Lloyds Bank, Bank of Scotland and Halifax to scrap charges for unplanned overdrafts

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 Lloyds Banking Group is to launch a simplified “pay-as-you-go” overdraft charging system and scrap some fees, in a shake-up affecting millions of customers.

The UK’s largest current account provider, with over 20 million personal current account customers, said more than nine in 10 of those with its brands Lloyds Bank, Bank of Scotland and Halifax will be left either better off or in the same position financially.

Starting in November, customers will be charged a single rate of 1p per day for every £7 of planned overdraft usage. A fee will be charged at the end of each day of planned overdraft usage, which Lloyds said would help customers to budget, rather than being hit with a bigger bill weeks later.

All fees and charges associated with unplanned overdrafts will be removed. Lloyds is writing to customers to tell them how they will be affected. The less than one in 10 who will be worse off will receive extra support, which could prompt them to consider a more cost-effective way of borrowing.

This may include reviewing alternative options, such as a personal loan. Those who may be worse off are particularly likely to have large overdrafts which they consistently max out for long periods. Lloyds said the average debit balance for a customer using their overdraft is £450 in a month. A Lloyds Bank Classic current account customer using £450 of a planned £1,000 overdraft limit for seven days would currently pay £7.49.

But under the new system they would pay £4.48. A Halifax Reward customer who goes overdrawn by up to their planned £100 limit for 10 days and also goes into an unplanned overdraft by £50 for two of those days will be charged £1.40 under the new system. Previously they would have been charged £18.

The bank expects to make less money overall from overdrafts as a result of the moves, but declined to specify amounts. It is also automatically opting customers into receiving free text alerts, to help them stay on top of their accounts.

People who do not want texts can opt out. Lloyds Banking Group’s changes will also mean that, from November, customers will no longer be charged a “returned item fee” for having payments stopped due to a lack of funds.

Greg Coughlan, the bank’s director of personal current accounts and payments, told the Press Association: “We want to put customers in control so that they can better manage their day-to-day finances” with “pay-as-you-go” daily charging.

He continued: “We think more customers will be able to use their overdraft in a smarter way.” Mr Coughlan said that while the banking group expects to see its overall income from overdrafts reduced: “We’re convinced we will have better relationships with our customers as a result of the change.”

He said that for the vast majority of customers, the charges under the new system would only be “pennies a day”. Vim Maru, group director, customer products and marketing, Lloyds Banking Group, said: “When asked about our new approach, over 80% of customers said that they preferred it compared to the current charging format.” An investigation by Which? into unarranged overdraft fees found some can potentially cost more than a payday loan.

The Competition and Markets Authority (CMA) previously said that in 2014, £1.2 billion of banks’ revenues came from unarranged overdrafts. The Financial Conduct Authority (FCA) is currently putting the high-cost credit sector under the spotlight, including overdrafts. Peter Vicary-Smith, Which? chief executive, said Lloyds’ decision is a “positive step”.

He said: “The Financial Conduct Authority must now use its review of high-cost, short-term credit to ensure other banks follow suit, restricting unarranged overdraft charges to the same level as for arranged overdrafts.

” Andrew Hagger, founder of Moneycomms.co.uk, said Lloyds had taken a “fairly radical move” and predicted more banks would be reviewing their overdraft charges. Mr Hagger said Lloyds’ new tariff works out cheaper for customers with smaller borrowing requirements.

But for those borrowing sums in four figures it starts to get more expensive, he said – for example a £2,000 overdraft for 12 days currently costs a Club Lloyds customer £17.47 but under the new tariff it is £34.29. Mike O’Connor, chief executive of StepChange Debt Charity, said around half of its clients have struggled with overdraft debt.

He said: “This looks a positive step forward, but there is a need to monitor what happens next, not least for the questions this announcement poses for the overdraft market as a whole.”



Bovis sets aside another £3.5m to fix faults with homes

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Housebuilder Bovis has set aside a further £3.5m to deal with customer complaints over flaws in its homes.

Some customers said homes were sold unfinished, and reported plumbing and electrical faults in new properties.

Bovis has already set aside £7m to cover the issue and said the extra provision was to ensure it was “fully resourced” to complete work quickly.

It added it had made “good progress” addressing problems and was confident all legacy issues had been identified.

Strong demand

In February, Bovis said it would put in place a number of measures to correct the faults, including having more staff to deal with complaints, creating a homebuyers’ panel and an improved quality check process.

The company also said it would slow down the pace of building throughout 2017. As a result it will build between 10-15% fewer homes this year.

Bovis added that its profitability in the first half of the year had been affected by higher building costs and an increased level of investment to address legacy issues.

However, it said demand for new homes remained strong, and the average selling price of its homes rose 9% to £277,000.

Earlier this year, Bovis was a takeover target for two rivals – Galliford Try and Redrow. However, Bovis rejected both of their bids and eventually the two suitors abandoned their takeover attempts.

Qualcomm seeks Apple iPhone sales ban

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Qualcomm, the world’s biggest producer of mobile phone chips, has appealed for the sale of some iPhones in the US to be blocked.

It claims that iPhones using chips by rivals, such as Intel, infringe six of its patents.

Qualcomm said it had asked the US International Trade Commission (ITC) to investigate and impose an import block.

It is the latest move in a series of disputes and lawsuits between Apple and Qualcomm.

In January, Apple filed two lawsuits against Qualcomm, claiming it had abused its dominant market position.

It also alleged the chip-maker had broken an agreement between the two companies, by denying Apple access to chip technologies it was entitled to use under the terms of a licensing deal.

The latest disagreement concerns six patents relating to energy-saving features on the iPhone, which Qualcomm says Apple has used without permission.

According to the news agency Reuters, Qualcomm has also filed a lawsuit seeking financial compensation from Apple.

“Apple continues to use Qualcomm’s technology while refusing to pay for it. These lawsuits seek to stop Apple’s infringement of six of our patented technologies,” the company said in a statement.

Apple referred the BBC to a previous statement on Qualcomm, in which it said the company’s business practices “harmed the entire industry”.

“They supply us with a single connectivity component, but for years have been demanding a percentage of the total cost of our products – effectively taxing Apple’s innovation”, it said.

“We believe deeply in the value of intellectual property but we shouldn’t have to pay them for technology breakthroughs they have nothing to do with.”

Qualcomm said it hoped the ITC would begin an investigation in August.

Audi manager arrested in emissions probe

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German authorities have arrested an Audi manager in connection with the VW diesel scandal.

This is the first arrest in Germany related to Volkswagen’s emissions-test cheating scandal.

Munich prosecutors declined to comment on whether the arrested person is a current or former Audi employee.

On Thursday, the US Justice Department said it had charged former Audi manager Giovanni Pamio with directing staff to design emissions-cheating software.

Audi and parent company Volkswagen both declined to comment.

The Munich prosecutor’s office said the Audi employee was brought before a judge on Tuesday and was now being held in custody.

A spokeswoman declined to discuss the possibility of the detained person being extradited to another country or comment on whether Munich prosecutors were in touch with US authorities.

The German arrest was part of a wider probe into fraud and false advertising and is a consequence of “findings following searches,” the spokeswoman said.

No members of the Audi management board are being personally investigated as part of that probe, she added.

US charges

In a statement released by US authorities on Thursday, US prosecutors alleged that Mr Pamio ignored or suppressed warnings by certain Audi engineers that the pollution control systems being used on the brand’s diesel engines contravened US clean air rules.

US prosecutors said Mr Pamio had told subordinates to send false information to American regulators stating that Audi’s “clean diesels” did not use technology designed to cheat federal pollution tests.

Mr Pamio could not be reached for comment on Friday.

British Gas investigated over switching fees

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British Gas is to be investigated by energy regulator Ofgem for potentially misleading customers over fees for switching to other providers.

Those planning a switch before a fixed-term deal expires can do so for free for up to 49 days before the deal ends.

But Ofgem is to examine allegations that British Gas told some customers they would have to pay a termination fee within that period.

The complaints were passed to Ofgem by the website MoneySavingExpert.

The website said it had received complaints from some customers that they had been told to pay up to £60 for switching, despite being within the 49-day period.

It is not known whether anyone actually paid the fees.

British Gas said it would co-operate with the inquiry, but gave no further comment.

Ofgem said that it would also be looking at whether British Gas had obeyed the rules which oblige them to write to customers on fixed deals, telling them they are about to expire.

However it said the opening of the investigation did not imply that they had made any findings of non-compliance.


MoneySavingExpert said that it had received similar complaints about Npower at the end of last year, and subsequently about E.On.

Ofgem said it was talking to both companies about their exit fees, but they were not part of the inquiry.

News of the investigation was welcomed by MoneySavingExpert founder Martin Lewis.

“The rules are very plain; you cannot and should not be charged exit penalties if your switchover takes place within the last 49 days of your energy fix,” he said.

“At least two firms – British Gas and Npower – have wrongly put that they would charge in their official literature. At best they are careless in the way they treat customers; at worst that they are trying to bully them into staying with misinformation.”

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