Lloyds profits up as PPI costs recede

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Lloyds Bank has announced pre-tax profits for the third quarter of £1.95bn, a rise of 141% on the same period last year.

However, last year’s result included a big provision to cover claims for mis-sold payment protection insurance (PPI).

Underlying profit for the period was £2.08bn, up 9% on 2016.

The bank did not set further money aside to cover PPI claims, having made another £700m of provisions in July.

The Lloyds group has already paid out more than £18bn in PPI claims and received more following a Financial Conduct Authority (FCA) advertising campaign featuring Arnold Schwarzenegger.

The FCA campaign highlighted a deadline for PPI claims of August 2019.

Lloyds said it received 16,000 claims per week after the advert was broadcast, with the number then dropping back to 11,000.

“Now they will be getting more claims but the end is in sight, so what they are saying is they have sufficient provision in to see it all through,” banking analyst Frances Coppola said.

Looking at the bank’s profits, she added: “It’s got out of its doldrums, cleaned up its balance sheet, recovered from its acquisition of HBOS and is moving on.”

Group chief executive Antonio Horta-Osorio said: “These results highlight the strength of our customer focused, simple and low risk business model.”

The bank’s credit card arm performed well, with a reduction in “persistent” debt.

The figures follow on from Lloyds’ half-year pre-tax profits of £2.5bn, which were the first results announced after the government sold its stake in the bank.


RBS may face further action by financial regulator

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The financial regulator has said it may take “further action” over the way Royal Bank of Scotland mistreated some small business customers.

The Financial Conduct Authority has published an interim report into failings by the RBS division that dealt with struggling businesses.

The Global Restructuring Group was found to have “widespread” mistreatment of customers in some areas.

RBS said it had acknowledged failings and again apologised for its mistakes.

The FCA report identified a number of failings, including that 92% of viable firms handled by GRG suffered “inappropriate action”, such as interest charges being raised or unnecessary fees added.

It was cleared in others, according to the report prepared for the regulator.

FCA chief executive Andrew Bailey said: “We are investigating the matters arising from the [report] and are focusing on whether there is any basis for further action within our powers.”

The bank has set aside £400m for compensation and paid out £115m, chief executive Ross McEwan said.

The BBC reported on a leaked copy of the report in August, leading to political pressure on the FCA to publish more of the findings.

The regulator was initially reluctant to do so, but gave in to pressure from MPs and campaigners.

GRG operated from 2005 to 2013 and at its peak handled 16,000 companies.

But Mr McEwan said the “most serious allegations made against the bank have not been upheld”.

That includes finding the bank did not set out to engineer ways of transferring customers to GRG, or make requests of directors that were “unnecessarily burdensome”.

“The culture, structure and way RBS operates today have all changed fundamentally since the period under review,” he said.

‘Not before time’

The bank has dealt with more than 900 complaints going back a decade, Mr McEwan added.

However, the report found that inappropriate treatment of small business customers was “widespread” in areas including:

  • A failure to support small businesses in ways consistent with good turnaround practice
  • Placing an undue focus on price increases and debt reduction without considering customers’ longer-term viability
  • A failure to handle customer complaints fairly and to deal with certain conflicts of interest

It also found senior GRG managers were encouraged to place “financial objectives first and emphasised the need for continuing financial performance”.

Nicky Morgan, who chairs the Treasury select committee, said: “It has taken the FCA too long to publish its summary of the skilled persons’ report, so this is not before time.”

Mr Bailey is due to appear before the committee on 31 October.

‘Incompetent or criminal’

Bill Esterson, Labour’s shadow business minister, called for a judge-led inquiry, adding: “Trust between small businesses and our financial institutions needs to be restored.”

The RGL management group, which represents some former business customers of RBS, said the FCA report appeared to be a whitewash.

“From what we understand, the FCA has failed to acknowledge the serious and deliberate harm caused to businesses through RBS’ Global Restructuring Group,” it said.

“The FCA is making excuses in its interim report as to why it cannot bring the bank to justice, which does nothing to help redress the devastation inflicted on business owners by RBS.”

Lawrence Tomlinson, author of a 2013 report into GRG, said: “Banks do not treat their customers inappropriately, bankers do.

“The authorities should look at whether these bankers’ behaviour is incompetent or criminal – either way, whoever allowed the scandal at GRG to occur should not be allowed to work in the sector or enable similar ethos and culture to enter other banking institutions.”


Fake holiday sickness couple from Wallasey jailed

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A “greedy” couple made “fake” holiday sickness compensation claims while boasting about holidays full of “sun, laughter and fun”, a court heard.

Deborah Briton, 53, and partner Paul Roberts, 43, were jailed at Liverpool Crown Court after admitting fraud.

They tried to claim nearly £20,000 saying their two children fell ill on holidays to Majorca in 2015 and 2016.

Judge David Aubrey QC said there had been an “explosion” in gastric illness claims made by UK holidaymakers.

Briton, who was jailed for nine months, and Roberts, who received a 15-month term, bragged about their holidays on social media, the court heard.

‘Utter sham’

The pair, from Wallasey, Wirral, both admitted four counts of fraud in the private prosecution, brought by holiday company Thomas Cook.

Family members, including Briton’s daughter Charlene, who had initially been charged with two counts of fraud that were later dropped, shouted out in court as the couple were jailed.

The court heard that had they succeeded, the couple would have also cost the holiday firm a further £28,000 in legal expenses.

Judge Aubrey said their claims had been a “complete and utter sham”.

“They were bogus from start to finish, you were both asserting on your behalfs and on behalf of your two children that on two separate holidays you had suffered illness.

“They were totally and utterly fake.”

‘Pure greed’

He said the claims, made in August last year, must have required planning and premeditation.

He said: “Why? Pure greed. Seeking to get something for nothing.”

The judge said those tempted to make a dishonest claim must “expect to receive an immediate custodial sentence” if convicted.

A Thomas Cook spokesman added “We had to take a stand to protect our holidays and our customers from the minority who cheat the system.”


Ryanair cancels flights after ‘messing up’ pilot holidays

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Ryanair cancelled 82 flights on Sunday after admitting it had “messed up” the planning of its pilots’ holidays.

The budget airline said on Saturday that it would cancel 40-50 flights every day for the next six weeks.

Marketing officer Kenny Jacobs said affected customers with bookings up to 20 September had been informed.

“We have messed up in the planning of pilot holidays and we’re working hard to fix that,” he said.

Most of the cancellations are due to a backlog of staff leave which has seen large numbers of the airline’s staff book holidays towards the end of the year.

The airline is changing its holiday year, which currently runs from April to March, to run from January to December instead.

Rynanair said the shift meant it had to allocate annual leave to pilots in September and October.

Passenger complaints

The cancellations could affect up to 285,000 passengers, who will be offered alternative flights or refunds.

Mr Jacobs said affected customers would have been sent an email.

“We advise customers to check the email address used to make their booking,” he added.

A page on the Ryanair website details flights cancelled up until 20 September. It says 56 flights are cancelled on Monday, 55 on Tuesday, and 53 on Wednesday.

Ryanair has said that less than 2% of its flights would be cancelled and the move would help it hit its annual punctuality target of 90%.

But passengers have complained about the resulting uncertainty. Gary Cummings was due to fly from Leeds to Bratislava on Friday morning.

On Thursday night he received a text message from Ryanair, saying his flight had been cancelled.

The only alternative flight he was offered was on Monday – when he was originally due to be returning to Leeds.

“We were left in limbo really,” he told BBC Radio 5 live.

UK Aviation Minister Lord Callanan said he expected “all airlines to fulfil their obligations to their customers”.

“In the event of any disruption or cancellation airlines must ensure customers are fully compensated and every effort is made to provide alternative travel arrangements.”

Customers do have rights under the European Passenger Rights legislation.

“The rules say if the airline doesn’t have a suitable alternative flight, you have to be booked on a rival airline,” said Simon Calder, travel editor of the Independent.

He said passengers should also be able to claim compensation for the cancellations.

“It’s a really odd thing in terms of customer care, to say we want to improve the operation by keeping more planes on the ground,” he told the BBC.


Equifax had ‘admin’ as login and password in Argentina

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The credit report provider Equifax has been accused of a fresh data security breach, this time affecting its Argentine operations.

Cyber-crime blogger Brian Krebs said that an online employee tool used in the country could be accessed by typing “admin” as both a login and password.

He added that this gave access to records that included thousands of customers’ national identity numbers.

Last week, the firm revealed a separate attack affecting millions in the US.

After being notified of the latest breach, Equifax temporarily shut the affected website.

“We learned of a potential vulnerability in an internal portal in Argentina which was not in any way connected to the cyber-security event that occurred in the United States last week,” an Equifax spokeswoman told the BBC.

“We immediately acted to remediate the situation, which affected a limited amount of information strictly related to Equifax employees.

“We have no evidence at this time that any consumers or customers have been negatively affected, and we will continue to test and improve all security measures in the region.”

The discovery came less than a week after Equifax revealed that a separate breach meant about 143 million US consumers and an undisclosed number of British and Canadian residents might have had personal details exposed.

The firm took six weeks to make the discovery public after first learning of a problem.

On Tuesday, 36 US senators called for a federal investigation into how three company executives came to sell nearly $2m (£1.5m) worth of shares in the company in the interim.

Equifax is also facing dozens of legal claims over the matter. Mr Krebs wrote that the Argentine matter involved Equifax’s local business Veraz.

Specifically, a web application – referred to as Ayuda, the Spanish for “help” – appears to have been weakly guarded.

“[It] was wide open, protected by perhaps the most easy-to-guess password combination ever: admin/admin,” wrote Mr Krebs.

The discovery was made by the US cyber-security firm Hold Security, which Mr Krebs advises.

Its researchers explored the portal and within found a list of more 100 Argentina-based employees, the blogger disclosed.

Using this list they were able to uncover the workers’ company usernames and passwords, which turned out to be matching words in each instance.

Each example amounted to either solely the worker’s last name or a combination of their surname and their first initial, which made them fairly easy to guess anyway, Mr Krebs added.

‘Extraordinary’

“But wait, it gets worse,” he blogged.

“From the main page of the Equifax.com.ar employee portal was a listing of some 715 pages worth of complaints and disputes filed by Argentinians who had at one point over the past decade contacted Equifax via fax, phone or email to dispute issues with their credit reports.

“The site also lists each person’s DNI [documento nacional de identidad]- the Argentinian equivalent of the social security number – again, in plain text.”

All told, there were more than 14,000 such records, Mr Krebs said, concluding that the firm had been “sloppy”.

Unlike social security numbers in the US, DNIs are publically available in Argentina.

But one UK-based cyber-security expert agreed the case raised questions about how Equifax protects the data it holds.

“This kind of security vulnerability is extraordinary as even the most basic of checks should reveal this,” Prof Alan Woodward from the University of Surrey told the BBC.

“It’s outrageous that any organisation that holds such sensitive personal data can build a portal with this kind of basic security vulnerability.

“It simply shouldn’t happen and responding that they have now fixed the issue is not the point: it puts a huge question mark over whether Equifax have been applying the appropriate resources to online security elsewhere.”


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