Williams & Glyn sell off sparks watchdog’s attention

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Royal Bank of Scotland’s (RBS) potential sale of Williams & Glyn to challenger Clydesdale & Yorkshire Bank (CYBG) has sparked the attention of the banking watchdog.

RBS was told to divest of Williams & Glyn, and its network of more than 300 branches, by 2017 as part of its £45bn state bailout deal. CYBG revealed it was in talks to possibly snap up the bank last month. Now, The Sunday Telegraph has reported the Prudential Regulation Authority (PRA) is appointing investment bankers to advise on whether integrating Williams & Glyn’s computer systems could wobble the challenger bank. Offloading Williams & Glyn has been a a tricky journey for RBS. Efforts to sell to Santander in 2012, which were nicknamed Project Rainbow, fell through because of IT problems, and, earlier this year, another bid from the bank collapsed over concerns on the price. RBS had once aimed to spin off and float Williams & Glyn, but revealed that plan had been scrapped in its interim results in August. The bank also warned in its most recent quarterly results that it was unlikely it could divest of Williams & Glyn by the 2017 deadline it had been given. RBS reported a loss of £469m for its third quarter of 2016, as litigation and restructuring costs of nearly £900m took their toll.

The PRA, RBS and CYBG all declined to comment.

Hayley Kirton


Barclays card glitch: Customers charged twice in bank’s latest debit card error

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A customer said that Barlcays had inadvertently taken a £4,000 payment twice!

Barclays customers face being charged twice as the high street lender tries to fix a debit card payment glitch. However, by Monday afternoon the bank said the problem had been fixed, and all customers had been refunded. Some customers vented their anger on Twitter in the morning saying the system error has left them overdrawn. Theresa Worthington tweeted: “I had a text today to say I’m overdrawn I have been charged twice for two things I’ve purchased over the weekend why”. Barclays said: “We detected a small number of duplicated debit card payments this morning.”

“We are working to fix this and refund customers as soon as possible. We apologise for any inconvenience caused and affected customers will not be out of pocket.” Customers are advised to check their statements to make sure any potential duplicate payments are refunded. This is the latest issues affecting Barclays debit card payments. In April, Barclays customers complained that they were unable to make payments from their accounts, an issue for which the bank later apologised and attributed to a routine systems update. While in October last year, Barclays customers had trouble getting cash from their accounts after the bank was hit by a system glitch as the clocks changed to Greenwich Mean Time.Barclays’s payment glitch follows a similar problem with card payments at Asda over the weekend. The problem left thousands of customers facing long queues at the store’s checkouts across the UK.

Zlata Rodionova

Competition watchdog criticised by MPs over bank reform

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Treasury select committee chair accuses Competition and Markets Authority of ‘dropping the catch’

The competition watchdog has been accused of complacency and missing an opportunity to overhaul high street banking, including capping overdraft charges, despite a two-year long investigation. The accusations were levelled at Alasdair Smith, who led the investigation by the Competition and Markets Authority (CMA), by MPs on the Treasury select committee who were questioning him following the publication of the report in August. In a gruelling evidence session, MPs questioned why Smith – flanked by two members of his team – had not put a cap on overdraft charges and taken more radical measures to break the stranglehold on the current-account market held by the “big four” of Lloyds Banking Group, Royal Bank of Scotland, HSBC and Barclays. Andrew Tyrie, the Conservative MP who chairs the committee, said the CMA had “dropped the catch” despite support from politicians, academics, consumer groups and the media for a tougher stance towards the banking sector. “The banking crash has changed the terms of trade in favour of the regulators with respect to reform,” said Tyrie.

The Labour MP Rachel Reeves said that the cost of an unauthorised overdraft was greater than a payday loan, where the charges have been capped. Reeves, who is arguing overdraft fees should be restricted, said vulnerable consumers were being let down. “It’s dereliction of duty,” said Reeves. The CMA report stopped short of recommending overdraft caps and said that banks should set out a monthly maximum charge for unauthorised overdrafts, from which the industry generates £1.2bn in fees annually. It recommended that the Financial Conduct Authority should examine this area. Smith argues that a new technology allowing consumers to compare the personal data, known as Midata, will shake up banking.

Tyrie said no other CMA report had ever received such “unequivocal condemnation” but Smith said he was confident the recommendations would transform banking in three or four years. “Only history will prove which one of us is right,” said Smith. “I am confident that the work of our group will result in a major change for the better and that when people look back at the CMA report of 2016 they will see it as a landmark that really changed the direction that this market has gone in,” said Smith, who also insisted that banks were not making excess profits. Smith said after the hearing that the CMA was introducing 17 “hard hitting” changes. “We will also help customers avoid unauthorised overdraft charges by requiring banks to text customers when they are at risk of incurring charges and give them a grace period in which to take action,” said Smith.

The CMA investigation was first announced in July 2014 at a time when the Labour party was promising to create new banks. At the end of the three-hour evidence session, Tyrie said: “The committee was deeply disappointed by what it had heard.”

Jill Treanor


Half a million loans written off after probe into debt collector’s practices

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Half a million people whose payday and car loans were sold to a debt recovery firm will have their loans written off after the financial regulator found failures in the collection process. Motormile Finance UK is paying a total of £154,000 in cash to 2,148 borrowers – equivalent to £69.83 each – and writing off a further £414m in debts where it has been unable to verify the amount owed by some 500,000 people. The firm, set up in 2008, specialises in collecting short-term loans that are passed on from lenders who did not recoup the debt themselves. The Financial Conduct Authority said Motormile failed to properly check the sums that these customers owed, and that the firm’s contact with some borrowers was “unfair and unsuitable”. The write-off is almost twice as big as the £220m in loans that Wonga forgave in 2014, in what was seen as the turning point for payday lending practices. Since the regulator started an independent review of Motormile in early 2015, the company has overhauled its IT systems and hired a new chief executive.

“We have worked closely with Motormile, and are now satisfied with their progress and the way that they will address their previous mistakes,” said Jonathan Davidson, director of supervision for retail and authorisations at the FCA. “This evidences the importance of conducting sufficient due diligence and how failing to do so leads to poor treatment of customers.”

The FCA took over responsibility for 50,000 consumer credit firms in 2014 and has been vetting providers before giving them permission to operate, starting with the payday lenders. The regulator refused permission to 35 loan firms in the last financial year and more than 100 debt management firms left the industry. The number of short-term loans has dropped from 6.3m in the first six months of 2013 to just 1.8m in the first half of 2015, aided by a new cap on fees and penalty charges. Around 400,000 Britons are still on debt management plans after struggling to pay back their original loan. Motormile Finance UK (MMF) reported that profits fell from £3.7m to less than £500,000 last year as it started to make provisions for the FCA’s intervention.

“Working so closely with the FCA has provided MMF with a very clear understanding of what is expected under the new regulatory regime and I can assure our customers that we have embraced this.” said Denise Crossley, chief executive. “We apologise to all of the affected customers and will be addressing the issues through the redress scheme we have agreed with the FCA.” She added that the group is now fully authorised by the regulator, “which is testament to them witnessing first-hand the serious approach we take to our regulatory responsibilities and our desire to treat customers fairly”. Customers do not need to take any action and will be contacted in the coming weeks. Motormile hopes to complete the compensation programme by February.

By Marion Dakers, financial services editor


Liz Truss urged by Bar Council to condemn Brexit ruling backlash

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New Lord Chancellor installed

The Bar Council joins calls for the Government to defend the judiciary’s independence after three judges were heavily criticised. Justice Secretary Liz Truss is being urged to condemn “serious and unjustified attacks on the judiciary” following a High Court ruling over Brexit. The Bar Council has joined calls for the Government to defend the judiciary’s independence after three judges were heavily criticised by some Tory MPs and sections of the media. The trio ruled on Thursday the Government must seek MPs’ approval before triggering Article 50 – the formal process of leaving the EU.

The Daily Mail called the judges “enemies of the people” while the Daily Express claimed the ruling was a marker of “the day democracy died”. The Bar Council, which represents barristers in England and Wales, condemned the attacks and called upon Lord Chancellor Ms Truss to do the same. It said: “A strong independent judiciary is essential to a functioning democracy and to upholding the rule of law.” Ms Truss has not spoken on the matter since the court decision and Prime Minister Theresa May has also been urged to calm the backlash in the wake of the ruling. Ex-attorney general Dominic Grieve said the stinging criticism of the trio was “chilling and outrageous” and “smacks of the fascist state”. He said reading some of the press coverage was like “living in Robert Mugabe’s Zimbabwe … I think there’s a danger of a sort of mob psyche developing”.

Bob Neill, the Conservative chairman of the justice select committee, told The Times: “All ministers from the Prime Minister down must now make clear that the independence of the judiciary is fundamental to our democracy.” It comes as Labour leader Jeremy Corbyn demanded Mrs May set out her Brexit plans “without delay”. In a speech to the Class think-tank, he said Labour “accepted and respected” the EU vote result but called for the Government’s negotiating terms be transparent and accountable to Parliament. Mr Corbyn also insisted all UK businesses should be given “assurances” over the impact of Brexit to match those apparently made by the Government to Japanese car-maker Nissan.

On Friday, Mrs May suffered a setback after a pro-Brexit Conservative MP resigned over “irreconcilable policy differences” with the Government. Stephen Phillips announced he was quitting over what he perceived to be a failure to appreciate the need to consult Parliament over Brexit. His resignation as MP for Sleaford and North Hykeham has fuelled speculation the PM will call an early election. However, a Number 10 source insisted Mrs May stood by her declaration that she would not go to the country before 2020. Meanwhile, the woman behind the successful High Court challenge on triggering Brexit has been subjected to a torrent of online abuse, including rape and death threats.

Gina Miller, who was born in Guyana in South America, has also been the target of racist rants by internet trolls, who have called for her to be deported.


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