HSBC and Santander to refund millions to customers after breaking overdraft rules

HSBC and Santander to refund millions to customers after breaking overdraft rules

The competition watchdog says both banks broke rules requiring them to contact customers before they go overdrawn

Stephen Little
Fri, 11/29/2019 – 10:11

Image

HSBC and Santander have agreed to refund hundreds of thousands of customers after they broke bank overdraft rules.

The competition regulator, the Competition and Markets Authority (CMA), says that both banks broke a legal order that requires them to send text alerts to customers before they go into unauthorised overdrafts.

HSBC broke the rules twice and is refunding £8 million to 115,000 customers.

Santander broke the order six times and has agreed to issued a refund, but it has not yet worked out how many customers were affected or how much they will be paid.

The CMA says the breaches first occurred in February 2018. The refunds will cover all fees incurred by customers who went into unarranged overdrafts and did not receive a text alert.

Since 2018 banks have been required to send text messages to customers when they go overdrawn to help them avoid paying unnecessary charges.

HSBC says it will be contacting customers who incurred overdraft charges to refund them.

An HSBC spokesperson says: “We apologise to those customers who for different reasons did not receive an alert. We will continue contacting customers who incurred overdraft charges as a result of these issues to apologise and provide a refund.”

Santander says it “working to identify and refund all affected customers as quickly as possible”.

A spokesperson from Santander says: “We are very sorry that some customers in certain circumstances were not sent the required overdraft alerts. The introduction of these alerts is a move we welcomed and believe is a real support to customers. 

“We have carried out a detailed review to understand why the errors happened and have taken steps to fix the issues.”

The CMA it is also directing HSBC and Santander to do an independent check of their compliance with the order between February 2018 and December 2019.

Earlier this year, Nationwide Building Society agreed to refund £6 million to its customers after it failed to send them correct text warnings.

Labour’s WASPI pledge: I’d get £12,833 extra state pension, but this cash should go to the NHS

Labour’s WASPI pledge: I’d get £12,833 extra state pension, but this cash should go to the NHS
Hannah Nemeth
Thu, 11/28/2019 – 14:18

Image

If Labour confounds the latest poll from YouGov and is able to form a government, then I will be due for a windfall of £12,833 over five years – that’s £2,566 a year.

I’m already thinking about how I would spend this pension payout – paying off credit card bills, helping my two kids with deposits for their first homes or just helping to clear their debts, going on a few holidays or splurging on a trip to Ikea or John Lewis.

But, deep down, I believe my potential windfall would be better spent elsewhere – on improving the ailing NHS.

Born at the tail-end of the 50s, for the first 15 years of my working life I expected to receive my state pension at 60. And this did affect my retirement planning – I took out a personal pension plan in my mid-20s and I factored into my pension forecast that I would receive my state pension at 60.

I do recall receiving a letter explaining that my state pension age would go up from 60 to 65 – and I remember feeling dejected and angry.

When the 1995 Pensions Act was introduced, I was self-employed with two young children and wasn’t earning enough to plough extra cash into my pension pot and make up for a shortfall in 25 years’ time.

In 2011, I accepted the change to my state pension age from 65 to 66 with greater equanimity because it didn’t seem such a big leap.

While I have lost out on six years of state pension, to some extent I have had time to play catch-up – however, not all women have been so lucky.

I am a ‘Waspi’ – one of the Women Against State Pension Inequality – but only out of support for those who are most adversely affected, such as women born from 6 April 1953 to 5 April 1955, who had their retirement plans snatched away from them.

Image

Labour posted a ‘calculator’ online to show how much so-called Waspi women could get back in state pension payments

I have friends in this age group who have found it hard to see other women who celebrated their birthday just a few months before them accessing their state pension months or years earlier.

The other groups that I believe should be compensated are workers on low incomes, struggling to make ends meet and unable to make up the shortfall, along with self-employed women who couldn’t fall back on a company pension plan or afford to pay more into a private pension.

I am puzzled why Labour would propose a compensation scheme that will be universal. While I am not in favour of means-testing, I do feel there should be a cap on compensation to the wealthiest women in our society.

Much has been made of the fact that Theresa May would receive £22,000 under Labour’s compensation scheme – she earns £79,468 a year as an MP.

But what about ITV breakfast host Lorraine Kelly, born on 30 November 1959, who would be entitled to £2,191, and is said to be worth more than £4 million? Or actor Emma Thompson, born 15 April 1959 and said to be worth $45 million, who would be entitled to a payout of £5,966?

Let’s keep the compensation for those who really need it or those who were most adversely affected by being at the cusp of when these changes started to take place.

And if money can be found in the government’s coffers for this – and that’s a big if – let it go to our beleaguered NHS.

That way, both men and women can benefit, getting the best treatment possible as quickly as possible – something more of us will need as we head towards retirement.

NatWest launches new digital bank Bó, but is it any good?

NatWest launches new digital bank Bó, but is it any good?

The new bank is targeting younger customers who are increasingly switching to rivals such as Monzo and Starling

Stephen Little
Thu, 11/28/2019 – 12:25

Image

NatWest has launched a new digital bank to rival the likes of Monzo and Starling.

Bó is a digital, cloud-based bank that comes with a bright yellow debit card and a mobile app that tracks debit card spending.

Challenger banks are growing in popularity with many people looking to switch accounts from the big high street players.

The new breed of app-based banks such as Monzo and Starling offer a host of features that appeal to younger customers, such budgeting tools or fee-free spending abroad.

In response, traditional high street banks such Lloyds, Barclays and HSBC have been adding challenger-style features to their apps.

Chief executive of Bó, Mark Bailie, says: “As we’re part of NatWest, people can rely on Bó to keep their money safe. But as a digital bank, built entirely on a separate cloud-based technology, Bó is also able to harness new technology and develop rapidly in line with our customers’ needs and expectations.

“With Bó we have an opportunity to help address a genuine societal need and to be a positive force in our customers’ lives. Our aim is to transform the nation’s attitudes and behaviour around money and I’m hugely excited to see what we can achieve.”

What features does it have?

Currently, you can only open a personal account, which can be done by downloading the app to your phone.

The account works as a second account to your main current account, allowing you to track your spending each month.

You can only add money to your account by bank transfer from another account. This means you cannot pay your salary into your account or use it for direct debits. Money can only be transferred using the Faster Payments scheme.

To open an account you must be 18 or over and a UK tax resident. If you are paying tax in another country you will not be eligible.

The account allows you to keep tabs on spending with instant alerts whenever you use your card and everything you buy listed by retailer, category and location.

You can also create a spending budget to help you save towards your goals and there is a piggy bank feature as well.

Fees

Cash withdrawals from ATMs in the UK, EU or anywhere else in the world are free, although you may be charged by the cash machine’s operator.

If your card is lost or damaged it will be replaced for free the first two times, after which you will be a £5 fee.

Is your money protected?

As the company is part of NatWest your money is covered by the Financial Services Compensation scheme up to £85,000.

Where can you use the debit card?

You can use the debit card anywhere in the world that Visa is accepted.

How does it compare?

While the Bó account has been launched to rival Monzo and Starling, some of its features are currently limited.

As you can’t use it for bills and direct debits, Bó essentially works the same as a prepaid card.

This is different to Monzo and Starling, which allow direct debits and your salary to be paid in.

Just like Monzo and Starling, Bó comes with a debit card which you can freeze. Bó also has similar features such as fee-free spending abroad, instant notifications and tools to help keep your eye on spending.

One of the biggest differences is that Monzo and Starling both offer overdrafts and interest on your savings, whereas Bó does not.

Starling pays a 0.5% annual rate of interest to account balances below £2,000, and 0.25% to those under £85,000.

With Monzo you can also create a savings pot with a partnered bank, earning up to 1.40% in interest.

Bó also currently only allows you to make one piggy bank account, whereas Monzo allows you to set up multiple ones to separate your money.

While Starling and Bó do not charge you fees for using your card abroad, Monzo charges you 3% on withdrawals abroad after £200.

David Clarke, head of policy at campaign group Positive Money, says: “That RBS sees an opening in the digital banking market is a sign of the failure, as well as the success, of its start-up rivals. Many had hoped that digitisation would revolutionise the banking system, with new entrants such as Monzo and Revolut finally breaking the stranglehold of the established players.

“But despite some successes, most digital bank customers still have their main account with one of the big four legacy banks, whose market share has remained largely unchanged. The highly-concentrated nature of UK commercial banking is unlikely to change without government intervention, and as a subsidiary of RBS, Bo offers little in the way of meaningful competition.” 

Potentially ‘deadly’ electrical items sold on online marketplaces including eBay and Amazon, charity warns

Potentially ‘deadly’ electrical items sold on online marketplaces including eBay and Amazon, charity warns

Online marketplaces such as Amazon and eBay are failing to tackle the sale of potentially ‘deadly’ items from third-party sellers, a consumer safety charity is warning ahead of Black Friday

Stephen Little
Wed, 11/27/2019 – 10:56

Image

Charity Electrical Safety First tested products found on Amazon Marketplace, eBay and Wish, including items such as hair straighteners, phone chargers, travel adapters and laser hair removers.

Of the 15 products which were purchased, 14 failed tests against the UK standard.

Failures ranged from minor non-compliance with markings to severe failures posing a risk of electric shock and fire.

During its research, Electrical Safety First found that a single-port charger bought on marketplace Wish came fitted with no protective devices. During testing the product ruptured internally, which could lead to a possible explosion.

Its investigation also found that a laser hair remover purchased from eBay posed a significant risk of electric shock to the user because of access to live parts, while counterfeit GHD hair straighteners were also purchased from Wish and found to pose a potential electric shock risk.

A hairdryer from Wish also ignited when put through a test to restrict the products air flow, while a modelling hair comb purchased from Amazon Marketplace exhibited a fire risk to the user due to a plug that failed to meet UK against safety standards.

Martyn Allen, technical director of Electrical Safety First, says: “No product that fails our tests should be being sold, and it’s very clear that the lack of regulation of online marketplaces – from government or from the sites themselves – is allowing those who sell dangerous goods to make a profit at the expense of consumer safety.

“As well as legislation, properly funded enforcement at ports and airports are necessary to stop these goods from entering the country.

“If you’re buying an electrical item, stick to a reputable retailer whom you trust and if you spot any safety concerns, stop using it and contact the manufacturer. Buyers need to beware.”

A spokesperson from Amazon says: “Safety is a top priority at Amazon. We require all products offered in our store to comply with applicable laws and regulations and have developed industry-leading tools to prevent unsafe or non-compliant products from being listed in our stores. The products have been removed.”

An eBay spokesperson says: “The importance of our customers’ safety is paramount. We proactively enforce our product safety policy using block filter algorithms to prevent unsafe products from being listed.

“In addition, our security team continuously patrols our marketplaces and will remove items and take appropriate action against sellers who breach our policies.”

FCA bans the marketing of high risk mini-bonds to retail customers

FCA bans the marketing of high risk mini-bonds to retail customers

The watchdog says it is banning the investments ahead of the upcoming Isa season

Stephen Little
Tue, 11/26/2019 – 11:02

Image

The financial regulator is banning the mass marketing of mini-bonds to retail customers following the collapse of a number of companies.

The Financial Conduct Authority (FCA) says it is intervening to protect inexperienced investors ahead of the Isa season.

The FCA says that it has significant concerns with the widespread marketing of mini-bonds and warns there is growing evidence of fraud.

The watchdog says the ban will restrict the promotion of mini-bonds to “sophisticated” or high-net-worth investors.

Andrew Bailey, chief executive of the FCA, says: “We remain concerned at the scope for promotion of mini-bonds to retail investors who do not have the experience to assess and manage the risks involved.

“This risk is heightened by the arrival of the ISA season at the end of the tax year, since it is quite common for mini-bonds to have ISA status, or to claim such even though they do not have the status.”

Firms will also have to include risk warnings and disclose any costs or payments to third parties on marketing materials.

The FCA says it is investigating more than 80 cases of regulated activities potentially without having the right FCA authorisation and over 200 cases of financial promotions that appeared not to have complied with the FCA’s rules.

The ban will come into force on 1 January and last for 12 months while the FCA consults on making permanent rules.

What is a mini-bond?

A mini-bond is effectively an IOU issued by a company to an investor, in exchange for a fixed rate of interest over a set period of time. At the end of this period, the investors’ money is due to be repaid.

While there is no legal definition of a ‘mini-bond’, the term usually refers to illiquid debt securities marketed to retail investors.

The return on investors’ money entirely depends on the success and proper running of the issuer’s business. If the business fails, investors may get nothing back.

They typically offer high returns, but this means they come much higher risks compared to other types of investments.

As firms do not generally have to be regulated by the FCA to issue mini-bonds, this means you are not protected by the Financial Services Compensation Scheme (FSCS).

Collapse

The news comes after thousands of small-scale investors lost millions when mini-bond lender London Capital & Finance (LCF) collapsed earlier this year.

LCF advertised itself as a low-risk Isa provider, offering market-leading returns of 6.5% to 8% a year.

Nearly 12,000 customers, many of them pensioners, lost £236 million when the company fell into administration in March.

The FCA was then ordered by the government to launch an independent review into its handling of the collapse of LCF.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, welcomes the ban.

She says: “Not all retail bonds are equal, and this particular kind of mini bond has always posed huge risks for retail investors – as they embody a lethal combination of fiendish complexity and high risk.

“At this time of year there’s always the risk that inexperienced investors are tempted by a complex mini-bond claiming to be an Isa and seeming to offer attractive returns, without understanding what they’re getting into.

“It’s great to see the FCA take decisive action on these bonds, and get something in place quickly for this Isa season.”

What the party manifestos will mean for your money

What the party manifestos will mean for your money

The major political parties have unveiled their manifestos, but how will they affect your finances?

Stephen Little
Mon, 11/25/2019 – 12:39

Image

All of the major political parties have now unveiled their manifestos.

Labour and the Liberal Democrats have both come in for criticism for promises that could cost the UK tens of billions of pounds a year.

Meanwhile, the Conservative manifesto, which promises to “get Brexit done” has instead played it safe with spending commitments.

We take a look at how they will affect your personal finances.

Income tax

Boris Johnson has ditched planned income tax cuts of £8 billion for Britain’s highest earners. The Conservatives had previously pledged to move the point at which someone becomes a higher rate taxpayer from £50,000 to £80,000.

The Conservative Party has said it will not raise the rate of income tax, VAT or national insurance if it wins the election. From next year the party says it will increase the national insurance threshold to £9,500 next year from £8,424. This could mean a saving of around £100 a year for 31 million workers.

It says its “ultimate ambition” is to ensure that the first £12,500 people earn is completely tax free.

The Labour Party plans to increase tax for the highest earners while the majority will see no change.

It plans to tax people earning over £80,000 on 45% of earnings, while those earning above £125,000 will pay tax at a rate of 50%.

The party’s manifesto pledges a freeze on national insurance for everyone.

The Labour Party has also pledged to reverse inheritance tax cuts bought in under previous Conservative governments.

The Lib Dems have said they will add 1p to income tax to help fund the NHS and and social care.

Pensions

The Labour Party has pledged to pay back £58 million to women born in the 1950s hit by changes to the state pension age.

Individual payouts to women could be as high as £31,300. Nearly four million women have been affected by the government’s decision to raise the state pension age from 60 to 66.

Campaign groups such as BackTo60 and Women Against State Pension Inequality (Waspi) argue that many women born in the 1950s were not sufficiently warned of the changes and have suffered financial hardship as a result.

The Liberal Democrats have also pledged to compensate women born in the 1950s over state pension increases.

Labour has also promised to freeze the state pension age at 66 and not raise it in the future.

All three major political parties have pledged to keep the triple lock. This will guarantee that the new state pension increases by either 2.5%, average wage growth or inflation.

The Conservatives have also pledged to review the pension tax of low paid workers.

Those who earn between £10,000 and £12,500 – mainly women – have been missing out on pension tax relief depending how their employer has set up their pension scheme.

No mention was made about pension age changes was made, suggesting the current timetable to raise the state pension age will go ahead as planned.

Capital gains tax

The Labour manifesto has outlined plans to increase the amount of tax paid on capital gains (CGT) and dividend payments.

For workers currently earning more than £12,000, basic-rate income taxpayers pay lower CGT rates of 10% on gains from most assets and 18% on residential property, while higher-rate taxpayers pay 20% and 28% respectively.

As for dividends, currently investors receive a £2,000 dividend tax allowance before any tax is paid. Once that is used up, the rate of tax you pay depends on your income tax band.

Dividends are taxed at a lower rate than for earned income, with the basic rate of 7.5%, higher rate of 32.5%, and additional rate of 38.1% kicking in above the £150,000 income level.

Those separate dividend tax brackets will be abolished, with both dividends and capital gains instead taxed in line with the broader income tax brackets of 20%, 40%, 45% and 50%.

CGT will also likely see an increase under the Lib Dems, with the manifesto committing to ending the current separate CGT-free allowance and taxing capital gains and income through a single allowance.

Social care

With social care costs skyrocketing, there is a lot of pressure on each party to offer solutions. Labour’s is to create a National Care Service for England, intended to provide free personal care for older people.

At the same time, the party has committed to implement a care cap of £100,000 payable by individuals for so-called “catastrophic costs” and an unspecified lifetime cap on personal costs.

The Liberal Democrats have promised to invest and extra £35 billion in health and social care over the next five years.

The party says it plans to raise £7 billion for the NHS and social care funded through a 1p on income tax in England which will be ring-fenced.

Despite the current crisis in social care, the Conservative manifesto failed to provide any concrete proposals.

The party says it will provide £1 billion of extra funding a year for social care, as well as a commitment to seek cross-party consensus for long-term reform. It also promised to introduce a system which means no one will have to sell their home to fund long-term care, but details of this were vague.

Housing

Labour has proposed a radical shake-up of the housing system with plans to deliver a new social housing programme of more than one million homes a decade.

The party says it will build 100,000 council homes and 50,000 affordable social homes each year.

There will also be a levy on overseas companies buying housing, while giving local people ‘first dibs’ on new homes built in their area.

Runaway rents will capped with inflation, and cities will be given powers to cap rents further.

It has also pledged to bring in a new national levy on second homes used as holiday homes to help deal with the homelessness crisis.

The Conservative Party says it will bring forward a social housing white paper to “set out further measures to empower tenants and support the continued supply of social homes”.

It will also commit to renewing the Affordable Homes Programme, in order to support the delivery of hundreds of thousands of affordable homes.

The Liberal Democrats have pledged to build 300,000 new homes by 2024, including 100,000 social homes. The party also revealed measures for tackling empty properties, including powers for local authorities to increase council tax by up to 500% on second homes.

Childcare

Labour has pledged to provide 30 hours of free childcare to all pre-school children within five years of coming to power.

It says it will also work to extend childcare provision for one-year-olds and that childcare provision accommodates the working patterns of all parents.

The Lib Dems have also promised to provide 35 hours of free childcare once babies turns nine-months-old.

Currently, childcare is free for all three to four-year-olds with both parents working for 15 hours a week for 38 weeks of the year.

The Conservative Party says it will establish a new £1 billion fund to help create more high quality, affordable childcare, including before and after school and during the school holidays.