Monthly Archives: January 2015

Millions set for compensation over missold credit card insurance

Millions of bank customers who were missold credit card security products could be in line for compensation after the FCA reached a voluntary agreement with 11 high street banks and insurance provider Affinion.

The regulator says around two million customers will receive a letter from the compensation scheme, called ‘AI Scheme Ltd’, giving information about making a claim against their bank

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Bank base rateBank Base Rate in the UK could rise earlier than expected, according to Bank of England (BoE) rate setter Kristin Forbes, in her speech published yesterday.

The Monetary Policy Committee (MPC) member said she placed a “higher probability” on inflation dropping more in the next few quarters than in the November forecast, and subsequently picking up further in the medium term.

The MPC voted unanimously to hold the Bank Base Rate at 0.5% earlier this month, in contrast to December’s vote which saw two members voting against the proposition, preferring to increase the Bank Base Rate to 0.75%.

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BOEThe Bank of England hawks have backed down over their opposition to holding interest rates at record lows, with the MPC voting unanimously to keep the Bank Rate at 0.5 per cent.

For the past six months, MPC committee hawks Ian McCafferty and Martin Weale have voted in favour of a 0.25 percentage point rise in the rate.

The Monetary Policy Committee (MPC) has voted unanimously in favour of holding the Bank Base Rate at 0.5% and chosen to keep asset purchase reserves at £375bn.

The deal struck at the meetings held on 7 and 8 January was “finely balanced” in comparison to the decision reached last month where two members of the MPC voted for an increase in the Bank Rate.

Last month, Ian McCafferty and Martin Weale, voting against the proposition, believed that the sharp fall in inflation to below the 2% target was likely driven by temporary factors, preferring to increase the Bank Rate to 0.75%.

“This marks a significant shift in the expected path for interest rates. Many forecasters had been expecting the first rise to come later this year, but this now looks extremely unlikely.

“This further reinforces my view that they will remain on hold throughout this year and into 2016.”

The MPC said inflation could persist below its target of 2% for longer than previously expected due to the continued decline in oil prices and the drop in inflation globally.

The MPC meeting minutes read: “In the view of all members, the outlook justified maintaining both the current level of Bank Rate and the stock of asset purchases financed by the issuance of central bank reserves.

RentThe cost of renting a home in England and Wales rose by 3% over the course of 2014, according to a survey.

The average residential rent cost £767 a month by the end of the year, compared with £745 at the end of 2013, LSL Property Services said.

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imagesThe Money Shop, a payday lender owned by US firm Dollar Financial, is in the midst of a consultation process to close as many as 200 of its 500 stores.

A full consultation process will need to be done before a final number emerges.

As many as 350 staff could be made redundant out of a total of about 3,000 employed by Money Shop, the company has confirmed.

Tighter regulation has hit profits across the payday lending sector.

The company hopes to keep compulsory redundancies down by finding new roles for staff, sources told the BBC earlier. It has already closed about 40 stores.

Loan cap on payday loans

The firm’s reorganisation may also include closing one of its three head offices.

Money Shop’s cutbacks follow the introduction by the Financial Conduct Authority this month of a cap on the costs of loans made by payday lenders.

Payday loan rates are now capped at 0.8% per day of the amount borrowed.

In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.

Mayor of London announces two first-time buyer schemes

The Greater London Authority (GLA) is to fund two new schemes aimed at helping Londoners into affordable home ownership and to accelerate the delivery of new homes.

Shared ownership is to be given up to £180m through the First Steps Challenge Fund. The fund aims to accelerate the delivery of 4,000 new homes between 2015 and 2020.

In addition, the Mayor of London announced up to £40m of loan finance for a new housing product where buyers will need no deposit or mortgage to purchase their home 100% outright.

This scheme, Gentoo Genie, aims to deliver 2,000 new homes over the next 10 years, helping people who would struggle to save a large deposit for a mortgage.

Gentoo Genie, provides long-term home purchase plans for first-time buyers and long-term renters which enables them to buy shares in their home every time they make a monthly payment.

The scheme is being introduced to London following Genie’s successful work in the North East of England. The GLA’s funding is from the Mayor’s Housing Covenant revolving fund and will be repaid in full within 10 years. Steve Hicks, managing director of Genie, said: “There has been a lack of innovation in the housing market which has left would-be homeowners feeling frustrated and unable to buy their own house.

“This 10-year partnership with the GLA will help customers into a minimum of 2,000 new homes in the capital who otherwise would have struggled to own their own homes, because of the difficult market conditions in London.” “The First Steps Challenge Fund is part of the £1.45bn secured from the government for affordable housing delivery in 2015-18.”

The money could take the form of an interest-bearing loan or equity investment, to encourage new players to deliver shared ownership homes and greater institutional investment into the tenure. When the funding is paid back it can be reinvested into delivering more homes.

Boris Johnson, the Mayor of London, said: “Shared ownership is crucial in helping the unprecedented numbers of people in London desperate for good quality low cost housing.

“I want the funding announced today to help thousands more Londoners own homes and create more developments like Erith Park delivering excellent affordable properties.”

Erith Park is an area of South East London which is under development.

BOEThe Bank of England’s Monetary Policy Committee has voted once again to hold the base interest rate at 0.5 per cent.

It is the 70th consecutive month in which the benchmark interest rate has been held at its current level, the lowest on record.

Committee members also voted to maintain the programme of quantitative easing at £375bn. It has remained unchanged since July 2012, when the committee voted to increase the programme from £325bn.

Last month the Bank announced plans to reduce the number of MPC meetings from 12 to eight, as well as publishing the minutes from each meeting on the same day, from 2016.

untitledA cap on the cost of payday loans enforced by the City regulator has now come into effect.

Payday loan rates will be capped at 0.8% per day of the amount borrowed, and no-one will have to pay back more than twice the amount they borrowed.

The Financial Conduct Authority (FCA) said those unable to repay should be prevented from taking out such loans.

Many payday lenders have already closed down, in anticipation of the new rules, a trade body has said.

And the amount of money being lent by the industry has halved in the past year.

Christopher Woolard, of the FCA, said the regulator had taken action because it was clear that payday loans had been pushing some people into unmanageable debt.

“For those people taking out payday loans, they should be able to borrow more cheaply from today, but also we make sure that people who should not be taking out those loans don’t actually get them,” he said.

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