Bye bye Financial Services Authority (FSA)

In its place will be the Financial Conduct Authority and the Prudential Regulation Authority.

Help to Buy scheme

This scheme is made up of two parts.

The first allows buyers to put down a 5 per cent deposit on a new home, with the Government putting up 20 per cent in a shared equity scheme. This loan is interest-free for the first five years. After that it will attract a 1.75 per cent payment, which will rise annually by inflation plus 1 per cent. The loan will be repaid once the home is sold.

The second part is a mortgage guarantee the government will offer to lenders, on new or old homes, for families who are creditworthy but cannot afford a big deposit. If a borrower’s property is repossessed, the Government will bear a proportion of the losses, with the lender taking the rest.

Bank of Ireland pay customers to leave

A number of Bank of Ireland customers affected by the recent increase to tracker mortgages have been offered £1,000 to leave the bank.

The troubled lender attracted much criticism when it announced plans to increase the differential on residential and buy-to-let mortgages because of a need to hold more capital.

Around 13,500 customers have been affected by the changes with some customers now facing a doubling of their mortgage payments.

The Bank of Ireland has now confirmed that a number of customers affected by the rate rise have been offered £1,000 to leave the lender.

http://www.mortgagesolutions.co.uk

What fun.....

Bank of Ireland increasing tracker rate when BoE has not

Bank of Ireland and Bristol & West customers with tracker mortgages are having their rates increased - despite the fact that the Bank of England has not changed it's rates. The rate would now be 3.99% above the Bank rate!

They seem to be claiming that some small print lets them do this. Doesn't sound like they are treating the customers fairly to me.

Bank of Ireland is pulling out of the British mortgage market, except through its joint venture with the Post Office which it continues to lend through. So I guess the Post Office will come in for some stick also.

Bank of England Negative Interest Rates ?

A recent suggestion by deputy governor Paul Tucker that the Bank of England could consider paying a negative interest rate on deposits lodged with it by high street lenders could have implications for the mortgage market, if enacted. Although the Bank remains unlikely to adopt such a policy any time soon, we agree with commentators that it could put downward pressure on savings rates, and make conditions more challenging for those lenders that rely on retail deposits to fund mortgage activity.

Mr Tucker made his comments about negative interest rates when addressing MPs on the Treasury select committee last week. "I hope that we will think about the constraints of setting negative interest rates," he said. "This would be an extraordinary thing to do and it needs to be thought through carefully."

The deputy governor argued that charging banks and building societies interest on deposits they held at the Bank – in effect, imposing a negative interest rate – would incentivise them to reduce those deposits, and increase lending to small and medium-sized businesses.

http://www.cml.org.uk

Building Society market share up

Building societies increased their share of the mortgage market in 2012, after lending by societies and other mutual lenders increased by 30% last year.

FCA given power to instantly ban products

The new Financial Conduct Authority (FCA) will have the power to instantly ban unsuitable financial products without consultation. In a guidance document published yesterday, it was also revealed that the new authority, which will be replacing the Financial Services Authority (FSA) early next year, will be able to impose tougher penalties for financial misconduct, pursue criminal prosecutions and make supervisory judgements about a firm's business model and forward-looking strategy. "The FCA offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services," said FSA managing director, Martin Wheatley. The guidance was welcomed by the Council of Mortgage Lenders, the Building Societies Association, the Investment Management Association and the Association of British Insurers. Consumer Focus warned, however, that "the test of the FCA will be whether it prevents toxic products such as PPI, mortgage endowments or split capital trusts in the future. Will it intervene early or will pressure from industry delay action? A model where customers are ripped off, and then awarded compensation years afterwards, is expensive and wasteful and serves consumers badly."

Dramatic rise in mutual lending

Gross mortgage lending by building societies amounted to £3 billion during August, latest statistics from the Building Societies Association (BSA) have revealed. Total lending from mutuals rose by 40% compared with August 2011, whilst savings balances held with building societies increased by £1,158 million, suggesting a growing number of savers prefer to place their finances with mutuals rather than banks. Building societies took a 23% market share in August, 16% higher than in August 2011. Adrian Coles, director-general of the BSA, said: "Lending by mutuals grew substantially in August compared to the same month last year which continues the trend of increased levels of lending activity by mutuals over the year so far. Lending by banks however fell by 13% in August, which follows a 9% reduction in July. Savings balances at mutuals were up significantly compared to August last year. With consumer price inflation on a downwards trend, the pressure on household finances eased somewhat allowing more money to be saved. The changes in deposits may also reflect consumers switching their accounts over to mutuals over the past two months as people opt for better service and a more ethical way of banking."

Hooray, people are finally realising that mutuals are a good idea.

Call for payday loan regulation

The chair of the Consumer Credit Counselling Service, Lord Wilf Stevenson has called for the payday loan sector to be regulated. The Labour peer claimed that amendments would be made to the Financial Services Bill, by the Government, in order for the sector to be regulated over the next year, should it fail to self-regulate. Lord Stevenson said: "The amendment calls on the financial authorities to come up with a scheme for regulating high-cost loans, or payday loans, within a year. The truth is that the people who earn least in our society have the most need to have access to short-term borrowing such as payday lenders so they can just get through the year."

http://newsbulletin.moneyfacts.co.uk/dailynewsbulletin_ds.htm

Hard to believe payday loans are not already regulated.

Direct Line Insurance

Are being forced to sell their insurance side.

Mortgages and Savings will remain under RBS.

Mortgage lending from mutuals soars

Mortgage lending by building societies rose significantly during July according to latest figures from the Building Societies Association (BSA). Mutuals lent a total of £3.1 billion to mortgage customers last month, 44% more than in July 2011 and 14% more than in June. According to the BSA, 26% of all UK mortgage approvals were from building societies, 32% higher than the previous year, suggesting more people are turning to mutuals following various scandals in the banking sector. Market share from building societies rose to 24% in July, a rise of 17% compared with the same period last year. Savings balances also boomed to over £1 billion in July, much higher than the same month last year, although the BSA were quick to point out that savings flows tend to vary from month to month. Adrian Coles, director-general of the Building Societies Association, said: "Mutuals are currently enjoying a sustained increase in lending activity, and an increase in deposits from savers. Lending activity by mutuals has been growing strongly on a year on year basis for some time now, and in July gross lending rose again by a healthy 44%. At the same time lending by banks fell by 9% in July. As a result mutuals continue to take market share, up to 24% in July, well above the 17% figure for the same month on 2011."

moneyfacts.co.uk

Freddie Mac says 30-year fixed mortgage plunges below 3.5%

The typical rate on a 30-year fixed mortgage tumbled below 3.5% for the first time this week, Freddie Mac said -- the latest record low in a trend that has fired up refinancing but done little to ignite housing demand.

Asda makes financial services play

UK supermarket giant Asda has re-branded its personal finance arm as it prepares to become the latest retailer to take on traditional high street banks.

Government publishes vision for mutuals

The Government has published its vision of the building society sector, stating how recommendations of the Independent Commission on Banking (ICB) will apply to the sector. The document confirmed the Government's support for building societies and said it will consider removing any potential lending and funding restrictions. Graham Beale, chief executive of Nationwide Building Society, said: "As the largest building society, Nationwide is unique on the high street, providing a mass-market, mutual challenge to the banks across the full range of retail financial services. The Government's commitment to review and revise building society legislation to support these aims is a positive step forward."

moneyfacts.co.uk

RBS customers are still suffering

Thousands of RBS customers are still being hit by problems with their accounts - nearly a fortnight after the banking group's computers went into meltdown. They include many of the 1.9 million customers at its subsidiary Ulster Bank, who still have no idea when their nightmare will end. A fault in its computer system, which was being supervised in India, plunged RBS into chaos on June 21. It affected 7.5 million of the bank's retail customers. Many did not have wages paid in, and others missed mortgage and loan payments after direct debits were not paid.
[Daily Mail page 45 - 4.7.12.]

Banks to improve saving protection publicity

New rules mean banks, building societies and credit unions will have to prominently display posters and stickers in branches and on websites explaining which deposit guarantee scheme applies to their customers' deposits. The Financial Services Authority (FSA) wants the change to take effect from 31 August this year. After this date, if customers are using the UK branch of a foreign bank from the European Economic Area (EEA), posters will have to set out that those customers are not covered by the UK's Financial Services Compensation Scheme (FSCS), but by the bank's national scheme instead, which will need to be specified. "Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure," said Andrew Bailey, FSA director of UK banks and building societies. "Too many people assume that because their branch is located on a local high street in the UK, they are covered by the FSCS. This is not true for UK branches of EEA banks where the home country's deposit guarantee scheme applies." The regulator has published prescribed wording in order to assist the various banks, building societies and credit unions.

moneyfacts.co.uk

Banks increase SVRs

Five banks increased their standard variable rates (SVRs) yesterday, with more than one million homeowners to be affected. Bank of Ireland, Clydesdale and Yorkshire Banks, Co-operative Bank, Halifax and Royal Bank of Scotland/NatWest all increased their SVRs. The bank with the most affected customers is Halifax, with around 850,000 customers hit by the 0.49% increase, with the SVR rising to 3.99%. Estimates by Which? suggest that the upturn in SVRs could add £300 million to the UK's mortgage bill over the next 12 months. "Our advice to anyone struggling with their mortgage repayments is speak to your lender straight away," Which? chief executive, Peter Vicary-Smith said.

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GE boss has UK's banks in his sights

[Sunday Telegraph Business page B3 - 25.3.12.]

GE, the US power and industrial conglomerate, is to open its first British bank in the biggest launch into the UK banking sector since the financial crisis. The new internet bank - to be called GE Capital Direct - will aim to attract billions of pounds of savings in its first year of trading. It wants to increase the size of its £10 billion-plus UK corporate loan book. The launch amounts to a declaration of intent on high street incumbents such as Lloyds Banking Group and Santander plus relative newcomers including Virgin Money and Metro Bank, with GE expected to offer keener interest rates to long-term savers due to the strength and size of its balance sheet.

Lenders increase SVRs

Clydesdale and Yorkshire Banks have announced an increase to their standard variable rates (SVR) for residential mortgage customers. The increase is to come into effect from 1 May 2012, and will see the banks' SVRs rise from 4.59% to 4.95%. The banks cited the increased costs associated with wholesale borrowing as the reason for the increase, while pointing out that it was the first change to the SVRs in three years. A customer with a £100,000 mortgage will see their monthly bill increase by around £30 per month. "This change will help enable us to continue to support savers and maintain the competitiveness of our deposit rates," commented Steve Reid, retail director.

moneyfacts.co.uk

ISAs overtake pensions

For the first time since 2001/2, Britons saved more into stocks and shares ISAs than personal pensions last tax year, AJ Bell has said. Figures from the Office for National Statistics released today showed that £14.28 billion was saved into personal pensions (excluding stakeholder) in the 2010/11 tax year compared to £15.8 billion saved into stocks and shares ISAs in the same tax year. This compares with £12.5 billion being subscribed to stocks and shares ISAs and £14.4 billion contributed to personal pensions in 2009/10. AJ Bell's Billy Mackay said it was a 'ticking timebomb for the UK'. "The Government needs to do everything possible to make pensions attractive and simple," he added.

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