Banks Replace Cash Incentives with Gold and Fine Wine

After the bashing that the banks have taken following the economic crisis, huge losses from the payment protection insurance mis selling scandal, and ridiculous six-figure bonuses for being incompetent – the banks have found a way to retain their employees and attract new ones – a “pay off” using gold and fine wine.

A concocted scheme that is free of regulation, and has been named “broker dealers”.

According to the chairman of the International Search firm Sammons Associates, Jonathan Evans, the scheme was a “different way” “the banks cut the cake”, to boost their brokerage transactions by offering their top staff another form of remuneration.

Evans states, “clever minds (referring to banks) will work out how to make the overall pay package look more attractive”… even if it involves giving out gold.

The expose shocked members of the Treasury Steward Hosie and the House of Commons. The SNP Treasury spokesman stated,  “Banks need to do more than just stick to the letter of the law on remuneration agreements – they need to abide by the spirit of the law”

“To hear that anyone in banking or stock broking is getting round the spirit of what’s intended by paying in bullion and fine wine is mind-boggling”.

Meanwhile, the HBOS’ former head of group regulatory risk, Paul Moore commented on the banks’ actions: “It demonstrates the banks are not acting in good faith and don’t want to solve the problem in the first place.”

I still haven’t figured out how this type of practice will restore consumer confidence in the banking system!! Any takers??

 

Continue Reading

Labour Wants Government to Produce 200,000 Jobs from Bankers Bonus Taxes

A Parliament Member is calling for economic boost (putting up new homes, create jobs and apprenticeship) by pushing the government to implement taxes on banker bonuses.

It was recalled the previous Labour administration started imposing taxes on bankers’ bonuses last year, which garnered £3.5 billion.

A tariff, announced by the coalition government, will be introduced starting the first day of next year, January 1, 2012, based on every financial institution’s balance sheets.

A representative from Bolton North East, David Crausby agrees to the new ruling since it was “the banks that caused recession,” and thus, “they should pay their fair share to fix the damage”.

He continued, “A tax cut for banks this year is not fair when we see the Government cutting so much spending and making so many people unemployed.”

It is expected the tax on banker bonuses will make up to 2 billion pounds. The Labour Party wants the government to utilize the £1.2 billion to create over 200,000 jobs

Continue Reading

Consumer Groups Given Power by Treasury to Flag Harmful Financial Products

Under the new restructuring of the city regulator, consumer groups will be given authority to probe harmful financial products with the help of new regulators in order to guard consumers against improper selling of these services.

Consumer body Which? whom the Treasury had given the authority to raise competition grievances with the Office of Fair Trading, will be given the license to flag products they find questionable with the regulator, given an evidence of mis-selling or giving harm to their consumers.

According to the Treasury (which gives the power to consumer groups), the modifications will make the regulation body more aggressive and more responsive to the consumers’ needs. It even wishes to “go further” by providing “front line consumer groups the power to hold the regulator accountable.”

Commentators remarked “Consumer groups should be asked to deal with widespread mis-selling.”

Which? head Peter Vicary Smith stated, “In the past 10 years, consumers have suffered from mis-selling and toxic products on a grand scale”, and “the impact of these rip-offs has been compounded by a slow response from industry and regulators.”

Barclays, which ranks as the second largest credit provider by assets, set aside 1 billion pounds, while HSBC earmarked 440million dollars. Edinburgh-based RBS, which had already shelled out a hundred million pounds, will be adding another ?850 million as its redress,  while UK’s biggest bank Lloyds Banking Plc, and the largest payment protection insurance (PPI) provider, gave £3.2 billion to their mis sold PPI clients.

Payment protection insurance alone holds the biggest slice of mis sold financial products with a record of 5000 complaints held every day; and banks setting aside a total of 5.5 billion pounds for customer compensation.

A pre-legislative examination for the Financial Regulation bill will now be processed, which will, in effect, remove the Financial Services Authority and shift majority of its duties to the central bank.

Continue Reading

Deputy Prime Minister: It Is Right The Public Enjoy Windfall Shares

Deputy Prime Minister Nick Clegg encourages the Treasury to give a total of 1,000 pounds worth of bank shares after nationalized banks RBS and Lloyds Banking Group are sold, saying, ” it is right the public enjoy the benefits of potential windfall profits”

He further stated, ” Psychologically, it is immensely important that the British public feel they have not just been overlooked and ignored” …”their money has been used to the tune of billions and billions and billions to keep British banking system on a life support system”

RBS is 83% owned by the British Taxpayer, and 43% of Lloyds, both banks were injected with ?67 billion pounds during the banking crisis in 2008.

The motion, supported by leading Conservatives, was started through a letter addressed to the Treasury, calling for their consideration to give every UK citizen an estimate 1,450 shares in RBS, and 440 in Lloyds, valuing presently up to 775 pounds in the market.

Britons would get a “floor price” or “free gains” made beyond the floor value – in other words – if shares increased to 1,500 and would be liquidated, individual taxpayers could receive 500 pounds after a thousand bounces back to the Treasury.

David Cameron who shares the idea of “widening share ownership”, gives his word to look into the scheme.

Even prior to 2010’s general election, George Osborne came up with the plan of selling shares at a “discounted price”, however, at that time, was dismissed by the administration, along with the Liberal Democrats, having not yet a clear plan on how to privatize banks.

The “People’s Banking System” would be the largest shares allotment since nationalized industries were liquidated in the 1980s by former Prime Minister Margaret Thatcher.

Continue Reading

ICO warns banks to respect customer right to transparency

Information Commissioner’s Office (ICO) has warned banks and finance houses to offer “greater transparency for customers” as their actions greatly affect their customers’ lives.

High street banks are under inspection after a judicial ruling, supported by the city watch dog’s policies on payment protection insurance (PPI) selling, in creating rules that would make financial information readily available to their account holders.

In a conference started by the BBA, deputy commissioner David Smith tells British customers to “exercise their legal right to access information” as stated in the data protection law;

He states that banks should comply to this ruling by providing a prompt breakdown or a detailed list of accounts to their customers.

He emphasized on their indictment on not wanting a repeat of the scenario “when the ruling on unfair bank charges took place” two years ago that resulted in a “swamp of complaints.”

As Mr. Boorman puts it, those were the years banks were “addicted”  to regular mis-selling of financial products.

The commissioner also stated high street banks should do more to tighten security to prevent any hacking on their customers’ accounts, emphasizing their right to transparency and control over their finances.

“We want to make sure financial service providers are doing all they can to comply with data protection law. While the number of upheld complaints is small compared with the millions of bank accounts in the UK, mishandling of financial information can have a serious effect on individuals’ lives.

Continue Reading

Investment Firm Admits to Charging Hard to Spot Fees

A top British Financial company admitted to have ripped off its customers thousands of pounds through hidden or “hard-to-spot” charges in their investments.

Fidelity International, a large asset management company, and  part-owner of Lloyds, is the first among huge financial firms to openly admit that investors should be on guard of a whole range of “hard to spot fees when making investments in the stock market.

The firm told a newspaper the yearly fee of one of its famous funds costs only a third of its actual cost, caving in hundreds of pounds from individual savings account and big investments.

The firm surprisingly makes a move not common among financial institutions, calling for them to issue “simple, transparent” fees that illustrate “on the road” cost of different funds instead of facing forward the lower yearly charge, which is often used to lure in customers.

According to the firm, “Fees reduce the value of investments, so everyone should be clear about what they are paying, and the returns they get.”

The confession follows an investigation in 2010 by another known newspaper, which found 7.3 billion being “skimmed off” yearly through hidden charges by bankers and money managers.

The company revealed that their “low, low” 0.1% management charge actually charges depositors 3%. It pointed to its ISA, which collects small amount of fees that significantly builds up overtime… drawing to a conclusion that those who charge far higher could get higher profits from these hidden charges.

Moreover, research data shows 3% of investments could be lost to investors over these hidden charges, which grow bigger overtime.

As a result of the expose, city regulator the Financial Services Authority is increasingly worried about the value of advice offered to investors who plan to put their money in the stock market.

The City watchdog is mulling over screening investment products or “pre-approving” services before it will be offered in the market.

Continue Reading

Lloyds and RBS: Majority of Our Customers Will be Compensated

After Barclays’ vow yesterday to compensate its customers of the payment protection insurance (PPI) it had mis-sold, two of its fellow high street banks had announced that it promises to answer all complaints, “regardless of when they were received”.

Lloyds Banking Group and Royal Bank of Scotland will see to it that vast a majority of their customers will be given recompense, if not promising all.

In a statement given by Lloyds,  “We are handling all PPI complaints fairly and consistently, regardless of when they were received. We will ensure that we provide a clear response to every customer that has submitted a complaint to us before May 6 by the end of August. For customers that have submitted a complaint on or after this date, we will provide a full response within 16 weeks of receiving that complaint.”

RBS’ and Natwest’s spokesperson also gave its assurance that it will be handling complaints in the manner of accordance with the ruling implemented by the Financial Services Authority (FSA).

Continue Reading

Ignoring Big Spending Leaves Britain Badly in Debt

A leaked document reveals the excessive spending of over £90 billion by Former Prime Minister Gordon Brown and shadow chancellor Ed Balls left Britain “dangerously exposed to the economic crisis.”

The document came from personal files of the Labor politician following news of his scheme to remove Prime Minister Tony Blair.

Revelations tell of the Former Prime minister and his parliament member ignoring the warnings of the crippling economic effects of big spending.

Even before, public sector officials expressed their immense concern to the ex-prime minister about spending carefully, constantly reminding him to align every expense with inflation and its possible effects to it, as well as considering the 12 different areas where billions of pounds could be trimmed.

Instead, Brown doubled the recommended spending, which he only based on 4 areas, and left the country badly in debt. Chief Secretary Liam Byrne echoed in his statement, “There is no money left”

A source commented on the predicament, saying the document clearly showed “the reckless approach of Brown and Balls which left Britain dangerously exposed to the economic crisis.”

Other revelations tell millions living on pensions and underprivileged Britons could be affected if the 10% tax rate was trashed.

Like the spending cut, the former prime minister dismissed the warning and proceeded with the change. He came confidently that no one would lose to his plans but later on gave an emergency compensation package.

A draft of former foreign Secretary David Milliband’s speech had found his fear of the Labor under valuing the demands of deficit and his plans on choosing former chancellor Alistair Darling to start a body of new fiscal spending ruling, and tackling government debt.

Milliband also wanted to notify the Labor party, the importance of regaining the public’s confidence in the economy.

Continue Reading

Financial Power Will Shift to the East by 2030

India’s emerging market asset will soon overtake G7 banks by 2036, according to research from Price Waterhouse Cooper.

Financial crisis in the UK has fast-tracked predictions about the rate at which emergent banking markets, like China, India and Brazil, will dethrone the UK, US and other developed countries before 2050.

Britain’s banking advantage was dubbed as the world’s fourth largest after the US, China and Japan, but is under threat of stepping down in place of India due to the prolonged financial crisis.

E7 economies include China, India, Brazil, Turkey, Mexico, Indonesia, and Russia; of which China and Russia are predicted to become giant banking markets.

Chief economist of PwC Mr. Hawksworth stated, “The UK banking market should show some growth in the long term but, like other G7 economies, it is a mature market, and regulatory changes will constrain lending growth for some time to come. In the long term, therefore, the success of UK banks will depend a lot on their ability to compete in the fast-growing emerging market,”

G7’s assets come below $50 trillion (£30.4 trillion) while E7’s are less than half of G7’s total assets.

PwC predicts emerging economies will overtake developed systems by 2036, and will be 50% bigger.

China, which possesses an estimated $30tn in assets, will be able to surpass the United States in 2023, and India is expected to outdo Japan by 2035.

Hawksworth said the increasing growth of eastern economies is a sign that financial power has shifted from the West to the East and its implications will have a deep impact on the banking industry.

Continue Reading

Financial Sector is Under-Taxed

Financial reform campaigners have called for a £20 billion tax levy on the financial services industry, after a report by the Robin Hood Tax Campaign found that contributions to the Treasury are dwarfed by the increase in Government debt caused by the crisis.

The report ‘There is an Alternative’ estimates that it will take nearly 20 years to recover the costs of the banking crisis, and has demanded that the Banks take on more responsibility for repaying the debt

It referred to figures from the International Monetary Fund (IMF) that put the cost of Government debt at £737 billion as compared with the £203 billion it received in tax from the financial sector from 2002-2007.

Spokesman for the Robin Hood Tax Campaign, Max Lawson, said “The contribution banks make in boom years is dwarfed by the cost they impose on us all when things go wrong. It is time our politicians brought big banks to heel and made them pay their fair share. Even the IMF says the financial sector is under-taxed.”

Further adding that “The public should not pay the price of the reckless profiteering that was allowed to pass for productive activity in the trading rooms of the City”

The proposed £20 billion tax levy is a far cry from the current £2.5 billion levy on the banks’ profits that is currently in force.  The Robin Hood Tax Campaign, which launched in early 2010, wants the banks to help fight poverty in the United Kingdom and abroad and take responsibility for the mess they caused in the lead-up to an in the wake of the banking crash.

It also thinks that the banks’ warnings of a moving overseas if they are treated harshly is an empty threat, and UK politicians should call their bluff.

A proposed financial transactions tax is on the agenda of a meeting of European finance ministers later this month. Nicolas Sarkozy, the French president, and German chancellor Angela Merkel are both in favour, but will face of opposition from the US and UK.

Continue Reading