Weekend economic news round up

Charterbridge

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Weekend economic news round up

‘Combine pension and social care’
Squire Sanders put forward a paper this week calling for policy changes that would integrate the pension system with that used to finance social care – offering individuals better choices as they age.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 3

Savings
AA Savings has improved its two-year fixed rate and Internet Extra easyaccess savings accounts for new savers, by removing the interest-rate tiers for different savings balances, writes Miles Brignall.
The Guardian Money, p. 7

Bonds
A new market-leading five-year bond, 5 Year Term (Series 8), has been launched by Savings Secure Trust Bank, writes Sylvia Waycot.
The Guardian Money, p. 7

Is your works pension fit for purpose?
Financial advice looks at how huge management charges are eroding the value of thousands of pension plans. Josephine Cumbo writes that you can’t assume that trustees are actively looking after your interests.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 10-11

Men ‘scared’ into taking low pensions
Men have been locked into low pension rates after being “tricked” into buying annuities before new European Union equality legislation came into force, it has been claimed. The Association of British Insurers said it was wrong to say that rates were cut heavily last year.
The Daily Telegraph, p. 4

Pensioners tricked into a lifetime of lower income
Hundreds of thousands of older savers were locked into artificially depressed pension payout rates in the final months of 2012, The Daily Telegraph reports. Last March the Association of British Insurers launched a “code of conduct” designed to help pension savers find the best deals.
The Daily Telegraph Your Money, p. 2-3

Help to Buy extension set to boost pipes and paving
Builders’ merchants are poised to benefit as a result of the government’s controversial Help to Buy mortgage scheme. DIY retailers such as B&Q are suffering from the incursion of the discount and supermarket chains into areas such as gardening.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 18

Approvals hit a five-year high
The number of mortgages approved in the UK in August was the highest since February 2008.
This abstract from the Financial Times was produced by Kantar Media
Financial Times Money, p. 2

All pumped up and ready to go
The government is fast tracking the second part of its Help to Buy scheme, offering a lifeline to millions … and attracting criticism from experts, writes Rupert Jones.
The Guardian Money, p. 1

UBS among several banks probed by Swiss watchdog over forex trades
Swiss regulators are investigating several banks for alleged manipulation of the $4tn daily global foreign exchange market. The banks under investigation were not named, but two people familiar with the inquiry said UBS was among them.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 1

FCA presses banks over redress
The City regulator said yesterday that UK banks are taking too long to compensate small and medium-sized businesses for being mis-sold interest rate hedging products.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 18

Regulator chides U.K. banks over payout delays
British banks have paid out only a small fraction of the £3 billion they set aside to compensate small companies that were sold complex hedging products, drawing criticism from businesses and the financial regulator.
International Herald Tribune, p. 12

Swiss pursue banks over currency transactions
The banking industry, already troubled by official inquiries that have badly damaged its reputation, got hit by another on Friday.
International Herald Tribune, p. 9

State-backed banks accused of cashing in on Help to Buy
Halifax, which is part of Lloyds, and Royal Bank of Scotland/NatWest were last night accused of cashing in on the Government’s new Help to Buy scheme as it emerged their mortgage rates are likely to be more expensive than other loans on the market.
The Daily Telegraph, p. 4

RBS could exit markets under new five-year strategy
Royal Bank of Scotland (RBS) has begun work on a five-year plan that will likely see the taxpayer-backed lender exit markets where it is uncompetitive.
The Daily Telegraph, p. 33

Cheque in post as Barclays ENJOYs ‘solid’ rights issue
About 500,000 small shareholders in Barclays are set to receive a cheque for around £165 each if they chose not to buy more shares in its rights issue. Barclays will send out the cheques, which reflect the difference between the 185p rights price and the 268p level at which remaining shares were sold yesterday.
The Times, p. 51

New RBS chief prepares to transform the bank
Ross McEwan, new chief executive of Royal Bank of Scotland, is to outline his vision for the 81 per cent taxpayer-owned bank early next year.
The Times, p. 45

The former finance director […]
The former finance director of Barclays’ domestic retail and business bank has been handed the job of managing the books at the Bank of England.
The Times, p. 51

Divorcing IT systems will eat up profits
Royal Bank of Scotland could make £800 million profit before the sale of its Williams & Glyn’s branches, but has reportedly earmarked the cash from the new bank to set up its IT system. RBS signed a deal last week for a £600 million investment in the 315 branches that it has rebranded saying that it would create a new challenger bank when it floats the business in two years.
The Times, p. 51

Bank customers still paying out thousands for ‘useless’ and ‘misleading’ card insurance
According to the Financial Conduct Authority, millions of bank customers could still be paying for “useless” and “misleading” credit-card and identity-theft insurance, despite the industry watchdog criticising such products and demanding that people who have bought policies be refunded. After an investigation into Card Protection Plan (CPP), a company providing card and identity-theft insurance, the FCA ordered banks who mis-sold its products to compensate seven million people by as much as £1,000 each.
The Times, p. 58

Stocks inch up amid growing fears of default
Global overview equities and the dollar staged a modest rebound at the end of a week dominated by Washington’s failure to resolve the budget crisis, causing the shutdown of the federal government, and raising the spectre of a US debt default.
This abstract from the Financial Times was produced by Kantar Media
Financial Times, p. 21

Almost half expecting to work beyond 65
Nearly half of Britons believe they will have to work beyond age 65 because their pensions savings are inadequate, a Scottish Widows survey found.
The Independent on Sunday, p. 65

95pc home loans ‘back to normal’
The Treasury has issued a defence of George Osborne’s Help to Buy scheme just days before it is due to be launched, publishing research claiming that 95pc mortgages were the norm before the financial crash.
The Observer, p. 21

First-timers lose out in Help to Buy
First-time home buyers may still pay more than other borrowers for mortgages under the government’s Help to Buy scheme if lenders pass on Treasury costs. Chancellor Osborne will unveil details of the scheme on Tuesday.
The Sunday Times, p. 1-2

Help to Buy snag for first-timers
It has emerged that first-time buyers could still pay more than other borrowers for mortgages under the government’s Help to Buy scheme if lenders pass on Treasury costs.
The Sunday Times, p. 1-2

Help to Buy frenzy looms
Thousands of first-time buyers will flock into branches of state-backed banks this week when the government launches its Help to Buy mortgage guarantee scheme.
The Sunday Times Money, p. 1

Help to Buy: the essential user guide
Brokers have warned that a spotless credit history may be needed to secure a 5% deposit deal. Those with a history of debt problems and missed repayments are likely to be rejected. Skipton building society, one of the few lenders that already offered loans on a 5% deposit, recently admitted that 75% of applications were turned down because borrowers did not have the necessary credit scores.
The Sunday Times Money, p. 4-5

Hype fuels hot property
Last year the Council of Mortgage Lenders predicted that banks would approve home loans worth about £150bn this year, but the final figure is likely to be closer to £170bn.
The Sunday Times Money, p. 7

Queen’s bank could be next to go in great RBS sell-off
Columnist notes that the City still awaits the outcome of the Treasury’s review into whether to split up Royal Bank of Scotland into good and bad banks.
The Observer, p. 52

Father calls for law to change after bank intern son’s death
The father of a 21-year-old banking intern who died after working for 3 nights in a row has spoken for the first time and called for the UK government to introduce stricter employment legislation to prevent such a tragedy happening again. Moritz Erhardt was nearing the end of a £6,000 7-week placement at the London offices of Bank of America Merrill Lynch in August when he was found dead in the shower of his temporary accommodation.
The Observer, p. 21

RBS defies Osborne to ‘block new homes’
The Royal Bank of Scotland has been accused of blocking housebuilding on its £1bn worth of property despite the chancellor, demanding the construction of new homes. One property developer says RBS indicated it wanted to hang on to a site in Leeds until 2018 – when the bank is likely to be back in private hands. RBS owns a company called West Register. Its portfolio includes BBC Scotland’s former headquarters in Glasgow and a few Mercure-owned hotels.
The Sunday Times, p. 19

Fred’s law fails
Comment on the proposed new banking law, set out as one of 85 amendments to the Financial Services (Banking Reform) Bill, which carries an important caveat. That to commit the new criminal offence of reckless conduct as a banker, the miscreant must be aware that what he or she is doing “may cause the failure of the bank”.
The Sunday Times Business, p. 4

Rate rise falls off radar of markets
Comment on how America’s government shutdown has pushed back expectations for when interest rates will rise in Britain, bringing them more into line with Mark Carney’s forward guidance.
The Sunday Times Business, p. 2

The above articles appeared on 05/10/13 & 06/10/13 reproduced with the kind permission of Kantar Media UK. All rights reserved.

Charterbridge Private Financial Planning, Independent Financial Advice, Thornbury, Bristol.