The number of financial complaints received by The Financial Ombudsman Service increased by 18% in the six months from 1st July to 31 December, 2009.

The complaints relate to banking, insurance and investment products. In the period, the ombudsman received over 80,000 new complaints, compared to just under 70,000 for the first six months of 2009.

And leading the way in complaints, having the dubious honour of being most moaned about, was Lloyds TSB with a whopping 9,952 whinges, covering all aspects of its business, with Barclays close behind with 9,836.

Perhaps worryingly for the financial sector is the fact that over half of the complaints (53%) were upheld in favour of the customer, although to be fair, that was down from 59% in favour in the first six months of 2009.

Very few members of the financial sector escaped the wrath of their customers, but the ombudsman was keen to point out that it was natural for the bigger concerns to have more complaints than the smaller companies, just by virtue of their size and number of operations and products.

David Thomas, interim chief ombudsman, imparted some encouraging news:
“While the number of cases referred by consumers to the ombudsman has continued to increase substantially, it’s encouraging to see that some businesses are committed to handling complaints better.”

Although he added that things were not yet perfect:
“However, there is evidently still room for significant improvement in the way other financial businesses handle complaints – judged by the proportion of cases where we overturn the decision that the businesses have themselves come to in their own earlier investigation of their customer complaints.

“The data we have released today clearly shows that some businesses still need to do more to ensure that they deal with their customers’ complaints effectively and fairly – so that consumers do not then need to escalate their dissatisfaction to the ombudsman. We hope that businesses will continue to use this data to focus their attention on addressing these key complaints-handling issues over the coming months and years.”

Only time will tell whether complaints will drop off as the economic situation improves, or whether the problem is more deep-seated than a reflection of the financial climate.

Guest Article by Neil Camp

Research from high-street bank Lloyds shows that people are becoming more worried about the dangers of identity theft and that the recession has made them feel worse.

The report revealed that 76% of adults are currently worried about identity theft and furthermore, that 39% feel more at risk now than they did six months ago, with the recession playing a major part.

Some 52% of those worried about ID theft believe that the recession has increased the risk, mainly because they argue that as unemployment increases, more people are driven towards criminal activity and ID theft.

And a considerable 57% of the people questioning think that social networking such as Facebook, have made it easier to steal personal details. In the same survey carried out 12 months ago, it was 47% who felt the same, so there has been a considerable rise in fear in the implications of being listed on popular social websites.

And although as many as 38% of Brits have experienced ID fraud (some 18% directly), of those asked, an incredible 57% admitted that they have not done enough to protect themselves and 25% don’t know much about it all anyway.

This is despite the fact that studies by the UK’s Fraud Prevention Service, CIFAS, shows that it takes an estimated 48 man hours to repair the damage resulting from fraud, with the cost to victims is frequently as high as £8,000. The CIFAS figures also show that ID fraud is on the increase, with a 15% rise over the year.

And like many other financial institutions, Lloyds TSB is trying to make its customers aware of the dangers.

Jatin Patel, spokesperson for Lloyds TSB, said:
“As technology improves, it gets easier and easier for criminals to steal our identities and during tough economic times the temptation becomes greater. Protecting ourselves by shredding documents and protecting passwords is a good start, but having someone else keep an eye on your ID offers extra peace of mind.”

By someone the spokesperson means Lloyds TSB and they have introduced what they call ID Aware, claiming that it allows customers to keep on top of their credit status and safeguard their identity, providing credit monitoring services and an early warning system to alert the customer to any activity involving their account, including someone trying to lighten it with suspicious cash withdrawals.

They don’t mention if there is a cost to such a service, but with talk of banks trying to make their customers more responsible for their actions when it comes to their financial affairs (i.e. the banks are going to stop stumping up for this kind of fraud shortly), then this might be a way for a customer to insulate themselves against the worse.

Guest Article by Neil Camp

October 2009 is the month when the ISA limit increases and research conducted by high-street bank Lloyds TSB shows that 61% of over 50s do not understand the approaching ISA changes.

And the changes, which were announced by the Chancellor in the April 2009 budget, will see ISA rates increase from £7,200 to £10,200 (£5,100 which can be saved in cash), effectively increasing tax free savings for over 21 million savers. And the crunch is, for those born on, or before 5th April 1960 the new limits come into effect on October 6th, whilst younger customers will need to wait until the start of the 2010/2011 tax year next April.

Given the favourable over 50 status of the changes, it has surprised many that only 15% of over 50s know that the new ISA limit will be set at £10,200. Four out of ten over 50s were not even aware that increases have been announced.

Colin Walsh, managing director of savings and investment, Lloyds Banking Group, said, stoically:
“As the UK’s largest ISA provider, we want our customers to be able to reap the benefits of the new rules and make use of their entitlement. This historic low rate environment has meant a challenging time for savers, especially for those who rely on returns to supplement their monthly income, so maximising your full tax free allowance has never been more important.

“Traditionally the ISA transfer market peaks in April around the new tax year, but this year’s changes will no doubt result in a ‘mini ISA season’ as savers look to take advantage of competitive rates on an increased balance.”

Lloyds TSB has made it clear that savers will be able to top up their existing ISA balance in any of the Group’s fixed and variable rate cash ISAs, as well as investment ISA products. What’s more, new customers can also take advantage of the new entitlement and open one of the products offered by the Group’s ISA brands, including Halifax, Lloyds TSB, Scottish Widows, Bank of Scotland, Cheltenham & Gloucester, Birmingham Midshires and Intelligent Finance.

Lloyds TSB also participates in electronic transfers for the cash ISA market, allowing customers to benefit from what they claim is a more efficient process and reduces the delays caused by sending cheques in the post.

Guest Article by Neil Camp

As students across the UK head to their universities and colleges to start the new year, a high street bank is encouraging them to eat healthily whilst staying within a budget.

Although for some observers a bank encouraging another section of society to stay within a budget might seem a tad amusing, given last year’s bail-outs of the banking sector.

Nonetheless, Lloyds TSB has launched its ‘Budget Cook Off’ section of the Savvy Saver student hub, an all round guide for students, advising them on how to manage finances during their time at University. No doubt a part of the guide will advise students against helping out prime ministers by rescuing banks, or buying toxic mortgage debts from the US.

Included in the range of Lloyds TSB tips is information on how to make sure a healthy diet is maintained throughout the day, even when students are pushed for time, or under stress from upcoming exams or deadlines. The ‘Budget Cook Off’ section also advises prospective students on how to find the best deals on food in the shops and habits to avoid, such as junk food, eating out and paying ridiculous bonuses to people who pretend to work for a living, in order to make the most of their money.

The Lloyds TSB bankers are obviously taking students to their hearts, having conducted some research into what some might see as the blatantly obvious. The pin-stripes discovered that out of a thousand 17-25 year olds who hoped to start a degree course in the autumn, some three quarters of would-be freshers thought that money management was especially important in the current economic environment. Maybe the remaining quarter of would-be freshers were children of bankers, with no real need to worry about money.

Catherine McGrath, director of current accounts, Lloyds TSB, chirruped:
“We want to do everything we can to support young people manage their finances responsibly, but also have fun and enjoy their studies. We hope the hub will show them that it is possible to study on a budget, and also that they’re not alone in being concerned about looking after their pennies during their degree course.”

How kind, although maybe a deeper understanding about student cash-flow might have been a better consideration.

Guest Article by Neil Camp

For those worried about their building society surviving the bad times, the media is reporting that those in trouble might be given access to the asset-protection scheme which is backed by the government.

Although good news, this move actually signals the Treasury’s deep concern over the state of the building society sector. This is mainly down to the government regulator, the Financial Services Authority (FSA), forcing all financial institutions to get ready for an eventual 50% fall in house prices and an even worse commercial property downturn of 60%.

Those societies deemed unable to cope with such a nightmare scenario might be propped up by the asset-protection scheme, one that is currently being used to offer support for the Lloyds Banking Group and RBS.

The West Bromwich Building Society, already featured in this blog, is one of the institutions on the FSA watch list. It is thought that it is being asked to show it could weather a £100 million loss on its commercial property book. Such losses could mean a fifth of its capital could disappear; something that is worrying the FSA.

And with holes in their capital bases, building societies, along with other financial institutions, could be forced to look out for fresh money to shore-up their balance sheets. Unfortunately, going to the markets might not be an option, with the government having rocked confidence with a decision that saw the coupon payments of a number of Bradford & Bingley debt instruments being cancelled.

So with the money markets in no mood to risk money in an increasingly fluid situation, the government’s help might be needed.

Guest Article by Neil Camp

For a long time parents have helped their offspring get on the housing ladder, but a new mortgage from Lloyds TSB has made such assistance official.

Their new mortgage product called Lend a Hand offers first-time buyers a generous 95% of the property valuation. Such a low deposit of only 5% has been effectively unavailable since the housing crisis started.

Offered at a fixed rate for three years of 4.39%, the catch (or opportunity is, whichever way you look at it) is that the borrowers’ parents deposit a sum of money with Lloyds TSB. The sum required is 20% of the property value and will be lodged in a savings account. Whilst there, it will pay a fixed interest rate of 3.5% and although the parents will retain the ownership of the savings, the bank will have legal charge over the money.

The bank will retain legal charge over the savings until the outstanding mortgage falls below 90% of the property value. This would usually occur with a mixture of monthly payments being made satisfactorily and an increase in property prices.

Once the 90% has been reached, the savings are freed up and the mortgage will operate normally for the three year fixed term, and then the holders would have the opportunity to switch mortgage products, or remortgage.

The arrangement fee for the Lloyds TSB Lend a Hand mortgage is a one-off £995.

Mortgage experts generally welcomed the new mortgage deal, although some did make the obvious point that it would only help those with parents who could afford £20,000 to be locked up in the first place. And if parents have such a some of money, they can always add it as a down payment, although it will not then necessarily making a decent return of 3.5% a year. They also pointed out that the Yorkshire building society also offer a 95% deal, although the interest rate is a lot higher at 6.99%.

On the plus side, it does allow the parents a good chance to get their contribution back, it offers a competitive interest rate and with the deposit, the credit score is not as demanding as a normal 95% mortgage, or even one for 80%.

Guest Article by Neil Camp

If you suspect you have money lying around in a bank, or building society account, claim it now before the Government does.

Later this year, money held by banks in dormant accounts is set to go to good causes.

A Government taskforce has recommended that any money left in an account which has had no customer activity in the last 15 years, should be transferred into a special fund. This will be administered by a special social bank which will recycle the unloved millions to worthy causes, such as helping the long term unemployed. The exact date of when this will happen is still not clear, but many think it will be in the autumn.

Dormant accounts can of course be a result of many circumstances, some just as simple as a change of postal address. Others might be a change of name, or a death of the account holder.

But certain consumer groups are worried that the banks, hit by the latest financial crisis, might not be that keen to either find the rightful owner, or donate it to charitable causes.

The banks claim otherwise, stating that they are successfully reuniting customers and their long lost money. Take the Lloyds Banking Group, which has since 2006 found homes for 23 million of its lost notes. Mind you, with an estimated near £100 million still lost and forlorn, there is still quite a bit of work to be done.

HSBC has been actively promoting its dormant accounts and recently announced that it had repatriated nearly £6m to over 3,500 customers.

And for those panicking that they know they had an old account somewhere, but just couldn’t place it, all is not lost when the social bank starts syphoning off the lost money. By law, it will still remain the property of the person that can prove it was originally their money, but the big difference will be that once it has been labelled dormant and moved to the social bank, it will be a lot harder to get, taking months to sort out the paperwork. You will be able to reclaim it, but just with a lot of effort.

For those that want to check if they have misplaced an account, the best place to start is www.mylostaccount.org.uk. This is a joint effort from the British Bankers’ Association, the Building Societies Association and National Savings & Investments. It saves time and effort, allowing you to check across a wide range of financial organisations. But, although the single website initially simplifies the start of the search process, the range of questions and details required can be quite onerous. So a casual fishing trip is a bad idea; it is a good idea to have a real think about names and other details pertinent to your claim.

You can of course go direct to the bank where you think the account might be hiding, but you will need to supply quite a number of personal details in order for them to answer your queries.

And it’s not only bank accounts that you should check. Many lottery winners don’t come forward, not realising they have perhaps won a major prize. And after 180 days, the money goes to good causes and can’t be claimed after that date. The lottery helps by arranging for publicity for any unclaimed prize over £50,000 in the area where it was bought, but still many millions remain unspoken for. So, check any lottery tickets lying around, before they run out of course.

Betting slips have no such expiry and have to be honoured no matter how late they turn up.

But there’s a whole host of other prizes and benefits which are not claimed, from pension and life insurance polices which are forgotten; to share certificates (from holdings in companies, or bonds); unclaimed state benefits (they reckon that £9 billion of government handouts such as pension credits are unclaimed every year); and, premium bonds.

So, when you’re having a good spring clean, rummaging around old boxes of papers and personal effects, keep an eye out for anything that might lead to an unclaimed prize, or asset. It might be very worth while taking the trouble.

Guest Article by Neil Camp

Just when you thought that the banks might have learnt their lesson and eaten a bit of humble pie, in comes news that they’ve been accused of playing Dick Turpin again.

This time they stand charged of ripping off their customers by charging interest rates of up to 21% on personal loans.

Some might claim this should be a surprise to no-one, as banks are just reverting to type as they see their customers as fair game when it comes to rebuilding their balance sheets.

The finger is being pointed ay Clydesdale Bank, Lloyds TSB, NatWest and Yorkshire bank. Recent figures show that the Clydesdale and the Yorkshire banks are charging a typical APR of 20.9% for just £2,000, repaid in three years. Lloyds TSB and NatWest banks are charging 21% for the same amount, for the same period. This compares badly with many credit cards.

Raising the alarm is people’s personal finance champion Liberal Democrat spokesman Vince Cable who has cried foul over the levels of interest being levied. He is astounded that when the Government has effectively nationalised many of the U.K.’s banks, they are now treating their customers with such contempt.

And the claim that the Government’s quantitative easing polices – which sees money being pumped into the banks in order to encourage them to loan it back out to their customers – is being ridiculed as a further example of banks wanting it all their own way.

Many of the financial pundits have joined Mr Cable in continuing to highlight the irony of the banks who hope to profit from a situation that they helped to create. The U.K. banks, like many across the globe, are seen as causing the crisis with not only over lenient lending policies when it came to lending people money, but also by re-packaging toxic assets that are still hanging around the system like a financial time bomb.

NatWest and Lloyds have come under particular scrutiny, as they are charging twice as much interest on their personal unsecured loans as many other lenders. And this at a time, many argue, of zero inflation.

But when questioned about their high rates, a NatWest spokesman hit back with the excuse that all their loan applications are judged on their customer’s ability to pay, not a standardised rate. Thus, personal circumstances, credit history and the ability to repay are all considered. And some customers, judged a higher risk than others, are asked to pay a higher rate. But, says the spokesman with undoubtedly a straight face, at least the lender has the confidence of using a high-street bank.

The reasoning from Lloyds appears to be the same, as their spokesman claimed that most of their personal loans, at least two thirds, are agreed at 9% interest. The remaining third of their loans do attract higher interest rates, but this is because of their customer’s personal circumstances. And, claim the bank, they do try to keep their rates in-line with the rest of the high-street.

Whether Mr Cable is right, or whether the banks are just trying to be prudent at long last, remains to be seen.

Guest Article by Neil Camp