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Jill Insley
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Posts by Jill Insley
Doing good – by comparison
Mar 14th
A personal finance comparison site set up by Beat That Quote and Oxfam promises to donate two thirds of its takings to charity
Savers who take out a new Isa or switch providers could raise money for charity at the same time by using a comparison website set up by Oxfam.
Comparison sites are typically paid commission by whichever product provider the customer selects. This can range from a couple of pounds for a credit card to hundreds of pounds for a life insurance, pension or annuity product. CompareForGood.com – a collaboration between site Beatthatquote.com and Oxfam – will give more than two-thirds of the commission it generates to charity. The remainder will be used to run the site.
Compare for Good allows consumers to compare thousands of products, including loans, mortgages, credit cards, current and savings accounts, pensions, annuities and investments. Isas, for example, are arranged with instant access accounts at the top of the table, followed by those with a fixed term.
Compare for Good was developed by entrepreneur Ivan Massow, who set up an insurance advisory firm for gay men and people with HIV in the 1990s. He said: “We estimate that every household has two or three credit cards, plus two or more insurance policies – home, car, travel – that will need renewing each year. If people use Compare for Good to switch deals, that’s quite a lot of potential income for Oxfam.”
Charities have suffered a fall in donations during the recession, but Cathy Ferrier, Oxfam’s director of fundraising, said: “This website means people can support Oxfam even when money is tight.”
The site will soon be adding a utilities comparison service, enabling visitors to make sure they are on the most competitive tariffs. The 4%-8% cuts in consumer prices announced by the big six providers – npower, E.ON, Scottish and Southern Energy, EDF, Scottish Power and British Gas – during the past few weeks are much smaller than expected given the drop in wholesale costs, which have fallen by 60% since their peak in the summer of 2008, according to energy consultants McKinnon & Clarke.
But if you add these cuts to those made last year, E.ON has reduced bills by £112 in total, Scottish and Southern Energy by £97, nPower by £94 and British Gas by £170, says comparison website Uswitch.
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Bank charges: Overdrawn by 15p? Let’s call it £80
Mar 14th
One Alliance & Leicester customer’s penalty charge works out at 53,333%, finds Jill Insley
An Alliance & Leicester current account customer, charged £80 for going 15p overdrawn, is calling on the bank to introduce a “buffer” for those who mistakenly go into the red without permission.
Lewis Mathers, 20, from Leigh-on-Sea, Essex, ran up an unauthorised overdraft for 11 days last November. Alliance & Leicester did not notify him immediately and he only noticed he had gone overdrawn on his monthly statement.
Since the amount was 15p he thought little of it. But the bank levied a £25 penalty and, because he used the account while overdrawn, the charges spiralled to £80. This is equivalent to a simple interest rate of 53,333% on the 15p, and two days’ pay for Lewis, who supports himself and girlfriend Charlene Jones, who has a heart condition, on a £200-a-week salary plus her £250-a-month disability living allowance.
Lewis’s father Nigel, a mortgage consultant, said: “We contacted Alliance & Leicester to let them know that they appeared to have made a terrible mistake but we were totally shocked when they said the charges were correct.
“We highlighted to them that the charges equated to a penalty interest rate of over 53,000% and an APR close to 2,000,000%, and that this could not be possible, but they simply said that if we were not happy we would need to put our complaint in writing. However, when we did this and asked them not to apply their charges while the account remained in dispute, they wrote to us stating that their charges were correct.”
When they continued to contest the charges, Alliance & Leicester said it would not refund them because of a Supreme Court ruling in November which said the OFT had no power to decide whether bank charges were fair or not. It said: “The Supreme Court decided, unanimously, that the level of banks’ unarranged overdraft charges could not be assessed for fairness. Therefore we do not believe that there is any legal basis on which the amount of the charges can be challenged or refunded, and hence the fees levied are valid.”
Mathers took his case to the Financial Ombudsman, complaining Alliance & Leicester’s charges were immoral and must be incorrect, but was told the service would be unable to help if his complaint related to the level of charges. Still, a spokeswoman for the service says all banks “should treat customers who are in financial hardship in a sympathetic and positive way and try to produce a resolution”. A low-income customer whose overdraft charges pile up because he is unable to clear the debt may be judged to be in financial hardship.
Eventually Alliance & Leicester agreed to refund most of the charges as a “gesture of goodwill”. But a bank spokesman said: “We believe that our fees are fair, legal and appropriate, and clearly explained. Customers have a responsibility to keep an eye on their finances, but if a customer believes they are going to go over their agreed limit, they should contact us to see how we can help.
“Mr Mathers was given plenty of notice of the fees being applied to his account, and as he was continually using his account to deposit and withdraw funds it would have been simple for him to have kept an eye on his balance and avoid the unauthorised overdraft fees.”
Although the Mathers are grateful the charges have been reduced, Nigel is still concerned other Alliance & Leicester customers will be caught out. He said: “If they want to be fair to customers they need to change their banking policy so that those who go overdrawn by very small amounts and/or for very short periods, should not be penalised at all, or should certainly not be penalised to the extent that they are.
“A large number of banks do allow a reasonable amount of flexibility in this area and offer an overdraft “buffer zone” or a time period whereby no charges apply. These other banks accept there will be certain where an account may go slightly overdrawn and do not feel the need to punish customers in those circumstances. I believe that Santander (which owns Alliance & Leicester) should look at those accounts and apply a similar policy so they can avoid treating their customers unfairly.”
A spokeswoman for Alliance & Leicester says the bank has no plans to change the structure of its accounts.
Draft dodging
A recent survey by Moneysupermarket.com found that 5 million Britons – or 10% of those old enough to have a bank account – are permanently overdrawn, while 12% drop into the red five times a year and 38% use their overdraft at least once a year. So which account suits what type of overdraft user?
• Occasionally overdrawn
Cheapest: The Halifax Reward current account is the cheapest for customers who go overdrawn by £500 for just five days a month, as the overdraft charge of £1 per day for debit balances under £2,500 will be covered by the £5 monthly payment the bank pays to account holders who pay in £1,000 a month. bank account £16.80.
Most expensive: Alliance & Leicester’s Premier Direct account is one of the priciest, costing £2.50 a month or £30 a year.
• Permanently overdrawn
Cheapest: Ironically Lewis Mathers might do better if his account was permanently in the red. Alliance & Leicester is one of the cheapest, costing someone in this situation £60 a year, according to Moneysupermarket.
Most expensive: Halifax’s fixed daily rate the makes it one of the most expensive, with borrowers clocking up £300 in charges.
• Accounts with buffers
Buffers allow you to go overdrawn by a small amount without incurring hefty fees. Coventry Building Society’s First Current account and First Direct’s First account both offer buffers of up to £250. The Co-operative Bank’s Current Account Plus has a £200 buffer while NatWest’s Current Plus account offers a £100 buffer.
Jill Insley
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The tube driver: Tunnel vision
Mar 13th
Robyn Jiles may be one of only a few female tube operators – and once the youngest – but, as she tells Jill Insley, she still loves her job as much as the next man
Most people can remember very clearly where they were when they first heard about the 7 July bombings. Robyn Jiles, an underground train operator with Transport for London (TfL), was fast asleep in bed at home when the bombs went off, but she spent much of the rest of the day guarding a train standing at a platform in Waterloo tube station.
On that terrible day in 2005, when 52 people were killed and 700 injured by four bomb explosions – three in London’s underground system and one on a double decker bus – Jiles was woken by a call from her mum, desperate to find out if she was safe.
“I was working the late shift, so I was still at home, but I rang up work straightaway to see if I could help. I ended up relieving a driver who had been stood in a station for six hours,” she says, explaining that drivers are not allowed to leave their trains even if the service has been suspended.
Trains were running again the following day when she reported for work, but the eerie atmosphere remains with her. “There was a special timetable service, but I only picked up 10 passengers,” she recalls.
Some passengers continued to be deterred from using the tube for many weeks after the bombings: I still have friends who prefer to travel above ground if at all possible. Did it affect train operators in the same way? “We talked about it quite a bit, but our perspective was that it could happen anywhere, any time. The terrorists wanted to stop London, and the best thing to do, to prevent them, was to get on with things as normal.”
While the 7 July bombings vividly brought home some of the unique risks of working below ground on a daily basis, tube drivers have another potential trauma to contend with. Each year, on average, 22 people choose to end their lives by jumping in front of tube trains. When put into context, such incidents – out of more than 1bn annual passenger journeys – are thankfully rare and Jiles has been fortunate to have avoided one so far. Even so, she has seen how being subjected to such an incident can have a profound effect.
“You don’t know how it’s going to affect you until it happens,” she says, pointing out that TfL provides first-class counselling to help staff who have been involved. “I’ve seen the strongest of men completely changed. But I don’t think it’s healthy to think about it. As long as I know what I’m expected to do if it happens.”
Jiles sometimes gets curious stares from passengers on the platforms as she drives past, possibly because she is a female working in a very male-dominated world – there are 21 female operators based at Jiles’s Morden depot, compared with more than 200 men. But I can’t help thinking it’s more likely to be because she looks so young: now 25, she applied to join TfL on her 18th birthday after completing her A-levels, and started driving trains at 19. At the time she was the youngest train operator on the underground (there is now an 18-year-old driving). Reassuringly for anyone who travels on the underground, the training course for train operators is very demanding, “much harder than A-levels”, she says. “I’d never done anything technical before. But because we worked in a group, we really helped each other.”
The first four weeks were spent doing theory, followed by 17 weeks of stock training – learning about the trains from the inside out. “The trains on every line are different,” says Jiles “The Northern Line trains were introduced in 1995, Jubilee in 1997 and Bakerloo in 1972. You learn every inch of the trains – every switch, every mechanism, so if something goes wrong, you can fix it.”
Next came learning to drive the trains. Trainee operators can practise on a simulator (the public can try one out at the Transport Museum in London’s Covent Garden), but because the underground system is so busy, there is no opportunity to learn by driving empty vehicles: you go straight from simulator to an in-service train complete with passengers, albeit with an instructor at your side. Jiles points out, with a smile, that the instructor can always press the red emergency button to stop the train if things go wrong.
Trainees have to learn all the signals, all the possible shunts – everything about the line they are working on. This is no mean feat: Golders Green, for example, has about 50 possible shunting positions. Driving lessons last for three months and each trainee has to complete a minimum of 100 hours before taking their test. Every part of the training is examined, and if the trainee fails, he or she goes back to scratch. The driving test alone lasts eight hours.
Into the black hole
On the day we meet, Jiles is due to drive a train from Morden, at the southern extreme of the Northern Line, to High Barnet via Bank, and has agreed to drop me off at the Guardian’s offices, in King’s Cross, en route.
The operator’s cab is surprisingly spacious, cool and sweet smelling – especially when you consider the fetid hordes squashed in like sardines in the carriages behind. Settling into the driver’s seat on the left of the cab, Jiles invites me to sit on the other side and picks up a telephone handset to announce in a low, calm voice that the train is about to depart.
As we move forward out of the sunshine (Morden is based above ground) into the tunnel, I feel like we are being sucked into a black hole. It seems absolutely pitch black to start with, and if I was driving I would be slamming on the brakes right now. But Jiles’s eyes are much more accustomed to the low light levels, and gradually even I start picking out the ribs of the metal lining of the tunnels – it feels a bit like being Jonah in the stomach of the whale.
As a passenger, you sometimes think the train is going really slowly – how can it possibly take so long to get from Clapham South to Clapham Common when you can walk it in 10 minutes? But upfront it’s quite bumpy and seems very fast, even though at times the train is restricted to 15 miles an hour, and the maximum speed for a Northern Line train is 35 miles an hour.
At each station, Jiles either watches a small TV screen or opens her cab door and sticks her head out to see if everyone has got on the train. You’d think train drivers would prefer off peak periods when stations are relatively empty, but she prefers operating trains during busy times when there are more people on the platforms, arranged neatly behind the yellow lines. It gives more opportunity for customer interaction, she says.
Jiles recently travelled as a passenger by underground to visit a friend in north London during rush hour: “I was amazed that people could deal with it. It was so packed.”
She likes making announcements, which is just as well: operators are expected to communicate why delays are happening within 90 seconds of being at a platform, or 30 seconds if held in a tunnel. Tfl takes communication with its customers seriously, sending “mystery shoppers” on to the lines to test whether this rule is being observed. Operators working on lines that meet the targets set by Tfl get a bonus.
At one station Jiles notices a group of school children on the platform. A customer assistant is waiting to tell her where the children are getting off, “so I can give them some extra time”.
She really does seem to love her work: “Sometimes I think I’m really lucky – this is such a different thing to do.” It’s not just the train driving: she has recently stood for election as a health and safety representative for her union, the Associated Society of Locomotive Engineers and Firemen (Aslef), and is already thinking about her next career move, perhaps to the control centre.
There must be something she doesn’t like about it? The uniform, maybe (blue polo shirt, navy trousers and fleece, black shoes, alleviated, I notice, by purple, panda-patterned socks)? “No, it’s fine. In the summer we can wear shorts – I really like those.”
What about antagonism from the general public about strike action (most people I know who live or work in London, even union members, groan at the name of Bob Crow, general secretary of the National Union of Rail, Maritime and Transport Workers)?
Aslef, she says, always tries to prevent industrial action: “We don’t want to strike. When we do vote for strike action, it’s because communication has broken down.”
So what are the pitfalls? “Well, the worst thing in the world is if you’ve made no announcement (inconceivable for Jiles), you’ve been delayed for 10 minutes because someone has pulled the emergency handle and you’ve got to walk through the train to find them.”
Although tube journeys normally seem to take forever, we are pulling into King’s Cross station in no time. I hurry to get out and turn to wave goodbye. But I’m too late. With ultra-efficiency, Jiles has already closed the doors and the train is pulling forward: she has disappeared into the next black hole.
CV
Pay Tube drivers’ salaries range from £19,448 to £40,714.
Hours Maximum of eight hours a day. Train operators must take a break of at least half an hour after four hours and 15 minutes.
Work/life balance Train operators get 43 days’ holiday per year (including bank holidays). Jiles say the shift system, running from about 5am to 1am the next day, works well for women with children, enabling them to fit in work at times that suit their families.
Best thing “The team I work with: they’ve become my friends, not just colleagues.”
Worst thing “It can get monotonous and lonely. You just have to find ways to improve this – by making announcements to the passengers, finding someone to talk to when you’re on breaks, making sure you have a busy social life.”
Overtime
Although Robyn was at one stage the youngest person qualified to drive a train on the underground, she has still not passed her car driving test. Robyn can’t bear to watch Creep (a horror film in which a woman gets locked in the underground overnight and stalked by a deformed killer), ‘not because it’s too scary but because it takes liberties with the way things are really done on the underground’. Robyn likes to eat oriental food, especially dim sum. Robyn listens to alternative music, especially rock, and her favourite band is Green Day.
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HSBC launches 1.99% discount mortgage
Mar 11th
Smaller arrangement fee means HSBC’s discount mortgage is market leader
HSBC is offering a market beating discount mortgage with a rate of 1.99% from Monday.
The loan, set at a discount of 1.95% from its standard variable rate (SVR) of 3.94% for two years, has a £999 arrangement fee and is available up to 60% of a property’s value.
Richard Morea of mortgage broker London & Country said the mortgage is good value, beating those with lower interest rates over the two-year period because of a smaller arrangement fee.
He calculates that a 25-year £150,000 HSBC repayment loan would cost £635 a month based on current rates. This means the borrower would pay £15,240 over the two years of the deal plus the £999 fee, producing a total of £16,239.
However, the same borrower taking out an Alliance & Leicester tracker mortgage set at 1.34% above the base rate would pay £624 a month. This would lead to lower repayments of £14,976 over the two-year deal period, but because the fee is 2% of the mortgage (£3,000) the borrower would pay a total of £17,976 – a difference of £1,737.
Morea said the difference would be even bigger if the borrower took out the maximum £250,000 available on this loan from HSBC. But he added that the A&L loan allows a higher loan-to-value of 70% and mortgages are available up to £750,000.
He added: “Tracker loans are completely transparent. If the base rate goes up the tracker rate will go up by the same amount. But discount rates are linked to the SVR and some lenders have been raising these in recent months, even though there has been no change in the base rate. The interest rates for this type of mortgage are therefore more cloudy.”
However, HSBC spokesman James Thorpe said: “I have had it on good authority from our mortgage guys that we have no intention of doing that. We don’t have the same funding pressures that other lenders are under.”
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Analysis: House prices could fall for several years
Mar 9th
Last month’s fall could be a blip but some economists warn there is worse to come
House prices may start rising again after last month’s fall but the market will drop later in 2010 and this time the correction could last for several years, economists warn.
House prices had risen for nine months in a row until last month, and both the Nationwide and Halifax said last week that the February fall could have been caused by the ending of a stamp duty exemption for homes between £125,000 and £175,000 at the end of December and the snowy weather. Nationwide’s chief economist Martin Gahbauer added that it wasn’t clear whether this would be a blip or the start of a new trend.
But Ed Stansfield of the consultancy Capital Economics thinks February’s price fall is a precursor of worse to come: “The correction we saw in 2008 and the beginning of 2009 is probably not over yet,” he said. “We’ve seen a recovery [in house prices] and the number of sales has improved, but if you look at the extent of that recovery against the recessionary backdrop – salaries, rental yields and unemployment figures – they all give you a very similar picture: that house prices haven’t finished their correction yet.”
He suspects that prices will start dropping in earnest after the election, once whichever party is in control begins to implement public spending cuts, and when the Bank of England base rate starts to rise again. “House prices will end the year lower than they started it,” he said.
Danny Gabay, a former Bank of England economist and director of consultancy Fathom, was even more bearish at the weekend, saying that British homeowners would at best be facing a decade of “flat to slightly falling prices”. He went on to predict a 5% fall this year and a 10% decline in 2011.
However, Barry Naisbitt, chief economist at Santander, says homeowners (and economists) should not get carried away by the direction of the house price indices for one month. “Just because we’ve had one bad month, it doesn’t mean it’s going to carry on,” he said. “You should look at three months’ worth to identify a trend.”
He is also more positive about the future for homeowners: while he believes that economic uncertainty, unemployment, depressed pay settlements and higher house prices themselves making purchase difficult for first time buyers could mean an end to inflation this year, he adds that the scarcity of property in the UK means that in the medium term at least property values will continue to rise.
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Fixed-rate mortgage? Homeowners should consider all alternatives
Mar 8th
You may pay over the odds if you panic-buy a fixed-rate mortgage when rates start rising, warn brokers
Borrowers who stampede for fixed-rate deals as soon as the base rate starts rising could end up paying over the odds for their loans, mortgage brokers warn.
Although the Bank of England last week kept its base rate at 0.5% for the 13th month in a row, economists and mortgage market watchers are unanimous in predicting a gradual climb in rates over the next couple of years. Economists at Barclays, for example, expect rates to hit 6.5% by 2015.
Fixed-rate mortgages have been considerably more expensive than tracker loans in the past year, but the gap has closed slightly in the last few weeks, and HSBC in particular has seemed keen to promote its fixed-rate deals.
Martijn van der Heijden, head of mortgages at HSBC, says: “The next few years are going to be difficult to predict in terms of mortgage rates, and some volatility for borrowers may be unavoidable. The message is that if you couldn’t afford an increase of up to 3% on your mortgage, you should look to fix your payments.”
But mortgage brokers are advising borrowers to consider trackers unless they are very nervous about being able to afford potential rises in their mortgage rate. Ray Boulger, of John Charcol, says the withdrawal of fiscal stimuli, cut in public spending and a possible hung parliament could cause volatility in interest rates, but adds: “I see no point in fixing for two years, because rates will still be going up. If you are going to fix, it needs to be for at least five years, but then the differential between the best fixed rate and best tracker is about 2.5%. You will be paying a big premium for the protection afforded by a fix.”
First Direct’s lifetime tracker is 1.89% above base rate (making 2.39% now), up to 65% LTV with a £499 fee. For those still tempted by short-term fixed rates, Yorkshire building society has loans fixed at 3.09% for two years (with a £1,195 fee up to a loan-to-value of 60%), while Britannia offers loans fixed at 3.19%, again for two years, with a £999 fee for up to 75% LTV.
HSBC is offering the best five-year fixed rate, at 4.64% for up to 60% LTV with a £999 fee, while Britannia has a 10-year fixed rate of 5.29%, with a fee of £999 and 75% LTV.
But David Hollingworth, of mortgage broker London & Country, points out that borrowers who must redeem before the end of the deal will face a whopping early redemption fee of 6% of the outstanding balance in the first six years, reducing by 1% each year thereafter. He added borrowers who opt for the cheaper tracker loans should take advantage of the lower payments to over-pay their mortgages or save in a separate account to reduce the shock of future rate rises.
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Green loans for homes could push up property prices
Mar 2nd
Government plans for energy efficiency could reduce mortgage offers, experts warn
Plans to make UK homes more energy efficient through new “eco-loans” could help to push up property prices but reduce the size of mortgages buyers can borrow, property market experts warned today.
The government plans to allow homeowners to borrow money to fund the upfront costs of eco-upgrades, such as the installation of solid wall insulation, heat pumps and solar panels.
Instead of paying for the energy efficient work upfront, homeowners will be able to take out a long-term loan, with repayments made through a pay-as-you-save mechanism. The loans will be designed so the repayments are less than the amount the borrower saves each month on energy bills, producing a monthly surplus.
This means that anyone living in a house that has had energy efficiency work done could make money out of the process even while the loan is being paid off.
In its household energy management strategy (pdf), the government acknowledged that although efficient homes were cheaper to run, this had not yet been reflected in house-buyer demand or property prices.
“A price differential between energy efficient and inefficient homes, coupled with the added prospects of lower fuel bills, would offer homeowners greater incentive to invest in energy efficiency measures,” it said.
It has asked the Royal Institution of Chartered Surveyors (Rics) to develop recommendations for both government and property professionals “so that the energy performance of a property starts to be better reflected in its market value”.
Barry Hall, a spokesman for Rics, said the recommendations would include drawing up standards for the energy saving equipment and for those installing them.
“Although solar panels and wind turbines are available, we have no idea how long they might last before they need replacing,” he said . “You need some kind of reassurance about their quality and a register for the installers, before installation will feed through into property valuations.”
He likened it to the early days of radiators: “To start with people would have a back boiler and one radiator in the hall upstairs. Then they decided they liked the effect, started installing more radiators and this then fed through to property prices.” Now properties that don’t have up-to-date central heating are likely to be down valued.
Martin Ellis, chief economist at the Halifax, one of the UK’s biggest lenders, said he thought the strategy would pay off.
“Annually homeowners should be better off: I think energy efficiency will become something that people take into consideration alongside location. It won’t make a huge difference to prices, but it should be a positive one,” he said.
One potential sticking point is that the new loans will be attached to the properties involved.
If a borrower sells up before the loan is paid off, the loan will have to be paid by the next owner. Some mortgage experts fear this could have the effect of reducing the amount buyers can borrow when taking out a mortgage.
David Hollingworth of mortgage brokers London & Country said: “You can see the sense of this approach in order to stimulate the use of the loans, as no one would want to take on a 20-year loan if intending to move on in five years.
“But from a lender’s perspective they will certainly want to know that there is a eco loan, and the monthly payments are likely to have an effect on affordability and so could result in a smaller mortgage being available to the buyer.”
Lenders have not yet been consulted on the proposals. A spokesman for the Council of Mortgage Lenders said: “Environmental concern is rightly high on the political agenda, but even so, the new financing initiative needs to be considered carefully before being implemented.
“If pay-as-you-save is to be secured against the property and transferable to future owners, this raises questions about how the conveyancing process may have to change to identify and report the existence of such loans, and there is also a question about whether the loans will be regulated.”
The government’s strategy also includes proposals for regulation to force landlords to install standard loft and cavity insulation measures as a condition of renting out property in the future, but no sooner than 2015. This could involve using a Landlords’ Register to help local authorities identify rented property in their areas and linking that with information on energy efficiency.
However Matt Hutchinson, director of flat and house-share website Spareroom.co.uk, said: “Energy efficiency comes very low down on the tenant’s wish list when choosing a rental property. Consequently, there is very little incentive for landlords to ensure that the properties they rent are effectively insulated.”
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Cash for Arch Cru investors
Mar 1st
Investors to learn how much they will receive in first tranche of Arch Cru funds, previously worth £400m
Thousands of investors whose investments have been frozen since March last year will learn today when they can expect to have the first tranche of their money released.
The £400m CF Arch Cru funds were suspended last year by the funds’ administrator Capita because of an apparent lack of liquidity – the ease with which the fund manager could sell assets to raise money for investors wanting to cash in their holdings.
In December Capita told investors it was not possible to lift the suspension on dealing in the funds, as it would not be possible to meet demand from investors wanting to redeem their money. It applied to the Financial Services Authority to wind up the funds on an “orderly realisation” basis, selling the underlying assets over a period of time to ensure shareholders benefitted from a fair value.
Although the FSA has granted permission for winding up, Capita has warned the process could take up to five years because of the long-term and illiquid nature of the assets, which included wine companies and shipping.
Capita said: “There will not be a “fire sale” of the assets of the cells (a sale to realise the assets as quickly as possible at any price), as we believe this would significantly reduce the return for shareholders. An orderly realisation will, however, release value to shareholders sooner than if the assets of the cells were held to their maturity.”
The funds were invested in a range of complicated and difficult-to-sell assets. They bought the shares of various Guernsey listed “cell” companies: these in turn had invested a range of assets, including private equity, hedge funds, asset-backed loans linked to shipping, property-linked investments and direct holdings in companies including a fine wine investment company.
Investors will learn today how much they will get as part of the first distribution, and get an updated valuation information based on the audited and finalised valuation of the “cells”. Capita expects to publish a letter containing the information on its website at 8am today.
However, Spearpoint, the investment firm which took over managing the suspended funds from Arch Financial Products in December, is unlikely to have had time or opportunity to sell many of the assets yet, meaning the first payout will be based on the small amounts of cash available in each fund.
It has already revealed that restructuring the funds’ £92m investment in a single Greek shipping company is key to how much money will be recovered for investors: the investment has nearly halved in sterling terms, according to a report on trade website Citywire.co.uk.
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Lloyds Group attracts twice as many complaints as other banks
Feb 25th
Ombudsman reports combined Lloyds TSB and Bank of Scotland complaints top its list, with Barclays in second place
Lloyds Banking Group attracted more complaints to the Financial Ombudsman Service in the second half of 2009 than any other financial firm, according to figures released today.
In the last six months of the year the FOS received 20,190 complaints about the group, including 9,952 concerning Lloyds TSB – the highest number for an individual bank – and 7,349 about Bank of Scotland.
The Lloyds group received almost double the number of complaints as Barclays bank which came second on the list. The ombudsman received 10,892 about the Barclays group in total, including 9,836 complaints from Barclays bank customers.
The two groups’ banking arms have switched positions in the complaints table but both attracted substantially more complaints referred to the ombudsman than in the first six months of last yearwhen Barclays bank attracted 8,283 complaints, while Lloyds TSB had 6,947 complaints.
However, the ombudsman found in favour of the consumer in a higher proportion of Barclays bank complaints, upholding 54% of banking and credit complaints, 96% of general insurance, and 65% of the total.The ombudsman found in favour of Lloyds TSB customers in 31% of the banking and credit cases, 89% of the insurance cases and 51% of the total number.
The FOS said more than two-thirds of insurance complaints related to payment protection insurance, policies sold to cover debt repayments in the event of the policyholder losing their jobs or being unable to work through sickness or injury.
During the last six months of last year the FOS received a total of 82,136 new complaints – an increase of 18% on the 69,841 cases received in the first half of 2009. Of these new cases, 88% related to 155 firms, out of more than 100,000 covered by the ombudsman.
Five financial services groups accounted for 46,979 cases, more than half of all the new complaints. These were Lloyds, Barclays, Royal Bank of Scotland (with a total of 7,098 complaints), Abbey (4,918 complaints) and HSBC (3,881).
The data published today shows that in the second half of 2009 the ombudsman service upheld an average of 53% of complaints in favour of consumers, compared to 59% in the first half of the year.
David Thomas, interim chief ombudsman, said it was encouraging to see that some businesses were committed to handling complaints better, but added: “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.”
The ombudsman service said the number of new complaints against each business is likely to be affected by the business size.
The Association of British Insurers said it was necessary to know the number of products sold by companies to put the complaints into better context.
Maggie Craig, the ABI’s director of consumer strategy, said: “The actual number of motor insurance complaints referred to the FOS equated to one complaint per 4,100 motor policies; one complaint per 12,700 travel insurance policies, and one complaint for every 14,700 annuity contracts.
“Going forward, it is important for the FOS to adopt a similar approach when publishing its complaints data. This approach will help customers to make informed choices about an individual company’s performance, and provide the right incentive for individual firms to improve their performance as necessary.”
In a statement, Lloyds Banking Group said it took all complaints seriously and was committed to ensuring that they were dealt with fairly, quickly and consistently.
“With over 30 million customers, the group has the largest customer base in the UK. The vast majority are happy with the service we provide and this is reflected in the low number of complaints we receive in relation to the high number of accounts we hold.
“We encourage our customers to share their views with us and we use that feedback to help us to provide a high quality of service. We are focused on developing a long-term and strong relationship with our customers, and the complaints and feedback process is an essential part of that relationship.”
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Forced retirement increasing, says charity
Feb 25th
Charity survey reports: ‘Forced retirement has spiralled out of control as employers use low-cost shortcut to shed jobs’
More than 100,000 people were forced to retire against their will last year as employers used the default retirement age to cut back on jobs, according to Age Concern and Help the Aged.
The charity said its research suggested employers had used forced retirement as a cheap and easy alternative to redundancy during the recession.
Michelle Mitchell, Age Concern and Help the Aged Charity director, said: “Our survey clearly shows the use of forced retirement has spiralled out of control, offering some employers a low-cost shortcut to shed jobs during the recession.
“The default retirement age has stamped an expiry date on hundreds of thousands of older workers. It’s the most disturbing example of age discrimination which still tarnishes later life for so many people.”
The charity’s figure is four times higher than the number it expected to see when the default retirement age of 65 was first introduced in 2006.
However it said it expected the situation to get worse in the near future: some 530,000 workers aged 60 and over are still working for employers who enforce the default retirement age of 65, and 250,000 aged 60 to 64 say it is likely or certain that they will be forced to retire.
The default retirement age allows employers to force workers to finish work at 65, although they are obliged to consider reqests from individuals for their retirement to be postponed.
Charities have warned in the past that when companies are trying to save money they may use the rules to get rid of older staff, rather than making younger staff redundant. However, employers do have to give six months’ notice that they plan to enforce the rules.
The default retirement age prevents employers from forcing workers to retire earlier unless an earlier retirement age can be justified: many companies had a compulsory retirement age of 60 previously. Last month the Equality and Human Rights Commission (EHEC) called for the government to scrap the default retirement age and to extend the right to request flexible working to all employees and consider introducing incentives for flexible employers, with a particular emphasis on the over-50s.
A survey of 1,500 workers by the commission suggested a rule change would be welcomed by many workers. It found that 64% of women and 24% of men wanted to remain economically active after the state pension age (currently 65 for men and rising to 65 for women by 2020).
Margaret Davison-Scott was forced to retire from two part-time jobs she had with the East Riding of Yorkshire Council when she reached her 65th birthday.
“The council had mandatory retirement at 65 – unless you were in a key position, you had to leave. One person said they had to free jobs up for younger people, but the kind of jobs I was doing – part-time as a librarian and in the housing department – weren’t the kind of things you would sign off benefits for,” she said.
Davison-Scott is now living on the basic state pension and a small occupational pension, producing a combined total of less that £1,000 a month. She said: “I wasn’t ready to give up the ghost: I miss the people I worked with and it’s been a struggle financially.”
A spokesman for East Riding of Yorkshire Council said: “All individuals are afforded their full statutory rights to request retention beyond the age of 65 and it is up to the employing department to determine if individuals meet the criteria for retention.
“Individuals who are not successful in securing retention have the right of appeal against that decision. Where successful in their request to be retained, employees have been retained beyond the age of 65 across all directorates of the council in a wide range of occupations.”
Although the government has said that its long-term aim is to scrap fixed retirement ages, and that will review the default retirement age this year, Age Concern and Help the Aged has called on all political parties to adopt the policy in their manifestos.
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