Bank charges: It’s only a black day for those in the red

November 25, 2009 11:13 am by Matthew Vincent

So there we have it: the Supreme Court has this morning ruled that bank charges for unauthorised overdrafts cannot be investigated by the Office of Fair Trading – effectively closing the door on millions of pounds worth of compensation claims from 1.2 million account holders.

But not because these overdraft charges have been deemed “fair” by the court, simply because, in this case, the legal concept of “fairness” cannot relate to “the adequacy of the price or remuneration, as against the goods or services supplied in exchange”. Or, in other words, “value for money” is not part of the equation.

What does this actually mean? The banks (and the lawyers) are clearly the winners for now. But who are the losers? According to consumer group Which?, “The bank charges ruling marks black day for consumers – this is a bitter blow for the millions of people who have been patiently waiting to get their bank charges back.” It does, however, beg the question: who are these patient long-suffering people? People who borrowed money they didn’t have, without asking permission – and who then tried to claim compensation for being charged!

I can’t help but agree with Justin Modray, the independent financial adviser who now runs www.candidmoney.com: “Today’s Supreme Court ruling in favour of the banks is a blow for consumers, but might at least help discourage irresponsible borrowing”.

More importantly, the other winners are the responsible customers who remain in credit. If the banks had lost, we might all have suffered if free-in-credit banking was withdrawn.

It’s only a black day for those in the red.

For full coverage of this story on ft.com, see Supreme Court backs banks on charges.

If you’re a bank customer who was waiting for compensation, post your comment on today’s ruling below.

Posted in Banking, Consumer affairs, Current accounts, Personal finance | Permalink

House price indices? Arentcha sick of em’?

November 17, 2009 11:07 am by Matthew Vincent

House price indices. Dontcha just love ‘em? Six months of sizzling soaraway surges! Howard from the Halifax? You can bring your ‘For Sale’ sign round any time, with your 1.2 per cent rise in October, and your 7.1 per cent uplift since April!!! Nationwide? After six consecutive price rises, and the first year-on-year increase since March 2008, the feeling is most definitely mutual!!! FT-Acadametrics? Hearing you say “the worst is over“, has certainly left me in the in the pink!!!. Geddit!!?

House price indices? Arentcha sick of em’? A-whingin’ and a-whinin’ about their seasionally adjusted declines. Rightmove? Wrong move more like – with your report yesterday of a -1.6 per cent fall in November, and your forecasts of another three months of falling prices as new sellers drop their asking prices!!! Savills? We’d be better off asking Jimmy to Fix It, after your -6.6 per cent forecast for 2010!!! Fitch? A 30 per cent plunge from 2007 levels? How low can you go, with your dreary house price-to-income ratios??? Yawn!!

Sometimes, house price analysts spout more hysterical contradictory nonsense than Private Eye’s tabloid hackette Glenda Slagg. So who should you listen to?

Continue reading: “House price indices? Arentcha sick of em’?”

Posted in House prices | Permalink

Grounds for a grouse

November 9, 2009 10:37 am by Matthew Vincent

While the rest of us are being threatened with fines if we don’t value our homes correctly for inheritance tax (IHT) purposes, the taxman is letting the other half live off the fat of the land.

In a landmark court case, Brander v HM Revenue & Customs (HMRC), the owner of a large Scottish estate won the right to have it treated entirely as a “trading business” that qualifies for Business Property Relief, and thus enjoys 100 per cent relief from IHT.

Continue reading: “Grounds for a grouse”

Posted in Tax | Permalink

Competition losers

November 3, 2009 7:04 pm by Matthew Vincent

“We have made a decision that we will waive the competition requirements in relation to these two banks. That is not going to get revisited.”

Chancellor Alistair Darling, on the merger of Lloyds TSB and HBOS (including Cheltenham & Gloucester and Intelligent Finance), September 17, 2009

“What we really want to do is ensure that we have got proper competition and, therefore, choice on the high street”

Chancellor Alistair Darling, on the break-up of Lloyds Banking Group and the sale of its Cheltenham & Gloucester, TSB and Intelligent Finance brands, November 1, 2009

212.9p

Lloyds TSB share price, September 15, 2008

87.3p

Lloyds Banking Group share price, November 2, 2009

Ever get the feeling you’ve been conned? If you’re a Lloyds shareholder who bought into the story that it would become a UK super-bank, and eventually pay super-dividends, you certainly have reason to.

So to find out what will happen to your shareholding now, click here.

Posted in Banking, Investments | Permalink

How the Lloyds and RBS sell-offs will affect you

November 3, 2009 6:14 pm by Matthew Vincent

If you’re a customer of Lloyds TSB, Halifax, Cheltenham & Gloucester, Bank of Scotland, Royal Bank of Scotland, NatWest, Direct Line, or Churchill… then I wouldn’t blame you for feeling confused by today’s news about bank sell-offs.

What will actually happen is this:

Lloyds Banking Group is going to sell off its Cheltenham & Gloucester branches, its Intelligent Finance subsidiary and its TSB brand, to satisfy European state aid rules. So if you have an account or a policy through any of these businesses, you’ll end up as a customer of another company.

Royal Bank of Scotland (RBS) is going to have to sell off it RBS branches in England and Wales and its NatWest branches in Scotland, to comply with the state-aid rules. It will also have to sell its Direct Line, Churchill and Privilege insurance operations. So again, if that’s where you currently bank or buy your insurance, you will have to assess what a new owner can offer you, or transfer back to RBS or another company.

But don’t worry – nothing will change right now. Lloyds and RBS have been given four years to complete the sell-offs.

If you want to know what difference it will ultimately make to your finances, read our consumer guide here.

Posted in Banking, Consumer affairs, Current accounts, Insurance, Mortgages, Savings | Permalink

When is a growth stock not a growth stock?

November 2, 2009 6:58 pm by Matthew Vincent

Answer: when it is a low-cost airline trying to bluff Boeing into believing that it doesn’t need new aircraft.

This morning’s results from Ryanair contained a strong hint that it would shift its strategy from growth to dividend payments from 2012 – exactly as our aerospace correspondent suggested this morning.

While most headlines focused on the company’s 46 per cent rise in second-quarter profits, to €284.8m, savvier analysts pondered the comment towards the end of the chief executive’s statement:

Continue reading: “When is a growth stock not a growth stock?”

Posted in Investments | Permalink

Safe as warehouses?

September 16, 2009 5:41 pm by Matthew Vincent

Do I owe warehouse owners in the Midlands an apology? I ponder this from the safe distance of leafy Surrey, at the FT Fund Links conference, where I’ve just listened to a presentation from Don Jordison, managing director of Threadneedle Commercial Property. A few weeks back, I blogged:

Would you buy a warehouse in Daventry? As an investment? I wouldn’t – not even if the commercial property equivalents of Kirstie and Phil attempted to wax lyrical about its location, location, location. More

My somewhat dismissive analysis was prompted by news that the F&C Commercial Property Trust had spent £17.25m on such a warehouse, attracted by a yield of 9 per cent – while still issuing warnings that “capital values could come under further pressure” if rents and income streams are hit by economic weakness.

Is it a risk worth taking? I’m now thinking it might be, having just heard that Threadneedle bought a similar warehouse for a lot less, at an equally attractive yield. Other fund managers are making similar moves.

Continue reading: “Safe as warehouses?”

Posted in Investments, Personal finance, Property | Permalink

China gets the syndrome

August 18, 2009 4:02 pm by Matthew Vincent

Are Chinese markets heading for a fall? US investors will be hoping that this news, from FT.com, does not presage worse to come - as will UK investors in the Gartmore China Opportunities fund, which the Investment Management Association says was one of the most heavily bought this summer:

China sell-off sparks flight from risk

Equity markets fell sharply on Monday after fears of overheating in China triggered one of the country’s largest one-day declines… The main cause of the shares plunge in China appeared to be concern over government efforts to rein in bank lending, which has been diverted to the country’s stock and property markets following the unprecedented credit boom in the first half of the year. The Shanghai Composite lost 5.8 per cent, its biggest daily loss this year and 12th largest on record. More…

A further indicator of this overheating sentiment is the number of sharedealing accounts opened by Chinese punters in the past week: 484,799, according to data from the nation’s clearing house. And that’s not a blip. Exuberant Chinese private investors opened more than 2.4m broker accounts in the four weeks to August 7, Bloomberg reports.

Continue reading: “China gets the syndrome”

Posted in Investments | Permalink

Location, location, delusion?

August 10, 2009 5:46 pm by Matthew Vincent

Would you buy a warehouse in Daventry? As an investment? I wouldn’t – not even if the commercial property equivalents of Kirstie and Phil (are there such people?) attempted to wax lyrical about its location, location, location.

As far as I can tell, Daventry is – as its name suggests – neither one thing nor the other: a Northamptonshire hinterland halfway between Coventry and Dunstable. It has a rail freight terminal, but it’s surrounded by the Royal Oak, High March and Drayton Field industrial estates. So warehouses in Daventry aren’t exactly in short supply.

Clearly, though, Richard Kirby knows something I don’t – because he’s just spent £17.25m on precisely this kind of less-than-prime real estate. However, as he’s the manager of the Guernsey-domiciled, London-listed F&C Commercial Property Trust, he probably does know a lot that I don’t – and enough to persuade him to make his first property purchase since 2005. So what might that something be?

Continue reading: “Location, location, delusion?”

Posted in Investments, Property | Permalink

Venturing into the lower leagues

August 6, 2009 1:46 pm by Matthew Vincent

Is football ever a good investment? It’s a question that some venture capital investors may be forced to ask themselves as the season kicks off this Saturday.

Why should they take an interest in the Final Score videprinter? Because some venture capital trusts (VCTs) invest in health clubs and sports facilities. In fact, I know of one that is an accidental landlord to an up-and-coming non-league football team. It has invested £5m to turn the next-door health club into more of a leisure destination, and increase its profitability.

Continue reading: “Venturing into the lower leagues”

Posted in Investments | Permalink