Current accounts

Lucy Warwick-Ching

Can this really be true? Are customers finally voting with their feet and moving banks in search of the best deals?

The latest data from The Co-operative Bank would seem to suggest so. The research reveals a 22 per cent increase in customers switching their current accounts to The Co-operative Bank from other major providers, with a 31 per cent increase in switching activity from the big four banks.

Perhaps the financial crisis was the last straw. Fed up with hemorrhaging money in other areas of their finances customers started to look at their banking providers more closely and the general discontent and distrust finally lead to many customers switching their provider.

But there is still a long way to go before everyone takes action; the average person is much more likely to switch energy providers, move house, or switch mobile phone companies than switch their current account.

What has been your experience of switching banks?

Lucy Warwick-Ching

Christmas is here again and charity campaigns are working hard to make us part with our money. But it seems they will have to work even harder as total giving by individuals is down 11 percent in 2009, which means we have given £1.3bn less than last year.

But while some people are battening down the hatches and hiding their money under the mattress there are others who do still want to give to charity. Here are twelve ways to make your donations to charity go further:

1. Tick the Gift Aid box – If you’re a UK taxpayer making a donation to charity in the UK, you can add Gift Aid.  This means Her Majesty’s Revenue and Customs will give an extra 28p to the charity for every one pound you donate.  If you’re a higher-rate taxpayer you can also claim the difference between the basic and higher-rates of tax on your donation. 

Lucy Warwick-Ching

Following on from this morning’s surprise victory for the banks on overdraft fees on personal bank accounts Sharlene Goff, retail banking correspondent, talks about how the OFT will act and the future for overdraft charges.

For the full story read the story in full on ft.com, Banks in victory on overdraft charges

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.

Lucy Warwick-Ching

It’s official, JJB Sports and Topps Tiles tops this year’s list of Christmas retail losers.
Latest analysis by financial website The Motley Fool, reveals that for those companies that are saddled with excessive debt, hampered by declining sales and burdened with low valuations, it could be a make or break Christmas.

On their own, falling sales, low market value and mounting debt are not a problem. But together they can form a lethal cocktail that can quickly turn a retail high-flyer into a back street has-been.

The Motley Fool’s analysis uncovers ten retail winners and losers listed on the London stock market.

Lucy Warwick-Ching

With the Supreme Court ruling in the bank charges court case due next Wednesday banks are finally starting to understand that they cannot continue to charge customers up to £35 every time they go a few pennies over their overdraft limit.

Santander, which includes Abbey, Alliance & Leicester and Bradford & Bingley, has become the first bank to offer a fee-free current account in a clever move that has helped it hit the headlines in the national newspapers.

The Santander Zero, as it will be known, will not charge anything for exceeding an overdraft limit and will charge an annual rate of 12.9 per cent on borrowing – which is the lowest overdraft rate around

And it’s not only aimed at those people who constantly go over their limit. Customers who credit the account with a minimum of £1,000 a month will qualify for a 6 per cent gross interest rate on credit balances for a year.

 Read Sharlene Goff’s news article for more information on this account.

It’s an excellent offer but what’s the catch? To take out one of these accounts you need to have a Santander mortgage or be in the process of taking one out. This means it will give existing customers an incentive to remain with Santander for their borrowings. So any hit that Santander takes on charges they can make up with the slightly higher interest rates charged on their mortgage deals.

Lucy Warwick-Ching

We’ve just heard that the judgement on the bank charges test case will be given at 9.45am at the Supreme Court’s  Parliament Square HQ, London, next Wednesday 25 November 2009. So if you’re one of the thousands of individuals to have been charged high fees from your bank watch out for the result of the case on our homepage.

The case has been followed closely after it was revealed that the banks have made an estimated £2bn a year by charging customers hefty fees for unauthorised overdrafts, bounced cheques and direct debits. The major legal challenge is examining whether these are legally “fair”. If the supreme court justices rule against the banks, it could open the door for billions of pounds worth of charges to be paid back.

Lucy Warwick-Ching

Speaking ahead of the release of tomorrow’s national insolvency statistics Deloitte’s Contentious insolvency Group predicts the figures will break through the records again.

Louise Brittain, partner in the group, expects the number of people filing for personal insolvency in Q3 will exceed the 30,000 mark. She says:

This figure is staggering, and unfortunately the end is not in sight. I fully expect that by the year end, 2009 will have broken all personal insolvency records, with the total number of petitions likely to exceed the 130,000 mark.

The types of people filing for insolvency is also expected to change. There will be mix of sole traders and individuals with high credit card debt and also those who have lost or have had to reduce their income and have struggled to make the repayments on their fixed rate mortgages.

Look out for the piece on insolvency tomorrow on Personal Finance.

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.

Lucy Warwick-Ching

Gordon Brown wants to stop companies increasing interest rates on existing debts without telling card holders, issuing unsolicited credit card cheques and relaxing credit limits without being asked.

Speaking in a podcast, released on the 10 Downing Street website and YouTube at the weekend, he said: ‘We are announcing measures to make the credit and store card companies clean up their act to get you a fairer deal.’

Listen to the PM’s podcast here.

 

The recording comes ahead of Tuesday’s publication (by the consumer affairs minister Kevin Brennan) of the results of a review into credit and store card practices that it has been conducting over the summer. The review will include a proposal forcing an increase to the level of minimum monthly repayments card issuers ask for each month.

Watch out for Matthew Vincent’s story on this subject and what it could mean for you in tomorrow’s FT and on the personal finance website.

Related links:

Unsolicited credit card cheques to be outlawed in white paper plans, FT, July 2, 2009



The FT’s Money blog is a forum for the latest news and insights from the UK’s personal finance scene. Matthew Vincent, the editor of FT Money and his team of reporters will upload their views and insights on what’s happening in the industry and how this affects people’s finances.

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About our bloggers

Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.

Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.

Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.

Ellen Kelleher has been a personal finance reporter in the UK for close to four years. Before arriving in London, she worked in the FT's New York bureau where she covered the insurance sector.

Steve Lodge is a personal finance reporter on FT Money specialising in savings.


Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for FT.com. Prior to working at the FT she was a news reporter for the ABC.

Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.

Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.

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