the charges they have had to pay for having an unauthorised overdraft.

Banks have attempted to settle all the cases against them, rather than contest one before a judge; as they fear a precedent being set.

Were that to happen, all the banks would be forced to go back through their records for the past six years and repay the overdraft charges to every single customer who they have charged in that time.

In order to clear the large number of cases coming before district and county courts, mass hearings have taken place in the past few months at courts in Leeds, London, Guildford and Birmingham, with more to come in the next few weeks.

The banks have refused to say how many people have threatened to sue them, or how much they have paid out.

As I have said before, banks are in the business of making money. Even if a precedent were to be set, and every penny in overdraft charges were to be repaid, the banks would find other means of making money out of their customers (eg current account charges, lower interest rates on savings and higher rates on loans).

The dice are loaded in the banks' favour!

Wednesday, June 27, 2007

Outsourcing To China

Those of you who are fed up with ringing your "local" bank or financial institution hoping to talk to a "local" operator, only to find yourselves talking to an operator based in India, may be less than happy to learn that the fetish for outsourcing financial services helplines etc continues.

Indeed, the call centres are likely to be moved even further away from the UK, as the Chinese have now been identified by financial institutions as a source of even cheaper labour.

A report, titled Global Financial Services Offshoring Report 2007, issued by Deloitte notes that India continues to be the global offshoring hub. However, it is likely to lose its share of two-thirds of offshored staff in the next 10 years due to competition from China.

Quote:

"India remains offshoring's hub but is likely to lose share in the future. The DTT GFSI group estimates that about two-thirds of global offshored staff is employed in the sub-continent. China threatens to be India's principal offshoring competitor.

Some 200 million Chinese people are currently learning English, providing a growing pool of skilled labour that may compete with India over the next 10 years. China's share of offshore labour is already rising, with a third of financial institutions now having back-office (mainly IT) processes based in China
."

Needless to say, the financial institutions will never bother to consult with their customers over their outsourcing arrangements or the security of their outsourcing arrangements.

Tuesday, June 26, 2007

US Launches Probe Into BAE

The US Department of Justice has launched a formal anti-corruption investigation into BAE Systems' alleged payments of bribes to a Saudi prince, in return for a lucrative contract.

The allegations concern multi-million pound payments to Prince Bandar, a leading member of the Saudi royal family, as part of the Al Yamamah Tornado jet deal.

The investigation will look at BAE's compliance with anti-corruption laws, "including the company's business concerning the Kingdom of Saudi Arabia".

BAE shares have fallen 6% in opening trading today, as a result of the announcement.

The US action follows the UK government's decision to stop a fraud inquiry, last December, into BAE’s 1980s Al Yamamah deal to supply Tornado jets and other military hardware to Saudi Arabia. The UK government cited national security interest as a justification for their decision.

BAE have issued a statement:

"BAE Systems has been notified by the US Department of Justice that it has commenced a formal investigation relating to the company’s compliance with anti-corruption laws including the company’s business concerning the Kingdom of Saudi Arabia."

BAE is one of the largest defence contractors used by the US government.

BAE has already asked Lord Woolf to carry out an independent review of the company's handling of arms deals.

The review does not include BAE dealings with Saudi Arabia.

Prince Bandar has denied receiving improper payments, and BAE has said it acted within the law.

Monday, June 25, 2007

Squeeze Coming

The UK will experience a squeeze in public spending in the coming years, but the government has not made the British public aware of the hard times ahead.

That at least is the view of the Treasury Select Committee, in their report on the forthcoming Comprehensive Spending Review.

The report states that the government is "too timid" in stimulating a national debate on public expenditure, and has said that it should give clear indications of the decisions it is taking.

Committee chairman, John McFall, said:

"Our report highlights that the years of plenty in public spending are drawing to a close. The Treasury has not done enough to prepare the public for the squeeze that lies ahead."

The CSR was announced in 2005, and was set up to determine how much money each government department is to receive in the 2008-2009, 2009-2010 and 2010-2011. It is expected to be published this autumn.

The committee noted that the pre-budget report forecasted real growth in public spending during the period covered by the CSR of approximately 2%, this is half the rate of growth provided for during the period covered by the four previous CSRs.

McFall said:

"It is clear that the settlements for many departments will be tight.

Overall rates of growth in public spending in recent years have been very high. By those recent standards, there will be a squeeze in the years to come
."

The committee also recommended that the Treasury does a greater analysis into the overall impact of net migration on demand for public services in the UK.

McFall said:

"The Treasury told us that the fiscal benefit of inward migration is greater than the cost to public expenditure.

This may be the case, but the impact on public expenditure is uneven across the country, and this is an issue that requires cool analysis, not heated debate, and it is the job of the Treasury to promote and provide such analysis
."

He added:

"It is vital that every effort is made to verify that efficiency gains are not being made at the expense of service quality if the public is to have confidence that these are genuine efficiency gains, and not just spending cuts in disguise."

Don't hold your breath, there is no way that this government will actively publicise hard times to come.

Saturday, June 23, 2007

Filthy Fivers

The Bank of England's Governor, Mervyn King, has told banks that they must help replace the "scruffy" old £5 notes with brand new ones.

King said that the "fiver" is in a sorry state, and is hardly ever seen in a freshly minted state.

King lays the blame for the demise of the "fiver" at the doors of the high street banks. They find it easier and cheaper to stock their cash machines with ten and 20 pound notes.

Therefore "fivers" remain in the banking system for twice as long as they should. Circulation of the notes has not increased in 15 years.

King said:

"We have an ample supply of new £5 notes waiting to be used. We want to see them in circulation."

Even the Bank of England is not highly impressed with the high street banks, yet another dent in their already tarnished brand value.

Friday, June 22, 2007

EU Condems Government Role in Equitable Life Crisis

The EU will today savage the government's handling of the Equitable Life crisis, and its failure to protect Equitable Life policyholders.

Equitable Life had to close to new business in 2000, after it emerged it could not honour its policies; it went on to dramatically cut the value of customers' life savings, leaving many thousands of policyholders in deep financial trouble.

Today's report marks the culmination of an 18 month inquiry by the European parliament in Equitable Life, and will call for government compensation for the many thousands of investors who lost part or all of their savings and pensions when the company ran into trouble.

The report castigates the government's "light touch" approach to regulating the life insurance business, especially Equitable Life, which was seen by the authorities as "too reputable" to run into trouble.

The report notes that the UK's light touch:

"went a step too far and thereby contributed to a weak regulatory environment, which allowed the difficulties at Equitable Life to grow unchecked".

The report then states:

"There have been a significant number of statements to the effect that the UK regulators failed to prevent Equitable Life from steering into its crisis, and therefore failed to protect policyholders in the UK and other member states from suffering financial losses as a direct consequence.

It is also apparent that the UK regulators behaved with undue awe or deference towards Equitable Life, particularly given its long history and hitherto highly reputable status, leading them to consider it as the top pick of the life insurance industry and apparently believed to be too good and too reputable to make mistakes.

In view of the UK government's failure to comply with the requirements of the (EU's) third life directive, and given the absence either of accessible legal redress through the courts or of effective alternative means of redress, the committee firmly believes the UK government is under an obligation to assume responsibility.

The committee therefore strongly recommends the UK government devise and implement an appropriate scheme with a view to compensating Equitable Life policyholders within the UK, Ireland, Germany and elsewhere
."

Unfortunately, for the long suffering policyholders, the committee cannot order compensation. However, the report's author, Liberal Democrat MEP Diana Wallis, said:

"For the victims of the Equitable Life failure, the report delivers an analysis of the UK's flawed process of implementing EU law which, combined with the imminent report of the UK parliamentary ombudsman, should arm the victims with powerful findings," she said.

It is absolutely critical to the future of the pension industry and to all of us as savers and people who hope eventually to see our retirement, that there is confidence in this sector. I hope our report will assist that process
."

Tory MEP Robert Atkins, an inquiry committee member, is quoted in The Guardian as saying:

"I believe that due to its failure to adequately protect policy holders in accordance with EU legislation, the UK government is obliged to devise an appropriate scheme to ensure full compensation for victims of the debacle.

Having categorically proven that the UK and EU financial redress systems are unsatisfactory and lack the requisite level of security one would expect from the single market, the EU institutions and British government must urgently combine forces to ensure that higher standards of investor protection and security are legally enforced.

This is imperative if people are to be expected to save judiciously for their retirements
."

There will also be a report from the UK parliamentary ombudsman, Ann Abraham, on the Equitable collapse. However, as befitting the "speed" of government processes (doubtless to ensure that Equitable has long been forgotten), this report will not be issued until October at the earliest.

Too little too late for the 1 million policyholders affected by the Equitable scandal.

Maybe they should consider launching a class action?

Is it any wonder that people do not bother to save for their retirement?

How can anyone possibly trust the pensions industry, or the government, to look after their money or their future?

Thursday, June 21, 2007

Credit Card Fraud Decriminalised

Quite a row is breaking out over the revelation that the Home Office has lessened the criminality of credit card fraud.

Victims of credit card fraud can no longer report it directly to the police.

New rules came into force in April, under these rules it is now the responsibility of banks to decide which offences to pass on for investigation.

Given that the banks will want to maintain their reputation for good security, and effective fraud controls, it is unlikely that they will be incentivised to report every single id theft.

Cynics also suggest that the new rules are a method of reducing the crime figures.

In 2006 approximately £430M was lost as a result of credit and debit card fraud in the UK last year.

A Home Office spokesman confirmed that discretion had been handed to the banks, to ensure the police could concentrate on cases "more likely to result in a positive outcome.

The Government is determined to tackle the problem of card fraud, whether the account holder is an individual or multi-million pound organisation and we are working closely with finance and retail sectors along with the police to tackle this crime
."

Nonsense, the banks have no incentive whatsoever to report the failings of their security checks.

This is a green light to criminals, telling them that they can commit credit card fraud with impunity!

Wednesday, June 20, 2007

The Eagle Has Landed

The Eagle Has Landed
Barclays is to abandon its centuries old eagle logo, if the deal with ABN Amro the Dutch bank goers through.

It seems that the eagle, that has adorned Barclays letterheads, branches and all corporate communications since the 1600's has been deemed by the Dutch to be too reminiscent of the Nazi eagle for their taste.

Seemingly Barlcays will work on a new corporate logo, should the deal go through, sans eagle; probably the ABN Amro shield.

Barclays claim that the UK logo will remain the same.

I can't see that being a very bright or practical idea, as it will cause brand confusion and dilute the Barclays image and brand.

Tuesday, June 19, 2007

What Use Are Consultants?

Waste

Those of you who ever wondered what use consultants are, and whether they really represent value for money, should take heart from the findings of the all party Public Accounts committee.

The committee has lambasted the government's waste of £2BN per annum on external consultants, deriding it as "sheer profligacy".

The committee said that given such amounts of expenditure it was "impossible to believe that the public are receiving anything like full value for money".

In 2005-06 the public sector in England spent approximately £2.8BN on consultants, a staggering increase of 33% pct over the previous three years, with central government accounting for £1.8BN.

The bulk of the increase came from higher spending by the National Health Service.

Quote:

"Central government is repeatedly using consultants for core skills, including project and programme management and IT, and is increasingly turning to a select list of suppliers."

Committee chairman Edward Leigh said:

"Departments are often on the phone to consultants without first finding out whether their own in-house staff have the skills to do the job.

Departments routinely do not agree with the consultants any measurable benefits to be expected from the contracts. And consultants are often paid simply on the basis of the amount of time worked and not on what the work has achieved.

What would we say of anyone in private life who dealt with contractors like this? The consultancy firms are truly on to a good thing.

It is impossible to believe that the public are receiving anything like full value for money from this expenditure. In fact, a good proportion of it looks like sheer profligacy
."

Quite!

The consultants know that with this government, they have a prone cash cow begging to be milked to death; the government know that they need not worry about funding the bill, as all they have to do is raise taxes.

Everyone's a winner, except for the taxpayer!

Monday, June 18, 2007

FT Hikes Its Price by 30%

As from today, the FT (the leading printed matter financial news organ) will cost 30% more than it did last week. The FT will now be on sale at news stands at a hefty £1.30 a copy.

This is approximately double the price of most of its quality rivals in the UK quality press. The price hike is viewed by some to be a "bold initiative", considering that it was already the most expensive paper in the newsagents.

Those of you who don't want to pay for the FT, may find this site (www.congoo.com) to be helpful; it claims that it can give you free access to the FT.

Saturday, June 16, 2007

Broken HIPs

The much derided and incompetently drafted Home Information Packs (HIPs) legislation has been given another sound battering, this time by the Royal Royal Institution of Chartered Surveyors (RICS).

RICS has highlighted a loophole which renders the HIPs unnecessary and costly box ticking procedures useless.

New rules put forward in Parliament state that packs must be commissioned when a home is put on the market. However, and here is the clever bit, RICS say that no purchase of the same pack is necessary before exchanging contracts.

RICS state that vendors can exploit this, by completing the sale but never going through with the £400 purchase of a HIP.

Spokesperson Jeremy Leaf said:

"This is another example of rushed policy that fails to meet the needs of consumers and the housing industry.

Unless the Government can show us the regulation that says a property cannot be sold without a HIP, consumers and industry will draw their own conclusion
."

It is a sad reflection of the current government that many pieces of their headline grabbing legislation have been rushed, and have been very poorly drafted.

The irony with HIP's is that Labour have been pushing this idea since 1997. You would have thought that they could have ironed all the problems out in that 10 years.

Evidently not!

Needless to say the Association of Home Information Pack Providers (AHIPP), who of course were relying on all that lovely money that HIPs would have earned them, are not best pleased with the RICS view of reality.

Mike Ockden, Director General of AHIPP, said:

"The allegation made today by RICS, claiming to have found a loop-hole in the latest Home Information Pack regulations, which will not require sellers to produce a HIP at the exchange of contracts, is nothing more than the typical anti-HIP propaganda we have learned to expect.

Following our own investigations into the regulations, this allegation is totally unfounded
."

The astute amongst you will notice that despite his venom, Ockden has not bothered to explain why they dispute the RICS viewpoint.

A cynic might argue that AHIPP, since they were relying on the future income stream, would say anything to guard their income income stream.

I think it is fair to say that, whatever the views of AHIPP, HIPs are in effect so fatally fractured that they will die a death.

Good riddance to bad rubbish!

Friday, June 15, 2007

Mortgage Effectiveness Review

The Financial Services Authority (FSA) is to up the ante on its investigation into the UK mortgage market, with a new focus on those consumers considered most at risk from mis-selling.

This will be the second stage of the FSA's Mortgage Effectiveness Review, and will focus specifically on sub-prime lending and lifetime mortgages.

This shift in emphasis comes at a time when there is increasing concern that lenders are engaging in irresponsible lending to consumers, who might not be able to afford repayments if circumstances change.

These doubtless would be the same lenders who gorged themselves during the endowment mortgage heyday in the 1980's.

Vernon Everitt, the FSA's director of retail themes, said:

"Although there are signs that the UK housing market is coming off the boil, the question is, to what extent are consumers prepared for the consequences of a weaker economic environment?

With recent base rate rises, the ratio of payments to income is creeping up and many fixed-rate deals are coming to an end, potentially increasing the vulnerability of both borrowers and lenders.

So given this climate, all the players in this market clearly need to think through their decisions very carefully indeed. We are, as you would expect, taking these issues seriously and have made debt and affordability one of our priorities.

Initially we are looking at this in respect of more vulnerable groups: the sub-prime market, interest-only mortgages and those taking a mortgage into retirement.

We want to make sure that consumers are not being offered sub-prime rates when they could be eligible for much better prime rates
."

In other words, the level of consumer debt, and the rise in the housing market, make some people desperate and vulnerable to the actions of less than scrupulous lenders.

The question is, what does the FSA intend to do once it has completed its review?

Thursday, June 14, 2007

Slow Down In Housing Market

The UK housing market slowed slightly in May, as housebuyers started to take on board the effects of the recent interest rake hikes by the Bank of England.

The Royal Institution of Chartered Surveyors (RICS) issued its regular monthly report, which said that a balance of +24% of its members reported house prices rising in May, lower than the 29% in April and below the +26% predicted.

RICS spokesman, Jeremy Leaf, said:

"With interest rates expected to rise even higher and some home owners fearing the end of fixed rate deals, affordability conditions are set to worsen across the board and will herald a cooling market."

RICS noted that the effect of the rates rises have had on new buyer enquiries has so far been quite limited, with the absolute level of demand still high in light of buoyant economic conditions.

This modest slow down augurs for a further rate rise, as the Bank of England will wish to temper the housing market further.

Wednesday, June 13, 2007

HBOS Loses Customer Data

HBOS's reputation for professionalism has taken another knock, as it emerged that it has lost a disc holding confidential data on 62,000 HBOS banking group mortgage customers.

As if this were not embarrassing enough, it transpires that the disc was not encrypted.

One wonders quite what their internal audit and IT departments are being paid for, if they do not have procedures in place to ensure that confidential data held on discs is encrypted as a matter or course.

Regrettably, for HBOS, this was not the first time that it has lost customer data. There was also a loss of data in March, we are assured that the second loss was "unrelated" because the data had gone missing in a different way.

So that's alright then!

This month's data breach included names, addresses, dates of birth and mortgage account numbers on a CD-ROM sent by HBOS subsidiary Bank of Scotland to a credit reference agency. It was reported missing when the agency did not receive the expected monthly dispatch of information.

The lost data would enable any self respecting fraudster to have a "jolly time" doing what he does best, namely perpetrate identity theft.

An HBOS spokesperson said:

"The disc would usually be encrypted.

Unfortunately, due to human error on this occasion the usual policy was not followed. We apologise to our customers for this
."

As if this were not bad enough HBOS, for some unknown reason, chose to send the data via the Royal Mail's ordinary service rather than a secure service. This invites theft, as the Royal Mail is notoriously prone to theft and losses.

HBOS said:

"That was a mistake on our part."

Quite!

In March, Halifax building society, another HBOS subsidiary, lost a printout containing data on 13,000 mortgages from an employee's car.

HBOS general manager for group communications, Shane O'Riordain, at the time said:

"Lessons have been learned. We are reviewing our procedures as a matter of urgency."

This was the same month in which HBOS, along with 11 banks, was ordered by the information commissioner to sign a formal undertaking to comply with Data Protection Act principles, after dumping customers' personal data in rubbish bins outside their premises.

HBOs now claim the following:

"Lessons have been learned and we have revised our procedures accordingly," he said. "The other incidents ... are all unrelated. One was the theft of a briefcase from an employee (which has been recovered) and the undertaking referred specifically to the disposal of confidential waste."

Given that banks are forever lambasting their customers over their handling of passwords and personal data, this series of events is pretty pathetic.

Sauce for the goose is evidently not sauce for the gander.

Tuesday, June 12, 2007

Rate Rises In The Pipeline

Those of you who breathed a sigh of relief last Thursday, when the Bank of England chose not to raise interest rates, should take heed from the warning issued by Mervyn King (Governor of The Bank of England).

King, in a speech to business leaders at a CBI dinner in Wales, has put borrowers on notice that there will be further rises in rates. King warned of "persistent inflationary pressures" the result being that the Bank "may need to take further action".

King warned of the dangers of excess debt:

"It is unwise to borrow so much that the repayments are affordable only if interest rates remain at initial levels."

That is a clear message to all, that further rates rises are coming.

King noted that there are inflationary pressures within the system, as there are attempts by businesses to raise prices as spare capacity has been taken up by strong demand stoked by a buoyant world economy, as well as the fastest growth in business investment for almost a decade.

King added:

"There has been some underlying upward pressure on inflation that is in part hidden by the volatility in domestic energy prices."

He said that the Bank's Monetary Policy Committee (MPC) would be watching gauges of spare capacity, of companies' pricing plans, and of inflation expectations.

Quote:

"If these indicators remain elevated, the MPC may need to take further action."

The message is clear, those of you who are heavily in debt need to ensure that your finances can withstand a rise of between 0.5% to 1% in rates in the coming year.

Monday, June 11, 2007

Abbey Launches 100% Mortgage

Abbey has announced that it will launch a new range of 100% mortgage offers, as from June 13, with maximum lending of up to £500,000 and no higher lending charge.

The offers will be available at 6.29% as a two year tracker, from 6.35% as a two year fix, 6.99% as a three year fix and 6.79% as a five year fix.

Abbey expects the product to mainly appeal to first time buyers, as well as the recently divorced getting back on the housing ladder.

I trust that the launch date, 13th June, is not a bad omen for either Abbey or their clients.

Saturday, June 09, 2007

PINsentry

In the war against on line fraud and id theft, Barclays have announced the launch of PINsentry.

Barclays customers who use their online bank account, to set up payments to new third party accounts, will begin using PINsentry devices in the latter part of this year.

The devices will be used together with the customer's normal debit card and PIN, to authenticate their identity at log in and for making certain payments. This will replace the need for passcodes and memorable words.

Over half a million customers will be automatically sent free PINsentry card readers and instructions by the end of the year, with this number increasing further as more customers are added to the service.

Customers who simply wish to use online banking to view their accounts and pay bills to established payees, will be able to continue to use online banking as normal without the need for PINsentry.

It is a good idea, and unfortunately a necessary one. Quite how long it will take for the fraudsters to find a way around the new controls is not clear.

Friday, June 08, 2007

Bleak House

The Times yesterday painted a bleak future for the housing market and for first time buyers. It is estimated that by 2026 the average house price will be 10 times the average person's salary.

Quote:

"The next generation of first-time buyers will face house prices equivalent to ten times their average incomes, putting home ownership out of reach for the majority of young people, a new government agency says today.

The average home in England currently costs seven times annual earnings, but that is set to rise to ten times by 2026 even if the Government succeeds in its aim of sharply increasing the rate of homebuilding, the analysis reveals.

Campaigners said that the developing crisis would "stop social mobility in its tracks", and force young people to live in overcrowded conditions and take out ever-riskier mortgages.

The stark warning comes from the National Housing and Planning Advice Unit (NHPAU).."


How has this sorry situation come about?

Aside from the very obvious points that the UK is not building enough new houses, and that the rising population is placing an intolerable burden on the scarce housing stock, there are also other factors at play here:
  • A rise in single person households


  • The greater wealth of "younger" buyers, and their greater aspirations, means that they leave home earlier in their lives


  • The elderly are no longer living with their children, and are often (before being "homed") living in the original family homes


  • There has been a rise in multi house ownership
Aside from an increase in housing stock, which is not in any bank or property owner's interest as it will push prices down, there will need to be a change in social attitudes, customs and practices wrt to the above.

This is unlikely to happen in the short term. Hence the situation looks very bleak indeed for first time buyers.

Thursday, June 07, 2007

Interest Rates

The Bank of England will announce its decision on interest rates in the next couple of hours.

Pundits do not expect any change, this month, on the current rates of 5.5%. However, it is expected that there will be at least one further rate rise this year.

The consumer price index (CPI) is currently at 2.8%, well above the 2% target that the government has set.

The effect on the housing market will not be pleasant, should there be another ate raise.

I cannot help but observe that had Gordon Brown not removed house prices from the inflation index, then much of this pain could have been avoided. Interest rates would have been raised some time ago, thus slowing the housing market down long before the current excess levels were reached. This in turn would have prevented people from overburdening themselves with debt.

The market correction, as and when it comes, may well be painful for many.

Wednesday, June 06, 2007

The World's Costliest Airline

The World's Costliest Airline

Martin Waller in today's Times takes up the point that I raised a few days ago about the pricing disparity between BA and Iberia for the same flight to Barcelona.

He notes that BA's explanation for this disparity -

"BA claims that this is because it has the cost of the flight, while Iberia is merely issued with its own allocation of tickets."

- hardly makes much sense.

He then raises the question as to what will happen to the BA/Iberia flight prices, in the event that BA make a bid.

Will BA drop their prices or will Iberia raise theirs?

Maybe this very valid question should be raised with the Office of Fair Trading?

Rate Hikes Yet To Be Fully Absorbed

The recent interest rate hikes by the Bank of England have yet to be fully absorbed by the UK housing market.

That at least is the conclusion of the Royal Institute of Chartered Surveyors (RICS).

Quote:

"The full impact of current rate hikes on the housing market should not start to appear until after the summer."

It would seem that there are indications that there is some cooling off in the housing market. The Land Registry survey for April showed that prices are being buoyed by London, while house prices fell in four English regions. Figures from the Bank of England showed mortgage approvals fell for the third month running in April.

It is expected that the Bank of England will raise rates at least one more time this year.

Belt tightening time is upon us.

Tuesday, June 05, 2007

RBS Puts The Boot In

The Royal Bank of Scotland has put the boot in to Barclays bid for ABN Amro Holding NV, by claiming that the Barclays bid would cost 9,000 jobs net.

RBS said its proposed deal would lead to a maximum of 2,000 job losses in Britain, but the Barclays deal would lead to 11,000 losses.

RBS also hit the headlines this weekend, when its cash machines went off line; leaving millions of RBS and NatWest customers in the UK unable to withdraw money.

Although they are now back on line, Royal Bank of Scotland has refused to explain what happened.

The problems started at around 10pm on Friday, when a system failure meant that 13 million customers of RBS and NatWest were unable to use ATMs to take money out of their account. The problem extended to customers trying to use other banks' machines to access funds.

A spokesperson for the banking group said:

"It would be inappropriate to go into any further details due to security implications."

Derek French, director of the Campaign for Community Banking Services, said:

"It is appalling for a bank to be off-line and more importantly unable to deliver cash over a weekend at which point branches will be closed."

Another nail in the coffin of the reputation of British banks.

Monday, June 04, 2007

Call To Close Pension Fund Loophole

Gordon Brown and the six Labour deputy leadership contenders face calls by the GMB to close the legal loophole which enables "private equity racketeers" (as the GMB calls them) to pass on £2BN of pension liabilities to the taxpayer.

The GMB wants the UK laws that allow private companies to asset-strip failing firms, before winding them up with pension-fund liabilities left unpaid, scrapped.

Saturday, June 02, 2007

The World's Costliest Airline

The World's Costliest Airline
Here's a little conundrum for you.

What's the difference between the following?

A business class return air ticket for two people (Gatwick to Barcelona), flight to be taken in July, purchased via Iberia.

A business class return air ticket for two people (Gatwick to Barcelona), flight to be taken in July, purchased via BA.

In terms of the departure times, airport terminals, lounge facilities and airline operating the aircraft...no difference whatsoever.

The flights are operated by BA.

However, here's the rub.

The price of the two return tickets, if purchased via Iberia will set you back £455.80.

The price of the two return tickets (for the identical flight), if purchased via BA will set you back a stonking £1165.80 (256% of the Iberia price).

Don't believe me?

Try it for yourselves:

-www.ba.com

-www.iberia.com

Could BA please explain this differential?

Oh, and by the way, BA own 10% of Iberia.

Friday, June 01, 2007

Gordon's Legacy

Gordon Brown
As Gordon Brown limbers up to change jobs, after holding only one office of state over the last 10 years (Chancellor of the Exchequer), Grant Thornton have issued a timely reminder as to his tax legacy.

Brown, during his stint in office, increased the tax burden by an equivalent ten pence on the basic rate of income tax.

Additionally, the UK is now lumbered with more than double the number of pages in its tax code, increasing from 4,555 to just under 10,000 since 1997.

The number of higher rate taxpayers now stands at 3.5M, an increase of 58% since 1997 when Labour came to power.

Francesca Lagerberg, head of Grant Thornton's national tax office, said:

"Silently the tax take continues upwards with fiscal drag raking in yet more revenue year on year.

If income tax allowances had risen in line with earnings, then the average taxpayer would achieve tax freedom a lot earlier in the year.

Despite headline announcements in this year's Budget of dropping the basic rate of income tax, aligning national insurance contributions and reducing mainstream corporation tax, the reality is that other increases will lead to a maintenance of the status quo
."

Aside from Brown's economic legacy calling into question his qualifications to be an effective, dynamic and forward thinking Prime Minister, there is also one other very obvious hole in his CV.

He has never held any office of state, other than that of Chancellor, he has been in exactly the same job for 10 years.

Where was his ambition?

Where is his experience of the other major offices, eg Foreign Secretary?

He may well not be up to the job of Prime Minister, nor will he let go of the Treasury so easily (as his successor will soon discover).