Why Philip Hammond should be getting ready to break up RBS

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Conservative Leader Theresa May Addresses Party Conference

The new series of The Missing is surely the gloomiest television of the year. But it has nothing on the endless saga of RBS, which seems to use the same disturbing time-shift device: whenever there’s a horrible new plot twist, you have to spot whether we’re in 2008, 2011 or today.

The crippled bank, still 73 per cent state-owned, has lost £2.5 billion in the first three quarters of this year, having just paid out another £425 million in ‘litigation and conduct’ costs chiefly relating to mortgage-backed securities hanky-panky in the US. Since its bailout eight years ago, it has lost considerably more than the £46 billion of taxpayers’ money that was pumped into it, and has never reported a full-year profit. Attempts by chief executive Ross-McEwan, after three years in post, to persuade analysts to focus on the bank’s positive underlying performance, rather than the extraordinary charges that are the legacy of his cursed predecessor-but-one Fred-Goodwin, fall quarterly on stony ground.

The harsh truth is this: if ever there was a company that cried out to be broken up, its operating business either sold to the highest bidder or if unsellable then parked in a ‘bad bank’ to be gradually wound down, RBS is surely it. The parent brand deserves to be buried forever, even if the main subsidiary brands of NatWest and Coutts are still viable and the original Scottish branch network might have a new life under a new (or old) name. But the one serious attempt to sell off a significant piece of the group — the separation of 314 branches into a ‘challenger bank’ under the revived and well-respected name of Williams & Glyn — has turned into the biggest cock-up of all.

The disposal was insisted upon by competition officials in Brussels, to be done by 31 December next year as a condition of the 2008 bailout. Plans for flotation of Williams & Glyn this year were abandoned because it proved too difficult to clone a separate computer platform; ‘restructuring costs’ relating to that and other problems amounted to £301 million in the most recent quarter alone. Next, Santander withdrew as a potential buyer because of incompatibility with its own superior systems; and after a recent second look, the Spanish group withdrew again because the price asked by RBS was too high for the can of worms on offer.

Now the Clydesdale & Yorkshire Banking Group — a hard-nosed operator recently spun off by National Australia Bank — has made a tentative offer, causing its own share price to dip as a result. But RBS says neither this nor any other Williams & Glyn sale can hope to be signed off by the end of 2017. In which case, Brussels may appoint its own ‘trustee’, somehow to force the disposal to completion.

What a farce. Philip Hammond, with none of George Osborne’s baggage to carry on this one, should call for a reappraisal of RBS’s chances of ever returning to the private sector in anything like its present size and shape. If he wants to set a generous time limit, he might say ‘before the opening of Heathrow’s new runway’. But if the expert advice is that the likelihood is close to zero however distant the deadline, he should send in a ruthless hit squad of accountants and liquidators to retrieve whatever value for the taxpayer they can find.

That would at least have some justice to it, since it is what RBS was accused of doing to so many of its struggling business customers during the recession.

http://www.spectator.co.uk/author/martin-vander-weyer/

 


Regulator accused of letting down poorer bank customers

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The Competition and Markets Authority (CMA) has been accused of letting down the financially vulnerable in its recent report on banking.

Labour MP Rachel Reeves said the CMA was guilty of a “dereliction of duty”, after it decided not to cap unauthorised overdraft charges. Instead the CMA’s August report suggested that banks should each set their own maximum monthly charges. Professor Alasdair Smith, the report’s author, denied the accusation. He was appearing before MPs on the Treasury Select Committee. Rachel Reeves said that, on average, vulnerable consumers were paying £225 a year in overdraft charges, which they could not afford. “It’s a dereliction of duty, Professor Smith. I think it’s a very disappointing report. You are letting down the most financially vulnerable,” she said. At the moment, the big High Street banks charge up to £100 a month for an unarranged overdraft, plus other fees on top. The MPs heard that the cost of borrowing £100 from a payday lender could even be cheaper.

‘Deeply disappointed’

However Professor Smith said the focus of the CMA’s banking enquiry had been on making competition between the banks work better. “I don’t think it’s a dereliction of duty,” he said. But he said he shared Ms Reeve’s concern. “I agree with you that our measures will not directly address all of the problems of the most vulnerable overdraft users,” he told the MPs. “And it is not realistic for us to do this.” However, the CMA’s senior director, Adam Land, said vulnerable customers would be helped by its plans for so-called open banking, which will enable consumers to share their banking data with third party providers. “Open banking helps overdraft customers in three ways: The first challenge it overcomes is customers feeling that they can’t switch because they are in debt; secondly it provides money-management tools so customers can avoid getting into a poor position; and third it will help customers compare the costs of overdrafts.”

The CMA has also been criticised by the debt charity StepChange, which has argued for a regulated maximum overdraft charge across the whole industry. After the hearing, the chair of the committee, Andrew Tyrie MP, also expressed concern: “The weaknesses identified today were already evident from the interim report of last year. The committee was deeply disappointed by what it heard.”

 

 

 


Barclays’ PPI costs rise by another £600m

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The cost of the payment protection insurance scandal has topped £40bn after Barclays took another £600m hit to pay compensation to customers who were mis-sold the product.

The extra provision, announced as the bank reported a 10% fall in nine-month profits, takes Barclays’ costs to £8.4bn. Data compiled by the thinkthank New City Agenda shows that this top up for Barclays has pushed the total provisions incurred by the industry to £40.2bn. Lloyds Banking Group makes up £17bn of that total bill for PPI mis-selling scandal tops £40bn

Barclays said its extra provision was caused by the cutoff point of June 2019 for claims, set by the Financial Conduct Authority. It added: “We will continue to review the adequacy of the provision levels in respect of the FCA’s proposals, which remain subject to consultation.” In the midst of an overhaul being led by chief executive Jes Staley, the bank insisted it was “open for business” after the Brexit vote. But Staley admitted he was considering what changes it might need to make to its business as the UK made plans to leave the EU.

Barclays chief executive Jes Staley insisted Barclays was ‘open for business’. Staley said: “We are looking at our options. We will take incremental steps. We are engaged in active discussions with the British government. Our desire is to stay as fully invested in the UK as we can.”

This week, the Observer reported a warning from Anthony Browne, the chief executive of the British Bankers Association, that bosses had their hands “quivering over the relocate button”. Staley said while Barclays was looking at its options, “I wouldn’t say our finger is quivering. Our intention is to stay as much invested in London as we can. We are a British bank.” In July, Staley said operations might need to be strengthened in Ireland if the government did not clinch a passport deal that gave access to the remaining 27 EU countries.

The bank’s shares were the biggest risers in the FTSE 100, despite the extra charge for PPI and the £150m hit to cover costs incurred in reducing office space because of job cuts. The bank would not disclose which office was affected, but it has been reported that it has been in talks about leasing space in Canary Wharf to the government. The shares closed 4.5% higher, at 190p, after the bank reported that its profits fell to £2.9bn in the nine months to September, triggered by a loss in the non-core division that houses the operations Staley has earmarked for sale or closure.

Staley joined Barclays in December and set about selling off the bank’s operations in Africa. He said: “The growing momentum in attaining our strategic goals means we can feel optimistic of our prospects of completing the restructuring of Barclays – a restructuring to a simplified, transatlantic, consumer, corporate and investment bank with the capacity to deliver sustainable, high-quality returns for shareholders. This quarter has seen us take another important stride toward that state.” The vote to leave the EU had been a political shock, Staley said, but consumers had recovered swiftly.

“The referendum was a political shock, not an economic shock. I think consumers have recovered from that, but there has been an impact in the currency, which directly impacts the consumer,” said Staley. Barclays said it remained in discussions with the US Department of Justice over a settlement related to mortgage bond mis-selling.

 


The worst airline for delays – and what you’re owed if your trip is affected

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Flights get delayed all the time – but not all airlines are happy about paying up afterwards. These are the worst (and best) airlines when it comes to disrupted travel. Every day at this time of year, the UK’s airports help to ferry hundreds of thousands of British holidaymakers all around the world. And, while we all hope for a smooth start and end to our time away, sadly some peoples’ plans do get hit by late flights. In fact, recent research by consumer group Which? found that almost a quarter of flights out of UK airports are delayed by 15 minutes or more. But what happens if you are lumbered with a late flight? And who is going to sort you out most effectively if the worst happens?

That’s why I thought I’d go through your rights when your plane is delayed, and work out which airlines deal with their delays most effectively…

When can you claim?

There are 3 basic rules as to whether you’re entitled to compensation for a delays:

  1. The flight must be delayed by more than three hours, and the delay has to be compared to the time the flight is meant to arrive and not the time that it takes off (oh, and ‘arrival’ counts as the point at which the cabin crew open the doors… not when the plane touches down)
  2. The flight must take off from the UK or European Union. If it’s a long-haul flight into the UK/EU, it must be via a UK or European airline and the flight must be longer than 3,500km
  3. The issue must be ‘within the control of the airline’ (so bad weather or air-traffic control disputes are going to leave you without any compensation)

What you can claim for also has some fixed guidelines:

  • If the flight is less than 1,500km and the flight is more than three hours late, then you can claim €250
  • If the flight is between 1,500 and 3,000Km and the flight is more than three hours late, then you can claim €400
  • If the flight is more than 3,000km and leaving the EU, or is an EU airline flying into the UK and is between three and four hours late, then you could get back €300. (If it is more than four hours late, then you could expect up to €600.

 

But just because your flight delay should mean compensation, it doesn’t mean the airline will just hand it over.

Dealing with delays

Using unique insights from the tens of thousands of airline customers who raise their flight delay complaints via resolver.co.uk every month, I’ve looked at which airlines you’re most likely to complain about, and which will sort your issues out most effectively if you do…

The most commonly complained about airlines                                                                                                                   

  1. Ryanair
  2. British Airways
  3. Thomson Airways
  4. easyJet
  5. Thomas Cook Airlines
  6. Flybe
  7. Jet2
  8. Norwegian Air
  9. Vueling Airlines
  10.  Monarch

Of course, a lot of complaints, doesn’t mean a lot of unhappy people – so here are the satisfaction rankings (out of 10, where 10 is satisfied and 1 is very unsatisfied) too:

The best airlines at dealing with your delays

  1. Monarch 7
  2. British Airways 7
  3. Virgin Atlantic 7
  4. Thomson Airways 7
  5. Flybe 7
  6. KLM Royal Dutch 7
  7. Emirates 6
  8. Jet2 6
  9. Qatar Airways 6
  10. Air France 6

The worst airlines at dealing with your delays

  1. Vueling Airlines 4
  2. Turkish Airlines 4
  3. Norwegian Air 4
  4. Etihad Airways 5
  5. Wizz Air 5
  6. Lufthansa 5
  7. easyJet 5
  8. Ryanair 5
  9. American Airlines 5
  10. Delta Airlines 5

 


‘Serious risks’ of further financial services mis-selling, MPs warn

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There are “serious risks” of further mis-selling scandals in the financial industry, MPs have warned.The Public Accounts Committee (PAC) said there has been a recent surge in complaints about “packaged” accounts, where consumers generally pay a monthly fee in return for a bundle of products and services included with a current account. The committee also warned that pension freedoms introduced last year, which give people aged over 55 more choice over how to use their retirement pots, could be a “potential trigger” for future mis-selling on a mass scale.

The PAC warned that more needs to be done to tackle the culture of firms, and highlighted the “failure” of regulation which has led to management companies making up to £5 billion from payment protection (PPI) insurance payouts.”The widespread mis-selling of PPI is a vivid demonstration of the risks facing consumers in the financial services market,” said Meg Hillier, chair of the PAC.”The fall-out is still with us. Many people have waited years for a decision on compensation and, because of the way they have pursued their claims, even then they may not receive the full amount. Serious risks of further mis-selling remain.”The PAC urged regulator the Financial Conduct Authority and the Treasury to take stronger action to find out how much mis-selling is still happening and identify how best to prevent it.

The committee said in a report that more than 12 million consumers were mis-sold PPI and firms have paid over £22 billion in compensation to them since April 2011.

 


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