ECB to halve €60bn bond buying programme

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The European Central Bank (ECB) will cut back its scheme designed to boost the economies of the eurozone.

From January of next year, it will reduce the amount of assets it buys every month to €30bn from the current level of €60bn.

The programme, which aimed to fend off the threat of eurozone deflation and help boost employment, could finish by the end of next year.

Inflation is likely to be below the 2% ECB target for the next few years.

The ECB said the reduced programme would run to the end of September 2018, “or beyond, if necessary”.

If economic conditions become less favourable, or if no progress is likely to be made towards the ECB’s inflation target, it could increase bond-buying again, it said.

“Our programme is flexible enough that we can adjust its size smoothly,” ECB President Mario Draghi told a press conference.

“Today’s monetary policy decisions were taken to preserve the very favourable financing conditions that are still needed for a sustained return of inflation rates towards [target],” Mr Draghi said.

He said the ECB will reinvest the principal investment from maturing bonds for an extended period after the end of the bond-buying programme, which could run to billions of euros per month.

The decision to cut quantitative easing measures was not unanimous among ECB policymakers, and a large majority favoured keeping monetary stimulus open-ended, he said.

Markets muted

Mr Draghi has been signalling for months that the bond-buying scheme will be reduced.

“Mario Draghi’s main goal for months now has been to gently steer markets into thinking that this tapering would come today. He’s done that so markets take the announcement in their stride, which they will,” said Patrick O’Donnell, Aberdeen Standard Investments senior investment manager.

The ECB kept the key interest rate for the countries that use the euro unchanged at 0%, and its deposit rate at -0.4%.

The central bank charges banks and other financial institutions to deposit excess money with it to encourage banks to lend.

BrightHouse rent-to-own firm pays £14.8m in redress

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Rent-to-own retailer BrightHouse has been told to pay £14.8m to 249,000 customers by the financial regulator, the Financial Conduct Authority (FCA).

BrightHouse will compensate customers who had cancelled agreements after one downpayment but had not been refunded.

It will also make payments to those who signed up to lending agreements that “may not have been affordable”.

The FCA said BrightHouse had not acted as a “responsible lender”.

The firm, which lets customers pay for household items such as washing machines and televisions on a weekly basis, has been criticised for its business model.

In 2016 a BBC investigation conducted by Ed Miliband, the former Labour leader, highlighted the example of a £358 washing machine that ended up costing more than £1,000.

BrightHouse has apologised to customers about failing to refund them.

There is no need for customers affected to contact BrightHouse. It will write to 213,000 current and former customers by the end of the year, explaining what they are due.

Customers whose deposits BrightHouse failed to refund signed up between April 2010 and April 2017. These customers will receive an average payment of £27.

The second group includes those who took out an agreement between April 2014 and September 2016. They will get an average of £147.

In the case of customers who were not assessed properly at the start of the loan who may have had difficulty making payments, BrightHouse will pay back interest and fees along with compensatory interest of 8% – if they return the goods.

Those who kept the goods will have their balances written off.

FCA chief executive Andrew Bailey told Radio 5 Live the move set a “very important precedent … BrightHouse did not behave as responsible lenders and they failed to meet our expectations”.


Lois Grant, from York, worked for BrightHouse from 2012 to 2016 as a branch manager in Yorkshire and London but left because of “unacceptable” high-pressure sales techniques.

“In the early days, we did not ask people about their expenditure at all. We just checked what their income was. They changed that policy because the FCA came to investigate, asking for more stringent checks.

“I can’t remember ever giving any money back to any customer. This is despite one of their policies that said if you cancel within 14 days you would get a refund. I know from several experiences that rarely happened, if ever.”

Citizens Advice said it had helped more than 13,000 people with rent-to-own issues over the past 12 months, many of whom were struggling to make payments on essential goods such as fridges and washing machines.

“We’re pleased to see that the FCA are taking action against BrightHouse whose loose lending practices have pushed the very people who can least afford it further into financial difficulty,” said its chief executive, Gillian Guy.

The charity said it had found one in five rent-to-own customers spent 20% or more of their income on payments, and more than half had to take on other debts to cover the costs.

It is asking that the same conditions apply to all forms of high-cost credit as the payday loans cap – meaning that no one would pay more than what they borrowed in interest and charges.

Separate criticism came from the Financial Inclusion Centre, a think tank that compiled a report into the company last year. It said BrightHouse had made profits of £162m last year, up from £63m in 2007-8.

Gareth Evans, a co-director of the think tank, said this had come at a personal cost for some customers, with some having to prioritise repayments over food or heating.


BrightHouse chief executive Hamish Paton sincerely apologised to those affected: “We’re absolutely determined that this doesn’t happen again and have made significant improvements over the last 18 months.”

The firm said it had overhauled its application process to ensure future loans were affordable and that customers were treated fairly during the collections process.

BrightHouse was founded in 1994 as Crazy George and rebranded as BrightHouse in 2002. It is owned by private equity firm Vision Capital and has about 280 stores.

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.”

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