Banks, investment firms and insurance companies have all been slapped on the wrists again as The Financial Ombudsman Service releases its third set of six-monthly complaints data.

And banks, like many companies across the financial sector, do not come out of the findings that well.

The report from The Financial Ombudsman Service covers complaints that were received for the first half of the year. The total number of new complaints in this period were 84,212. And nearly 90% of these related to 160 businesses which were financial in nature. The Ombudsman actually covers 100,000 businesses.

To compare with what happened in the second half of 2009, then there were 82,136 received then, so a slight increase in 2010.

What’s worrying, is that five individual groups had more than 3,000 complaints each. Taking as a total, this amounted to over half of all the new complaints.

As to the number of complaints upheld (those found in favour of the person complaining), then 44% were seen to have validity. This compares with 53% in the second half of 2009, which suggests that the complaints although up in number, are not for some reason being upheld so frequently.

A contributing factor may have been that some 15,000 complaints about unauthorised overdraft charges were filed and then closed. This was the only course of action left open to The Financial Ombudsman Service, after the Supreme Court dashed everyone‘s hopes by ruling last year that the Office of Fair Trading’s test case could not be used to challenge the fairness of unauthorised overdraft charges.

The chief ombudsman, Natalie Ceeney, said:
“The latest set of complaints data shows that some businesses are really committed to ensuring that complaints are handled well, and are used to inform and improve the service they offer their customers.

“However, the complaints data also shows there is still more that some businesses need to do to ensure that complaints are properly investigated and fairly resolved. The ombudsman is keen to continue to play its part and help businesses draw lessons from the complaints that we see, so disputes can be sorted out at the earliest opportunity.”

As for which banks got the worst marks, way out in front is the UK’s largest bank, Lloyds TSB. Of the 12,750 complaints about in the first half of 2010, some 45% were upheld. And although Barclays was second with 7,991 complaints, a whopping 61% of those were upheld. Third on the name and shame scale was Halifax/Bank of Scotland, with 6,211 complaints, although only 23% were upheld. Ironically, with Halifax/Bank of Scotland being part of Lloyds TSB, put those figures together, and the group wasn’t very popular at all.

Santander customers like to complain, but with only 19% of 4,881 complaints upheld, the Spanish banking group, coming in at number four, might have averted a PR embarrassment.

Fifth on the list is the bank that likes to listen to its worldwide customers, but obviously not enough, because 3,286 customers didn’t like what they were being told, although only 34% of the complaints were upheld.

Bringing up the rear of the top six worst offenders – no doubt due to those nauseating television adverts about their friendly bank staff – was NatWest with an not too unrespectable 2,810 complaints and 43% of those were found to be valid.

So complaints up, but numbers of those upheld down, so maybe there’s hope for the remainder of the year.

Guest Article by Neil Camp

Customers may like to rank their bank, but the European regulators and central banking governors have just done the same thing.

But how they rank their bank is far more exacting, as senior European regulators have got together in Basle, Switzerland, and created new stringent capital rules.

It comes down to how much capital a bank should hold in case it hits a financial problem. The financial crisis in 2008 highlighted how the banking system – not just in the UK, but across the globe – could not cope with a crisis, such as the US mortgage collapse.

It has been agreed that banks should now put aside some 7% of their loans and investments in reserve to cope with financial wobbles, without having to run to their respective governments for taxpayers help. The figure used to be 2%, which proved completely inadequate as the banks stood on the verge of near collapse.

But for some commentators, the newly found prudence could ironically lengthen recession, and might actually cause the double dip most economists fear. The argument goes that if banks have to spend more of their cash in bolstering their reserves, then that means less cash for the consumer on the street, or for hard-strapped businesses.

The UK’s chief money regulator was pleased though, with the Chairman of the Financial Services Authority Lord Turner saying that the changes were: “…a major tightening of global capital standards and will play a major role in creating a more resilient global banking system…”

Jean-Claude Trichet, President of the European Central Bank, added his weight to the proceedings, declaring that the new rules were: “…a fundamental strengthening of global capital standards. The transition arrangements will enable banks to meet the new standards while supporting the economic recovery.”

The US added their congratulation as well; it’s been known for a long time that Barak Obama, the American President, is in favour of more stringent banking rules worldwide.

For those worried that the new rules could bring about a double-dip recession, their fears should be somewhat calmed with the news that the Basle III – as the new guidelines were called – do not come into force until 2013 and will still then take several years to be gradually be introduced. Banks will not have to immediately squirrel away millions of pounds into their vaults.

And Basle III still needs the final ratification from the heads of governments who attend the G20 summit in November.

The reactions from the individual banks has been mixed. Many UK banks already discipline themselves to reserves pegged at around 9%, which possibly highlights the inadequacy of the new rules. But mainland European banks are going to find it more difficult, as they have operated traditional with lot lower reserves.

Indeed, the Swiss, UK and US authorities were lobbying hard for 10% and feel that 7% is just not onerous enough and will not deflect the next major stress test.

So from now, you can rate your bank from a new perspective.

Guest Article by Neil Camp

The term savings fixed rate will be uncomfortable for many of the over-55s if a new report from Aviva is to be believed.

The report concludes that around 25% of over-55s are having to take the unwanted step of dipping into their income-generating savings in order to pay for life’s unexpected expenses. And for those whose financial plans embody the savings fixed rate schemes, there could be a tightening of the purse strings in the future.

The report revealed that the majority of over-55s (92%) have faced unexpected expenses in the last five years. What’s more, for this age group, the biggest financial fear is the rise in the cost of living. Some 64% cited this as the thing that keeps them awake at night. And given that this worry has gone from 18% of those asked in May 2010, to 64% in the latest survey, then this demonstrates the sense of panic and bewilderment caused both by the effects of the recession and the Government’s plans regarding the austerity measures.

And when it comes to financing those unexpected expenses, most of the over-55s dip into their emergency savings funds to foot the bill. A quarter use income-generated savings to fund the payout; some 17% cut back in other areas to make savings; just over 10% organised a loan, or paid by credit card; and, 6% sold assets.

Aviva’s Clive Bolton, a director of the company focussing on retirement, said about the findings of their report:
“Over the last thirty years, people have generally seen retirement as an opportunity to relax after a long working life and enjoy the fruits of their labour.

“However, when you consider that for a savings pot of £16,296, you would get an annual gross income of just £117 from the standard branch based notice account, you can understand why many over 55s are very worried about their finances. In fact these figures reveal that one in five over 55 households is struggling to get by on almost a third of the national average income.”

She went on to explain that:

“Retirement income is also relatively fixed which is why any rise in the cost of living is particularly concerning for this age group. This coupled with the fact that people often have to pay for unexpected expenses for which they have made no provision highlights how vitally important it is to build up retirement savings over your entire life.

“The Aviva research shows that as longevity increases individuals will spend longer in retirement. As such we want to help them plan their retirement finances so that they can enjoy the best possible lifestyle in their later years. At Aviva we offer a range of saving and investment solutions, as well as access to financial planning tools, to help individuals save for both planned and unplanned future expenses.”

In short, a worry for anyone with savings fixed rate plans.

Guest Article by Neil Camp

Mortgage investments continue to haunt the giant investment bank Goldman Sachs after UK regulators have followed on from their US counterparts and levied a fine of $31 million.

The Financial Services Authority has slapped the wrist of the Goldman dealers because they failed to disclose that they were under investigation for alledged fraud by the US regulatory authorities. It all harks back to the infamous mortgage investments which were basically dodgy bets dressed up to look like A grade opportunities. For many observers, this was the straw that broke the Camel’s back and sent most of the globe into a massive recession which kicked-off in 2008.

The fine is just a fraction of the $550 levied by the US authorities – the Securities and Exchange Commission – but is concerned more about disclosure, than any wrong doing that might be discovered, including the alledged fraud.

Goldman Sachs should have come clean say the UK about the charges in the US. The mortgage investments in question were complex mechanisms designed to put the best possible light on a worrying housing crisis in the US. Many of the investments were sold just prior to the US housing market suffering a major rupture and becoming completely unstuck within months.

The problem arose because the mortgage borrowing market was being ‘alledgedly’ rigged, effectively allowing anyone to gain a mortgage. Previous safeguards such as credit checks went out of the window. Unlike the UK, householders in the US can just hand back the keys and walk away from the borrowing commitment, meaning that the whole situation was being built on a fragile and weak base. Catastrophe seemed the only likely result.

The FSA fine is one of the largest ever imposed by the authority. They were annoyed particular that a trader under investigation in the US who was said to behind the allegedly ‘dodgy’ mortgage derivatives, had been moved to London and therefore came under the auspices of the UK authorities.

Goldman Sachs has kept mum about both fines and has always maintained that it has not done anything wrong legally. The US case centres on the fact that a Goldman Sachs client had major input into a mortgage portfolio which was then sold to clients. What the Bank did not do was then admit that its client – a major hedge fund – had then bet that the value of the securities (which they had helped choose), would fall. The mortgage vehicle known as Abacus went onto lose around £1 billion when the US housing market suffered its inevitable collapse.

The huge US fine did not see any admission of legal wrong-doing from Goldman Sachs, who instead claimed that the marketing material for the Abacus fund had been incomplete.

Many experts feel that Goldman Sachs were given not so much a get out of jail free card, but nonetheless should have been more aggressively prosecuted for fraud. They say that the fines should be seen against a backdrop of profits which saw the Bank book a staggering $3.5 billion gain in the first three months of 2010. And although profits dropped to just over $600 million for the next three months, no-one can say that Goldman Sachs is near the bread line.

One thing is for sure, the US mortgage debacle is likely to haunt Goldman Sachs – and indeed Wall Street and the City of London – for many decades to come.

Guest Article by Neil Camp

The latest interest rates remain unmoved; staying at 0.5% for the 18th consecutive month.

It was in March 2009 that the rates first dropped to their lowest point ever, but news of the latest interest rates have coincided with calls that they must now be increased in order to curb inflation.

The Monetary Policy Committee’s decision this month to leave rates where they were surprised no-one in the City.

But the clouds on the horizon include the CPI inflation figure for July which was 3.1%; way above the 2% target set by the Bank of England.

Furthermore, for the third month in a row, the minutes of the last Monetary Policy Committee meeting revealed that one member, Andrew Sentance, had voted again for a rate rise.

And there was good news for fans of the Bank of England’s quantitative easing scheme which has so far seen some £200 billion committed to its ideals. The Bank confirmed that they were continuing with QE and that it may well be further expanded.

Graeme Leach, chief economist at the Institute of Directors, said:
“The Bank of England has held fire for another month, but we think the quantitative easing gun is about to be reloaded and the order to shoot given. Whilst above target inflation has stopped the MPC pulling the trigger on a further extension in QE this month, the economic threat from weak money supply growth looms ever larger.”

Other independent forecasts, including the National Institute of Economic and Social Research, have confidently stated that the Bank of England will keep interest rates at the current record low until the middle of next year, but if inflation becomes an issue, this may well look optimistic.

And as another negative, observers point to a sluggish UK rate of growth, with a not unreasonable 1.2% in the second quarter is expected to be eclipsed by a worse figure in the third quarter, giving rise to fears of a double-dip recession.

The CBI spokesman, Lai Wah Co, came out with the following view:
“In recent weeks there has been more talk about the need to expand monetary policy, amid concerns about how quickly growth momentum will fade in the coming quarters at home and abroad. However, economic indicators still suggest the UK recovery is on track, although we expect it to be bumpy and slow.”

And the British Chambers of Commerce applauded the fact that the latest interest rates remain unchanged. Their chief economist, David Kern, said:
“The government’s tough deficit-reduction measures, although necessary to repair the public finances, will increase the threat of an economic setback. Since sustaining the recovery must remain the priority, it is absolutely vital that the MPC maintains the current low level of interest rates until the middle of 2011 at the earliest.”

Guest Article by Neil Camp

The Post Office is warning UK holidaymakers high travel credit card charges when using the plastic abroad.

And the Post Office reckons that when you take into account all the travel credit card charges, the amount people could be literally throwing down the drain is over £60 million. And this figure relates just to the remainder of 2010.

The Post Office Credit Card research report revealed that over half of those questioned in a survey, admitted that knew they would be charged a fee, by the issuer of the plastic, if they used it overseas.

Perhaps rather more worrying, some 13% didn’t know if they would be charged a fee, or not.

Az Alibhai, Head of Cards at the Post Office, said:
“This summer, millions of travellers will have wasted money on unnecessary travel credit card fees, and worryingly many are not even aware of how much this will increase their holiday spending. By using a fee-free travel credit card, like the travel credit card available from the Post Office, people can enjoy that little bit of extra cash on holiday.”

Not surprisingly, the Post Office are quick to point out the benefits of their own fee-free travel credit card, although many savvy travellers ask not only about the transaction fee, but also the exchange rate. As some experts point out, the attraction of the deal is not only based on the fee, but the exchange rate offering. And some no-fee deals will have poorer rates of foreign exchange, meaning that the user could lose out in the long run.

Travel credit card fees tend to be in the region of 2.99%, which is a hefty fee each time a purchase is made.

So users of such cards are right to be encouraged to use only travel plastic which does have no, or very low fees, but also a very favourable exchange rate. That way they can get the best deal for their holiday pounds.

Guest Article by Neil Camp

Two of the UK banks are changing chiefs.

Banks Barclays and HSBC will shortly have new faces in charge as Bob Diamond comes in as the new chief executive officer at Barclays and Stephen Green, chairman of HSBC, takes a coalition government brief to become a trade minister.

Barclays Diamond is well-named, being one of the world’s highest paid bankers who has made around £100 million as head honcho at the group’s investment arm, Barclays Capital. He will replace the current chief executive officer at Barclays, John Varley. Mr Varley is credited by many as being the safe pair of hands that steered the ban through the financial troubles of the last couple of years.

Mr Green ends a 28-year career at HSBC, one of the world’s biggest banking groups, to help the coalition government. During his tenure at HSBC, he held the post of chief executive officer for three years and the top job of chairman for four years.

BBC business guru Robert Peston said of the Green appointment, that it “…will doubtless be heralded as a coup by the prime minister, even though the record of business people in government has been patchy.” Commenting on the Barclays appointment, Mr Peston ventured the opinion that the appointment of Diamond confirmed the view that Barclays sees its future firmly as a global investment bank.

The chairman of Barclays Bank, Marcus Agius, was quoted as saying that Diamond was “…superbly qualified…”, complete with “…a proven track record as a business leader…”.

Mr Diamond responded with:
“I am honoured by the board’s confidence in me and greatly motivated by the challenge of leading Barclays during the critical period ahead. As a leading global universal bank, Barclays has the right model, the right strategy and above all the right people to deliver for all our stakeholders.”

Mr Diamond is said to be on a base salary of £1.35 million, with a bonus scheme taking his total take-home package to be nearer £12 million.

As if to ward off any criticism over Mr Diamond’s remuneration package, a Barclays spokesman said:
“The compensation arrangements have been benchmarked against a peer group of global universal banks, industrial companies and financial services institutions.”

Which proves that the banks still have some money to throw around.

Guest Article by Neil Camp

A top comparison website has joined the calls for better regulation of the growing pay day loans market.

Pay day loans have undergone a fourfold increase in popularity over the last four years, making them one of the most popular ways to raise money over a short period of time.

The idea behind pay day loans is straightforward – people can raise money on their next wage slip before its actually due. The idea is to help smooth out cashflow in difficult months.

But confused.com, along with other bodies, are saying that there needs to be more clarity over this form of borrowing.

Following a report into the high cost of credit prepared by the Office of Fair Trading, confused.com prepared their own research into these type of loans.

The research came up with a number of observations, including the main point that a number of pay day loans websites did not clearly state the charges involved. They were not clearly displayed, especially if lenders could not afford the repayment within the time limit allowed. And if that basic agreement was breached, there was little information as to what would happen then.

Furthermore, one researcher who pretended to apply for a pay day loan, was not told of any deferral charges until he had accepted the agreement in blind faith, in contradiction of basic loan ethics and set agreements laid out by the Office of Fair Trading.

Sharon Flaherty, editor of confused.com’s Consumer Focus report on pay day loans, said:
“As Consumer Focus points out, the issue with payday loans is not that they should be banned altogether, but that they should be reformed to ensure customers understand exactly what they are agreeing to, and what the charges will be if their circumstances change and they can’t meet repayments. Increased transparency is crucial.

“Confused.com has had concerns about how some payday loan companies have been operating for some time, and has voiced these concerns to the OFT. We have even been contacted by customers who have taken these types of loans and have been treated poorly by lenders when they’ve had repayment difficulties. We agree with Consumer Focus that an industry code of practice is a good idea and that there needs to be better promotion of lower cost alternatives, such as credit unions, as previously highlighted by Confused.com.”

As with any sector, there are a number of pay day loans providers who meet the requirements laid down by the Office of Fair Trading, and potential customers are warned to check that they have all the figures and facts before they enter into such agreements.

Guest Article by Neil Camp

When it comes to money, a research report from financial giant the Prudential has revealed that one in three couples are oblivious to their partner’s finances.

And the Prudential – in the dock itself currently over its abortive plans to go large in Asia – worries that if partners don’t know each other’s money situation, then they risk poverty in old age through a lack of proper financial planning.

The Prudential study concluded that nearly one third of couples (33%) who were over the age of 40, but not yet retired, did not know, or indeed fully understand, their partner’s financial retirement planning. What’s more, just over a fifth (22%) admitted that they had never talked to their partner about the idea of planning for retirement.

The research went onto reveal that its women who are less likely to discuss these money matters with their men folk. Nearly a quarter of women said they had never broached the subject, whereas only one in five men said they had never raised retirement plans.

Perhaps even more worrying, just over 10% of both men and women admitted that they were not remotely interested in their partner’s financial affairs, nevermind their financial planning.

Investments director at Prudential, Andy Brown, said:
“It is incredible that so many people do not know the details of their partner’s retirement savings. Essentially, this could mean millions of UK adults are banking on hope as their core retirement strategy and are approaching what is arguably the most important financial decision without a full understanding of their household financial situation.

“It’s astonishing that one in 10 men and women say they’re not interested in their partner’s retirement savings arrangements. Firstly, couples should strive to have open conversations with one another but they also should aim to be constructive and use these conversations to begin laying the foundations for their retirement planning. The reason this is so important is because the longer retirement planning goes unresolved.”

And it also turns out there is a north/south divide over this money awareness. Those in the north of the UK had the lowest levels of awareness, compared to the greatest awareness which was found to be couples living in the South East and East Midlands.

Guest Article by Neil Camp

The UK might be heading for a double-dip recession, which means that more people – already highly geared before the economic troubles started – are going to have to face the issue of bad credit.

A number of organisations, including Citizens Advice, are warning that the start to the new decade and for many years to come, is going to be marked by people with bad credit problems.

And to reinforce the gloomy picture, the Insolvency Service has released figures which point to a record number of Individual Voluntary Arrangements being entered into in the second quarter of the year.

The IVA Advisory Centre said that nearly 14,000 people had entered into an IVA between April and June in England and Wales. This represents a 14% increase on the previous quarter. But apart from the implications of the increase, is the fact that the level of IVAs is at an all time high. The previous ‘record’ was 13,219 entering into an Individual Voluntary Arrangement, which was reached in the last three months of 2009.

What’s more, there has been a record number of people entering a Debt Relief Order. Some 6,295 chose that route as their best way out of their financial difficulties. Ironically, say the IVA Advisory Centre, the rises in both of these types of debt agreement, has meant that people entering bankruptcy is at an all-time low since the final three months of 2007. The number of people declaring themselves bankrupt in the second quarter of the year is 14,982, some 20% down.

An IVA Advisory Centre spokesman said:
“What’s particularly noticeable now is the similarity between the number of bankruptcies and the number of IVAs. With this drop in bankruptcy numbers and the increase in IVAs, bankruptcies in Q2 outnumbered IVAs by around 1,500 (or 11%) – far less than we’ve ever seen before.

"In the first quarter of the year, for example, there were around 6,500 more bankruptcies than IVAs. At the start of last year, there were more than two new bankruptcy cases for every new IVA. Before 2005, bankruptcies tended to outnumber IVAs by a ratio of 3:1 or more.”

The IVA Advisory Centre explain this trend by pointing to a great awareness of having a choice other than bankruptcy. The spokesman continued:
“How can we explain this trend? To a significant extent, it’s due to a greater awareness of the alternatives to bankruptcy. DROs have already helped thousands who simply couldn’t afford to enter bankruptcy and couldn’t commit to the payments which most IVAs require. And IVAs have provided many borrowers with a way to enter insolvency that avoids some of the potential drawbacks of bankruptcy, such as losing their home.

“Bankruptcy may still be the best option for many of today’s struggling borrowers, but these figures clearly show that more and more are finding an IVA or DRO provides the help they need in a way that better suits their individual circumstances.”

And the IVA Advisory Centre warn all those facing the prospect of bad credit and mounting debts, to contact an expert as soon as possible. Delay causes greater problems they warn and seeking professional advice quickly, creates better options for those facing problems.

Guest Article by Neil Camp