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PPI victory as banks stop sales

Some of the nation's largest High Street banks have agreed to stop selling the worst type of rip-off Payment Protection Insurance in a victory for campaigners.

The City watchdog announced today that much-derided 'single premium' PPI will no longer be sold with unsecured loans from February by five banks: Alliance & Leicester, Barclays, the Co-operative Bank, Lloyds Banking Group (which includes HBOS) and RBS/Natwest.

This is Money has been campaigning against PPI for the past three years.

With single premium PPI, the cost of the insurance is taken as a lump sum and added to the cost of a loan; it attracts interest for the length of the loan term and is extremely expensive relative to the sum borrowed.

These banks will now offer 'regular premium' PPI instead, which consists of regular monthly charges for covering repayments to a loan or credit card.

The Financial Services Authority said it expects other companies selling single premium PPI to 'take note' of these developments.

Although it recognised PPI could be useful in some instances, especially in the current economic climate, it said it remains concerned over the standard of single premium sales.

Jon Pain, the FSA's managing director of retail markets, said: 'A PPI product can be helpful for customers wanting protection on a specific credit agreement, as long as the policy is sold appropriately.'

Customers being sold PPI should be told how the product works, what it covers and how much it costs. Loan approvals should not be dependent on the purchase of PPI and customers should not feel pressured into taking it out.

PPI is designed to provide a safety net in times of unemployment or illness – when a borrower may not be able to make their repayments – but it is often sold inappropriately and greatly adds to the cost of a loan.

The Financial Ombudsman said it was dealing with 500 complaints a week last year over PPI, arising from an estimated rip off of customers to the tune of £1.4bn a year.

The Competition Commission also said last year that lenders could be banned for selling PPI with loans as there is a lack of competition in the market and customers are losing out.

However, banks and insurers hit back by saying borrowers would be left vulnerable in times of economic hardship if such a drastic change was brought in.

www.thisismoney.co.uk

The Britannia Building Society is to merge with Co-operative Financial Services (CFS)

Some branches may close if they are too close to each other but the two mutuals have promised there will be no compulsory redundancies. The new business will be a subsidiary of
The Co-operative Group and Britannia members will become Co-op members.

The merger will only be possible if a new law allowing mergers between mutuals is passed in March.

The Building Societies (Funding) and Mutual Societies (Transfers) Act, known as the Butterfill Bill after its sponsor Sir John Butterfill MP, would give building societies greater freedom to merge with other companies as well as changing the current restrictions on the way they are allowed to raise money. The deal would also have to be approved by members.

In a statement, the two mutuals said they would continue to have a significant presence both in Manchester, where CFS is based, and in Leek in Staffordshire where Britannia is based.

They say the customer-owned "super-mutual" will be an ethical alternative to shareholder-owned banks. "Owing to the damage done by the credit crunch, people have been crying out for a new way of doing business with a financial organisation of substance that truly has their interests at heart," said CFS chief executive David Anderson. "This merger will create that organisation and we'd hope to attract many thousands of new customers as a result." The merged business would have nine million customers, more than 12,000 employees, 300 branches and 20 corporate banking centres. In towns in which the merged group ends up with two or more branches, some of them may close, but there has been a promise that there will be no compulsory redundancies.

Callcredit restructures group

Callcredit Information Group has restructured its businesses it announced today.

The group, owned by Skipton Building Society and led by chief executive Mike Green, is creating two customer facing divisions: marketing solutions and credit solutions.  Credit solutions, headed up by John McAndrew, includes the businesses Callcredit, DecisionMetrics and Legatio. Graham Lund (pictured) is promoted to managing director of Callcredit.

Marketing solutions will be headed up by Caroline Worboys and comprises EuroDirect, BroadSystem and GMAP. The division will supply prospecting and customer retention information services to consumer-focused businesses.

McAndrew said: "the Callcredit Information Group has doubled in size over the last 12 months through organic growth and acquisitions. Increasingly our customers are looking for complex solutions comprising information, analytics, models and software. Whilst we will maintain the unique service ethos, flexibility and innovation of the individual businesses, this restructuring enables customers to receive comprehensive and strategic credit, verification and marketing solutions from a one stop shop".

He added: "The next two years are extraordinarily challenging for our customers. Legacy processes have proved not to be optimal and lenders are telling us that better information and new risk methodologies are fundamental to them knowing their customers and lending responsibly in these tough times.  These changes will enable us to help our customers find and keep profitable customers more effectively in this changing climate."

www.credittoday.co.uk

HomeBuy Direct

 

Information taken from www.communities.gov.uk

Scheme is due to start in early 2009

What is HomeBuy Direct?

HomeBuy Direct is a new shared equity scheme designed to help up to 10,000 First-Time Buyers into affordable home ownership. The scheme will also help participating house builders by enabling more First-Time Buyers to purchase their newly built properties. The scheme has been allocated £300m of Communities and Local Government funding.
The scheme will be offered on specific new build properties brought forward by developers. Buyers will be offered an equity loan of up to 30 per cent of the purchase price, co-funded by Government and the developer.   

Why have you introduced it?

We recognise the difficulties being faced by the house building industry and First-Time Buyers in the current housing market, where the global supply of credit has led to the most severe market conditions since the early 1990s.  
Evidence collected by the Regional Development Agencies (eg the recent survey of house builders undertaken by the South East England Development Agency - SEEDA), English Partnerships, The Home Builders Federation and others has demonstrated the impact on house builders - who have experienced a reduction in new reservations - and on First Time Buyers, who have struggled to raise the deposits they need in the tough mortgage market conditions.
HomeBuy Direct will respond to the current market conditions by:

• making more affordable homes available to First-Time Buyers who are currently priced out of the market, due to the higher cost of obtaining a mortgage or the need to provide a larger deposit
• providing a targeted boost to the housing market by stimulating more transactions, and      
• helping to maintain the capacity of the house building industry to respond when market conditions improve. This will, in turn, help us to achieve our long-term housing supply targets.

How will it work?

Once launched, HomeBuy Direct will operate as follows:

• Developers will shortly be invited to submit bids to the Housing Corporation to provide HomeBuy Direct on selected properties and sites. The Corporation will assess the bids according to published criteria, and will have regard to regional housing strategies and any additional evidence submitted by the Regional Development Agencies about current housing market challenges.
• As with the other HomeBuy products, the 23 regional HomeBuy Agents will be the first point of contact for First-Time Buyers who are interested in applying for the scheme.  
• General eligibility for HomeBuy Direct will be the same as for the other HomeBuy products (ie households earning less than £60,000 who could not afford to buy a suitable property on the open market without assistance in the area where they live or work).  
• Applicants will also be subject to an affordability check, designed to assess the size of equity share that they are able to afford and sustain.  
• If applicants qualify for the scheme, they will be invited to choose one of the HomeBuy Direct properties brought forward by the developers.  
• The purchaser will receive an equity loan of up to 30 per cent of the purchase price of the chosen property. The equity loan will be co-funded on equal terms by Government and by the developer supplying the property. The purchaser must contribute the remaining equity (a minimum of 70 per cent), through their mortgage (which could be obtained from any lender regulated by the Financial Services Authority) and any deposit.
• The equity loan will be free of charge to the purchaser for the first five years. From year six, a 1.75 per cent charge will be levied. This rises at RPI+1 per cent each year.
• Purchasers can redeem the equity loan in installments, purchasing up to 100 per cent equity after their initial purchase by buying additional equity at the market rate.
• Buyers will be able to sell their HomeBuy Direct home on the open market. When they do so, they will repay the equity loan by way of a share of the sale proceeds. This repayment will be shared equally between Government and the developer.
• If the value of the property has increased by the point of sale, the buyer, the developer and Government will all share in this increase. If the value of the property has gone down, Government and the developer will only share the sale proceeds that are left over once the mortgage has been repaid. This provides the buyer with greater protection against negative equity. 

Who will it help?

HomeBuy Direct will help:

• First-Time Buyers
  The scheme is targeted at First-Time Buyers who cannot afford to buy a suitable property on the open market without assistance in the area where they live or work. This may be due to the higher cost of borrowing at present, or other factors. Depending on the bids we receive from developers, we expect to be able to help up to 10,000 First-Time Buyers through HomeBuy Direct.
• House builders
  Current market conditions and lack of mortgage liquidity are impacting heavily on the house building industry. There is a long-term public interest in maintaining the capacity of the industry to respond with increased supply when the housing market recovers. The scheme will help participating house builders by enabling First-Time Buyers to purchase their properties (by offering purchasers a better deal than they would otherwise have received).
• The housing market
  First-Time Buyers are one of the key drivers of the housing market. By assisting First-Time Buyers to purchase, HomeBuy Direct will provide a targeted boost to the market. This will encourage developers to build more to meet the extra demand.

Who will be eligible?

General eligibility for the scheme is the same as for our other HomeBuy schemes (ie households earning less than £60,000 who could not afford to buy a suitable property on the open market without assistance).
Although the scheme is targeted at First-Time Buyers, HomeBuy Direct could also help people who have previously owned properties but are now unable to buy without assistance, for example in the case of relationship breakdowns or families who are over-crowded in their existing homes.

Web 2.0 and Retail Banking: Less Hype Equals Opportunity

Web 2.0 is one of the most misused and abused terms in business today. While consumer expectations advance at a fast pace, a gap between consumer expectations and bank delivery grows. Without a change in strategy, this delivery gap will widen and threaten the bottom line, according to a new report, Web 2.0 and Retail Banking: Less Hype Equals Opportunity from Celent, a Boston-based financial research and consulting firm.
Key findings of the report include:
• Celent defines Web 2.0 as the tipping point in the evolution of the Internet, where consumer behavior and activity and their enabling technology emphasize the user experience and capabilities as engaging, interactive, and collaborative. Web 2.0 represents a departure from the aspects of much of the Internet's legacy roots of one-way communication and static, desegregated data. Absent the hype and technobabble, Web 2.0 might simply be characterized as "the dynamic Internet" or "the interactive Internet."
• Banks can realize the untapped opportunity Web 2.0 provides by:
1) Realizing Web 2.0 is not a specific technology; rather, it is a shift in consumer behavior (largely online) and the technology supporting it.
2) Understanding the drivers of the behavior shift as well as the behaviors and expectations of post-Web 2.0 consumers.
3) Recognizing that the gap between traditional banking products and services and the expectations of the post-Web 2.0 consumer is significant, and it grows every year the bank does not evolve.
4) Creating a roadmap to transition the bank's products, services, and marketing and sales methodologies to remain relevant to a rapidly evolving consumer population.
5) Accepting that-though some banks will not change, and still continue to exist-those that can evolve their product and services offerings to be on par with and relevant to an evolving consumer population will see the greatest returns.
6) Applying a smattering of pixie dust in the form of add-ons or queues such as charts, or participating in a social network, will move the needle, but decades of consumer evolution require looking at the bank's product and services in a new way.
• Banks have not been on the leading edge of online consumer sales. Consumers have continued to change, and so have banks, but at a much slower rate. While consumer expectations advance at a faster pace than banks can support, the gap between expectations and delivery grows, threatening many banks' bottom lines.
• Generation Y's expectations of the retail experience (online and offline) have been shaped by the Internet. The wise retail banker will look at this segment's needs and begin a transition plan to ready the bank to serve them. Without a change in strategy, this delivery gap will begin growing at a faster pace, particularly as Generation Y-which will include 84 million US consumers in 2010-becomes a more important market segment for banks. Combined with the following generation, dubbed Generation Z, these groups will represent over half (53%) of the US population in 2020 and nearly two-thirds (64%) in 2030.
• Although Web 2.0 will have the greatest impact on the bank's marketing and sales strategy, the impact of Web 2.0's enabling technology will be great. Addressing consumers' broadening expectations will require a cultural shift within the bank as well as a technical one. Where the experiential side of Web 2.0 presumes information transparency and richness as well as collaboration, it will impact system design and system integration. The shift in design patterns and methodologies will benefit the end consumer and internal bank staff, and in time will help the bank deliver new products and services faster and at a lower cost (based on the increasing share of standards-based development).

www.bobsguide.com

UK looks to become a global provider of Islamic finance

A government organisation is looking to educate financial institutions in a bid to help the UK become a global provider of Islamic finance.

UK Trade & Investment, which incorporates the work of the Foreign & Commonwealth Office, has leant its support to a breakfast briefing hosted by the Association of Corporate Treasurers.

The aim of the briefing is to give financial companies more understanding of Islamic finance by explaining whom it applies to, how it can complement existing financial services strategy, and what the benefits are.

Sharia Islamic law forbids the practice of making money from money, such as charging or paying interest.

Sharia-compliant mortgages involve the bank buying the property with the buyer then buying it back and renting it at a slightly inflated price. Buyers also have to be sure that the money the bank is using to buy the property has come from permissible sources.

The sector is currently thought to be worth $500bn (£294bn) and it is predicted the sector will grow by a further 15% per annum over the next few years.

Andrew Cahn, chief executive of UK Trade & Investment, says: “In these tough times it's more important than ever that we make the most of growing sectors like Islamic finance.

"That's why it is important the UK's financial industry provides an open door and positions London as a leading western financial centre for Islamic finance.”

Richard Raeburn, chief executive of ACT, says: “A reduction in funding options with markets offering continually more expensive rates means that seeking alternative funding away from the traditional routes is an increasing trend.

"Islamic funding may not have been at the forefront of borrowers’ minds but the credit crunch has made an understanding of this market essential.”
www.mortgagestrategy.co.uk

edeus rumoured to be going into administration

Rumours are rife that edeus has gone into administration and that chief executive Michael Bolton has been made redundant from the firm.

Managing director Alan Cleary is thought to still be at the lender.

Nobody from edeus was available to comment.

edeus launched into the mortgage market in a blaze of glory in July 2006 with Michael Bolton and managing director Alan Cleary (both former HBOS employees) at the forefront of the firm.

The duo assembled an all star team from across the industry and were even
one of the first firms to adopt ‘eu’ at the end of the firm's website and email
address.

The new lender was an overnight success and edeus soon became the fastest growing new entrant the mortgage market had ever seen.

But the freeze in the credit markets quickly put paid to the ultimate Bolton and Cleary dream ticket.

edeus was quick to retaliate to market conditions and after successfully recruiting over 100 staff from rival lenders soon had to put out the fire with a swathe of redundancies in November last year.

By April this year another 50 jobs had gone to the wall.

In July 2008 it started to offer its now renowned and since copied Golden Goodbye offer to borrowers on its books. It also started to offer structured savings products from Newcastle Building Society.

Bolton and Cleary unveiled the name of their new lender edeus in July 2006, officially launching in September 2006.
Bolton said at the time the firm had been looking for a name that emphasised innovation, that was challenging and “would echo our core brand values of excellence, service, quality and speed”.

www.mortgagestrategy.co.uk

Not such a good idea after all?

With the nationalisation of the Bradford & Bingley, the last of the demutualised building societies has lost its independence.

Some people have been tempted to argue that this proves that converting from a building society to a bank was always a bad idea.

What looked like a good way of expanding business and becoming a modern, thrusting, go-getting organisation for the modern age (in other words, a bank) became something different - a new and exciting way to lose money.

But John Wriglesworth, an analyst of building societies for the investment bank UBS in the 1990s, and later a senior executive at the Bradford & Bingley, sees things differently.

"The reason the demutualised societies have gone has been due to investors having panic attacks," he said. "It has been a self-fulfilling, cataclysmic spiral into the abyss."

Way back when

Just 11 years ago, demutualisation among building societies was all the rage.

The year 1997 marked a sea change for a movement of safe and sound financial organisations, most of which had started up in the 1800s. One after another some of the biggest names jumped ship.

The Abbey National had struck out on its own back in 1989 to become a bank and, overnight, it converted its savers into shareholders. But with the Cheltenham & Gloucester agreeing to sell itself to Lloyds bank in 1995, the dam burst. Within the space of twelve months in 1997, the Alliance & Leicester, Halifax, Northern Rock and the Woolwich, all well known mortgage lenders, decided they wanted to be banks as well.

The Bristol & West jumped directly into bed with the Bank of Ireland that year, and two years later the Birmingham Midshires did the same with the Halifax. By the year 2000 the Bradford & Bingley was the last to join the stock market.

Adrian Coles, of the Building Societies Association (BSA), disapproved of all this at the time, but does not hide his amazement at recent events. "It has been utterly, unbelievably, astonishing," he said. "Seeing the swift disappearance of the former societies in the firestorm, which I don't claim to have predicted, has also been astonishing."

No guarantee

In fact the B&B directors campaigned against converting to be a bank, but were defeated after a saver from Northern Ireland, Stephen Major, succeeded in forcing a vote on the issue among members the year before.

"It's unfortunate but that's the way these things go," he told the BBC regretfully.

"Nine years ago we didn't think about credit crunches or that building societies or banks could go bust.

"There's no guarantee it wouldn't have happened anyway," he added.

According to the BSA, the total value of the payouts in 1997 amounted to £36bn in shares and cash into demutualisation. The B&B members were simply too keen to cash in on the value of their society, and so it went the same way as the other societies.

Share options

So why did all this happen?

Until the mid 1980s building societies dominated the mortgage lending business, more or less as a cartel. That changed with the 1986 building societies act, which also paved the way for demutualisation.

The house price boom of the mid and late 1980s alerted the banks to the rich picking to be had in home loans, as well as selling endowment investment policies, house insurance and, so they thought, estate agency.

They also recognised that the quickest way to get a large slice of this profitable business was to buy up an existing lender. And according to John Wriglesworth, directors of building societies were only too keen to join them. "They used words like 'freedom to compete' and 'access to capital,' but the main reasons were excessive pay, share options and testosterone".

Investment banks from the City and Wall Street did their best to speed up the process, touring the boardrooms of the larger building societies, convincing their directors that now was the time to break the mould and demutualise.

The fact that these investment banks often made large fees as advisers to the eventual flotations or takeovers was not a coincidence.

Funding

For the past decade the banks, building societies and other specialist lenders have all taken part in the biggest house price, and mortgage lending, boom in the UK's history.

One thing that has helped the banks in particular has been their ability to borrow money from other financial institutions, rather than just from savers, to fund their mortgage lending.

Building societies are restricted by law to funding just 50% of their lending this way and the average among societies is much less, at about 30%. It is this borrowing, and the current difficulty in repaying it, that lies at the heart of the problems that have been experienced by the Northern Rock, Halifax and now the B&B.

"With hindsight they raised more money than they would have done had they stayed as building societies and with the credit crunch that now looks like a mistake," said Adrian Coles.

But John Wriglesworth argues that losing their independence because of this was certainly not inevitable for the former mutuals, especially for the Halifax and the Alliance & Leicester. "They had a viable comprehensive strategy - their demise is due to the exceptional circumstances, based on fear breeding fear, not their areas," he said.

"There was no reason for the Northern Rock to go down the sub-prime route, or for the Bradford & Bingley to go down the buy-to-let route."

http://news.bbc.co.uk/

FSA fines GE Money £1.12m

The Financial Services Authority has fined GE Money Home Lending £1.12 million for systems and controls failings that resulted in 684 borrowers suffering financial loss in excess of £2.3m

This is the first time the FSA has fined a mortgage lender in relation to its lending processes.

The FSA says this action sends a clear signal that lenders’ management must treat all their customers fairly and prevent them suffering detriment.

The news follows concerns raised by housing minister Caroline Flint at this week’s Labour conference, on the number of second charge repossessions initiated by GE Money. For the full story see this week’s Money Marketing.

The regulator revealed that the customers affected were those whose mortgage contracts were subject to a retention clause, where a sum of around £3,000 was withheld from the mortgage advance - typically where the borrower was required to carry out specified repairs to the mortgaged property.

The firm’s mortgage terms and conditions provided that these retention monies would be retained for six months and that during this time the borrower would be charged interest on the full mortgage loan including the retention monies. After six months the retention monies and accumulated interest should have been released to the borrower or applied to reduce the outstanding mortgage loan.

The firm’s terms and conditions did not make it clear to all customers that they would be charged interest on the full mortgage loan, including the retention monies, during the six month retention period. The FSA has also revealed that due to inadequate systems and procedures at the firm, retention monies and accumulated interest were not always paid to borrowers or applied to their outstanding mortgage loan after six months and the firm continued to charge some borrowers interest on retention monies beyond the six month retention period.

When a mortgage with an outstanding retention was redeemed, the firm did not always deduct the retention monies and accumulated interest from the outstanding mortgage loan. This resulted in some borrowers overpaying the firm when redeeming their mortgage.

FSA director of enforcement Margaret Cole says: “The firm’s failings were serious because a large number of borrowers, including some with impaired or non-standard credit profiles, were put at risk of financial loss. The firm identified the systems and control failings in 2004, but despite internal recommendations that improvements be made, no corrective action was taken for more than two years.

“I emphasise that we expect high standards by lenders in their administration of their mortgage book.”

As a result, the regulator has ensured that customers who suffered financial loss as a result of the retentions failings were properly compensated.

GE Money says it will commission an external review of the issue and will share the report with the FSA. It says it also has stopped using the retentions mechanism.

Because GE Money agreed to settle an early stage of the proceedings, it had a 30 per cent reduction in the FSA penalty. The FSA says if it were not for this, it would have fined GE Money £1.6m.

In total, including both regulated and non-regulated mortgage contracts, GE Money has paid 5,245 customers redress of £7.04 million in relation to their mortgage retentions.

www.moneymarketing.co.uk

Ex-mutuals fall to the bottom of food chain

The financial jungle is full of endangered species at the moment. But building societies - those perennial dinosaurs of the sector - appear to be in relatively fine fettle.

With families seeking safe havens for their cash, and the global lenders on the retreat, dull and conservative customer-owned lenders have been hoovering up record savings as their commercial cousins stagger under the weight of toxic debts.

Building society bosses must be taking particular satisfaction at the beleaguered state of those ultimate turncoats - the former mutuals.

Abbey National was the first of the building societies to seek a stock market listing in 1989, but the high tide was in 1997, when four societies floated.

For a while the wave of demutualisations proved to be a boon for customers, who enjoyed a cash and shares bonanza of £20bn. Yet many of the former societies have since found themselves in deep water.

The woes of Abbey were an early foretaste, as the firm's overly-ambitious Treasury department racked up huge losses on dodgy loans, forcing it into the arms of Spain's Santander in 2004.

More recently, Alliance & Leicester was snapped up by Santander after being pushed into the mire by the wholesale lending drought. HBOS, the owner of former society Halifax, is being scooped up by Lloyds TSB amid its own funding woes.

Bradford & Bingley is expected to fall into the hands of a rescuer under the worried watch of the Financial Services Authority. And the less said about Northern Rock the better.

Adrian Coles, head of the Building Societies Association, is scathing about the record of members that abandoned their mutual status.

In their eagerness to drive up returns, managements bit off more than they could chew, he claims. 'They took their eyes off the customer focus and began to think money was more important than people.'

Bruno Paulson, UK banks analyst at Sanford Bernstein, is a little less emotive. He argues that firms such as A&L and B&B simply lacked the scale and diversification to withstand a major market maelstrom.

HBOS and Northern Rock expanded their businesses at breakneck speed, leaving them with too little funding from depositors when the wholesale markets dried up.

He said: 'Some of the demutualised lenders had a decent run for a while, but they all ended up coming a cropper. For some the problem was a lack of scale, while others misjudged risk as they chased growth and diversification.'

For investors who held onto their shares after demutualisation, the record has been pretty grim. For example, B&B floated at 248p, but it is now trading at 28¼p. Northern Rock started life on the stock market at 452p, but shareholders are expected to get precious little compensation following its nationalisation.

That said, it is possible to display a little too much schadenfreude at the fate of the ex-mutuals.

www.thisismoney.co.uk

Temenos names Mike Head global partners director

Swiss core banking vendor Temenos has appointed Mike Head to lead the development of its global partners programme.

As global partners director, Head is charged with expanding the programme to include new firms as Temenos looks to increase its geographic reach and capacity and win clients for its T24 and core banking products.

Reporting to COO Mark Cullinane, he will be a member of the management board and based in the company's London office.

Previously Head was programme director for German software giant SAP - building its reseller partner channel in Europe. After leaving SAP he was responsible for the start up of software implementation and development vendor Pecaso.

Andreas Andreades, CEO, Temenos, says that having built up its direct channel, the firm is now looking to expand the partner programme and become the "preferred partner of the world's largest systems integrators".

Temenos already has partnership deals with IBM, HP, Metavante, Oracle, Logica and Interactive Data, among others.

Says Head: "My role will be to bring to the core banking market the practices and the discipline that a partners programme requires for success".

www.finextra.com

HBOS 'might be bought out by JPMorgan'

A consortium headed by US investment bank JPMorgan could soon take over HBOS, the Daily Telegraph reports.
While the members of the group have yet to be finalised, the bank is thought to have already held talks with parties including the National Australia Bank and private equity firms.
The Spanish financial services firm Santander, which recently announced a successful takeover bid for rival UK mortgage lender Alliance & Leicester, is also likely to be approached, sources indicated.
For its part, JPMorgan is understood to be more interested in taking up an advisory role for the consortium, rather than purchasing large pieces of HBOS itself.
This is due to the fact that the bank is otherwise engaged, after taking over stricken investment bank Bear Stearns in March.
Commenting on the potential acquisition to Bloomberg, Singapore-based Leslie Phang at Schroders said: The trend in consolidation in the financials is poised to accelerate.''
None of the parties apparently involved in the deal wished to comment.

www.bobsguide.com

TietoEnator Turnaround Continues

IT services company TietoEnator has reported a 270% increase in net profit to 18.7m euros ($30m) for the second quarter, on revenueup 11% at 480m euros ($761m).

For the first half, the company reported a 20% increase in net profit to 35m euros ($55m) on revenue up 8% at 948m euros ($1.50bn). During the quarter, processing and network revenue grew 16% to 113m euros ($179m), healthcare and welfare revenue rose 25% to 42m euros ($67m), telecoms and media revenue increased 10% to 178m euros ($282m), and banking and insurance revenue grew 9% to 77m euros ($122m). Geographically, Finland and Sweden contributed to 74% of revenue.

Hannu Syrjälä, president and chief executive at TietoEnator, said: "The second-quarter results strengthen our view that we are on the right track in turning the company around. We have concluded several major agreements in 2008 and succeeded in outpacing our market in many areas, reflecting the good momentum in the company.”

www.computerwire.co.uk

Government launches rent now buy later scheme

The pilot project will be open to households earning under £60,000, who will be able to rent the property at a discounted rate for two or three years, and will be given the option to buy it.

Rents will be 80% or less of the real market value, in order to save up for a deposit.

The scheme, which will be managed by the Housing Corporation, will be open to buyers who qualify for the government's new-build HomeBuy scheme, but are currently unable to buy. They would have an option to buy 25% or more of the property at any time under the scheme.

The government had previously extended the shared ownership scheme from key workers to those households earning £60,000 or less.

Bids will have to be made for the rent first, buy later scheme through registered social landlords.

Lembit Öpik, Liberal Democrat shadow housing minister, says: "Another day, another new affordable housing announcement. The government’s hot air will not hide the fact that 10% fewer shared ownership homes were provided last year than in 2006.

"What is strangely absent from this announcement is any suggestion of how the government imagines the rent-to-buy scheme will be paid for."

He adds: "With building firms making redundancies and councils strapped for cash, who does the government expect to fund it? Councils should freed to borrow so they can buy up empty homes to meet the huge demand in social housing."

www.mortgagestrategy.co.uk

Peter Heigho (Trigod/ The Key)

Peter Heigho, the designer and founder of both the ‘Trigold’ and ‘The Key’ software systems, has joined Enterprise Group as its head of e-commerce.

Heigho is tasked with developing Enterprise’s back-end processing systems and the ongoing integration of EDGEv2 with a growing list of third party systems.

This appointment follows recent announcements from Enterprise regarding high profile promotions and departures, indicating that Enterprise is rapidly adapting its senior team to the changing market conditions and its future strategy.

Michael Clapper, Enterprise Group’s CEO, says: “Peter’s track record speaks for itself and we are extremely fortunate to secure his invaluable experience which will help ensure our future success.”

“We now have over 10,000 brokers using the broker-facing ‘EDGEv2’ system, and we have already launched two of our new consumer-facing affiliate sites.

"Our strategy is now to focus on our strengths as a technology provider - specialising in the mortgage and loans space, and adding a range of products where consumers and brokers need accurate and fast comparison and execution.”

Heigho adds: “I have been seriously impressed with Enterprise, its team and its EDGE system.

"Having worked very closely with many systems and teams within the mortgage industry, I am in no doubt that Enterprise has a very exciting future and I’m very much looking forward to being a part of it."

Nationwide launches 48-strong broker sales force

Nationwide has launched a 48-strong broker sales force in a bid to show its commitment to the intermediary market.

Each of the business development managers will be supported by a sales support adviser who will handle queries and trouble-shoot problems when BDMs are unavailable.

Nationwide says it also has a dedicated team of telephone-based business
development advisers who will concentrate on intermediaries based in
more remote geographic locations.

The sales force will be headed up by head of sales Ian Andrew who joined last year from Northern Rock.

Nationwide group executive director Matthew Wyles says: "At a time
when some lenders are pulling back, Nationwide is renewing its long-term
commitment to the intermediary market. The new sales force is part of a
broader initiative which also includes a review our mortgage processes
to make them more broker friendly and a slick new online system."

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C&G appoints new intermediary sales director

Cheltenham & Gloucester has appointed Jon Farley as its new intermediary sales director.

Farley joins from Barclays where he was regional sales and service director at its premier banking division. He will start at C&G on July 7.

He will be responsible for growing and developing C&G’s intermediary proposition in the marketplace.

C&G managing director Joy Griffiths says: “Jon will be a strong addition to our leadership team. He has extensive experience of sales and relationship management in a number of industry sectors and will play a key role in ensuring that we continue to grow our intermediary business.”

Farley adds:“C&G enjoys a longstanding, well regarded reputation within the intermediary market and this appointment reflects a real commitment to this sector. I am looking forward to taking on the challenge of this new role and continuing the growth of the C&G offer.”

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87% of assessed firms failed to meet March TCF deadline

Only 13 per cent of firms assessed by the FSA met the March treating customers fairly deadline, which required them to have management information in place to test their TCF systems.

The FSA says that many firms have invested “significant time and energy working to measure TCF” and the regulator still expects 80 per cent will meet the December deadline.

The FSA has published its latest update on firms’ progress towards the December deadline, which requires all firms to be able to demonstrate they are consistently treating their customers fairly.

The regulator says it will take “tough action” on the worst performing firms, including enforcement action with increased penalties, a requirement for firms to hire external consultants and visits from FSA specialist teams to assess firms’ progress.

The regulator has published further material illustrating good and poor practice as part of its update, using examples observed during its recent assessments.

The FSA says an update on the progress of small firms in particular will be published early next year.

FSA director of treating customers fairly Sarah Wilson says: “Having appropriate MI or other measures in place puts firms in a position where they can measure the quality of the outcomes they are delivering for consumers. These results show that adequate MI is not yet fully in place in the firms assessed – it does not mean that they are treating their customers unfairly.

“However, we now expect all firms to maintain their momentum and to undertake a significant amount of further work to meet the December deadline of demonstrating that they are consistently treating their customers fairly.”

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