RBS Seeks To Shut Down Payday Loan Brokers

Royal Bank of Scotland (RBS) has told Sky News it is actively working to close payday loan brokers.

The group, which includes the Natwest and Ulster Bank brands in its stable, said that between July and August alone it was receiving 650 complaints a day from its customers about payday brokers.

It said one million attempts were being made a month to remove money from RBS or Natwest accounts and said that one customer of a payday broker who was seeking a £100 loan was charged £700 in fees.

Brokers are web-based and do not lend money themselves but often charge fees even if their attempts to find a lender are unsuccessful. Fees usually range between £50 and £100.

The Guardian reported on Tuesday that, in the worst cases, brokers have passed a person's bank details to others which then also attempt to charge the individual for a service.

Its story prompted the Financial Ombudsman to issue a new warning about the use of payday brokers, saying nearly 11,500 people had contacted the service to complain about credit-brokering websites since April alone.

In two-thirds of complaints it investigated, the ombudsman agreed that the consumer had been treated unfairly. Fees were refunded in the remainder of cases.

The ombudsman said many people using the websites thought they were applying for a loan directly and did not realise that they were paying a middleman and loans would not materialise. 

Senior ombudsman Juliana Francis said: "In too many of the cases we sort out, no loan is provided and people's bank accounts have been charged a high fee, often multiple times.

"If money has been taken from your account unfairly or without warning, the good news is the ombudsman is here to help."

The Consumer Finance Association (CFA), which represents some of the best known payday lenders but does not represent brokers, said: "Brokers do not lend any money - they are simply the middlemen.

"There is no need to pay a fee to arrange a loan. You can go direct to reputable lenders who have new rules that ensure they will be clear and up front about costs and they cannot make more than two attempts to collect your loan payments from your account.

"Many brokers have no such rules and will keep dipping into your account to take arrangement fees."

Sky News revealed last month how the Competition and Markets Authority was changing the scope of its clampdown on payday lenders to include a greater focus on the brokers too.

Previous regulatory reforms within the short-term credit industry have included rules on capping daily rates and stricter advertising.

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Yorkshire Building Society Fined £4.1m

The City watchdog has fined Yorkshire Building Society (YBS) more than £4.1m for failures in its dealings with thousands of mortgage customers.

The Financial Conduct Authority said that between October 2011 and  July 2012, short-comings by call handlers dealing with customers in payment difficulties meant there were "significant delays" in determining appropriate payment solutions.

It said that while YBS properly viewed repossession as a last resort, the failures meant some customers incurred increased fees and associated interest - money it is already refunding.

Tracey McDermott, FCA director of Enforcement and Financial Crime, said: "Customers in financial difficulty need to be treated fairly and sensitively.

"Firms must ensure that they are taking into account the particular circumstances affecting customers who find themselves in difficulty.

"By allowing cases to drift without agreement, YBS's actions meant that customers in vulnerable circumstances risked falling into further financial difficulty."

The FCA said its investigation found that insufficient training and fragmented guidance meant that call handlers did not consistently probe customers' circumstances and identify the cause of their problems.  

A redress scheme means approximately 33,900 customers will be repaid a total of £8.4m at an average payment of £247.

Chris Pilling, YBS chief executive, said: "As a mutual organisation owned by our members, the service we give to customers is fundamental to us and we are very sorry for letting them down.

"I hope the refunds we have voluntarily given to customers and the changes we have made demonstrate how seriously we have taken this issue and our commitment to put things right."

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Energy Crunch: Don't Expect Return To 1970s

Are you ready for winter?

This question is at the heart of today's National Grid Winter Outlook report.

The weather is predicted to reach around 20 degrees in some parts of the UK on the final day of October this year so it's no wonder consumers aren't planning how to manage their energy use for the winter ahead.

But while customer use or demand is an important part of the equation – power supply is the key – and that's where the UK's plan falls apart.

In the past year, several power plants have experienced unexpected shutdowns due to fire, breakdowns and accidents.

Video: Why The Winter Lights Could Go Out

At the same time, the building of new plants has been terribly slow and faced numerable delays.

Which is why today National Grid is warning that our electricity supply margin has narrowed from last year, to the lowest level since 2007.

Which means, technically, the risk of blackouts, and brownout (where power use is limited, but not cut off completely) is increasing.

But asking three, more detailed questions, reveals that there isn't call for panic just yet and the prospect of a return to rolling blackouts last seen in the mid-1970s.

:: What is the likelihood of blackouts actually occurring?

The National Grid says that in the event of the UK experiencing the coldest snap in 20 years,  then electricity supplies would not meet demand for up to two weeks in January.

But there is only a 5% chance of this cold snap even happening. And not meeting demand, is not the same thing as a blackout. Which brings us to the next question.

:: How would it work?

Consumers and businesses would be encouraged to iron-out their electricity consumption across the full day, rather than all pile in at peak times.

This would reduce the likelihood of a total collapse at any one point in the day though whether families want to get up to put the dryer on at 3am is a question not addressed in National Grid's report.

Energy intensive business may be able to reorganise themselves to do this more easily, which leads nicely to – the final question.

:: Are emergency measures put in place by National Grid sufficient?

National Grid had started a programme to PAY some businesses to reduce their energy consumption, and time it more evenly with periods when consumer demand is not lower.

In addition, they are un-mothballing some plants previously marked for closure, to have them on standby should that mythical cold snap happen.

The Grid says these plans will lift the electricity margin back up to 6.1% from the 4.1% it is warning is the level at present.

And though it's not a pleasant thought, consumers must remember that behind all the statistics and warnings there is electricity to be had, no matter how cold the weather gets.

It will just cost more.

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Lloyds Cuts 9,000 Jobs And 200 Branches

Lloyds Banking Group has confirmed 9,000 job losses and 200 branch closures as it moves to bolster its digital banking offering through a £1bn investment over three years.

The bank - 25%-owned by the taxpayer - said the job and branch cuts would take place as consumers' habits continued to shift towards online banking services.

Lloyds said it would be investing in remote advice services for customers, who would be increasingly expected to use online banking or self-service facilities within branches instead of dealing with staff face to face.

More than 10 million Lloyds Banking Group customers currently bank online while five million use its mobile banking services.

The news was contained in its latest results which showed a nine-month profit before tax of £1.61bn - 5% down on the same period last year.

Antonio Horta-Osorio wants to make Lloyds more efficient

Lloyds said the figure included an extra £900m provision for the costs associated with the payment protection insurance mis-selling scandal.

Sky News reported on Monday night that Lloyds and other major banks were all planning to put aside extra funds, giving them a combined provision of more than £22bn.

Video: How Do You Use Your Bank?

Lloyds accounts for half the total.

Underlying profits for the business, which includes Halifax and Bank of Scotland, rose 41% to £2.2bn in the third quarter.

Sources at the bank told Sky News it had already shed 45,000 jobs since its bailout at the height of the banking crisis.

Video: The Cost Of Banking To The Banks

The latest cuts represent around 10% of its current workforce of 88,000 and form part of its plans to "digitise" the bank.

Earlier this year, the British Bankers' Association published research showing that UK-based customers conducted almost 40 million mobile and internet banking transactions each week in 2013, a huge increase on the previous year.

The branch closures will mainly affect urban areas where there are already high concentrations of Lloyds branches.

Video: 1964: Banking For the Ladies

Chief executive Antonio Horta-Osorio said: "Over the last three years the successful delivery of our strategy has ensured that we have become a safe, highly efficient, UK-focused retail and commercial bank.

"The next phase of our strategy will use these strong foundations as a basis for meeting the rapidly-changing needs of our customers, and sets out how we will grow the business in a way that will deliver increasing and sustainable returns for our shareholders."

Shares have been under pressure since the results of a European stress test to see how lenders would cope in maintaining the buffer of capital they hold in the event of a financial crisis.

Video: Banks To Use Twitter Cash Transfers

Lloyds passed the test but performed the least well among UK banks, adding to fears that it may struggle when details of a further exercise by the Bank of England are published in December.

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Energy Crunch: Plan To Keep The Lights On

National Grid has warned the UK may be forced to resort to emergency measures to keep the lights on if bad weather strikes this winter, with households picking up the bill.

Its annual Winter Outlook report looking at the capacity margin - the gap between total electricity generating capacity and peak demand - was compiled as the country misses output from five key power stations following fires or safety checks.

The network operator put the figure at just 4.1% - its narrowest since 2006/7 - and said that margin of spare capacity could fall further to just 2.8% if weather conditions took a turn for the worse.

Such a scenario would mean the grid failing to meet its "basic reserve requirement" of spare capacity needed to run the system, forcing it to adopt contingencies such as paying factories to shut down and supplying reserves from mothballed power stations.

Power station fires have hit electricity output

National Grid said it was finalising contracts with three sites, Littlebrook in Kent, Rye House in Hertfordshire and Peterhead in Aberdeenshire, to provide reserve capacity that would widen the margin by 2%.

Having to use these power stations would add £1 to the average family bill, the operator confirmed, as it would cost £25m.

1/5

1. Gallery: Blackout Britain: 1970s Power Cuts

   Paul Caldecott, six, was forced to stay at school because his parents couldn't pick him up

2. Four women work in a Slumberdown office in Bond Street, London, during a miners' strike in 1973

3. A woman breastfeeding her baby during a blackout at St Andrews Hospital, Dollis Hill, northwest London

4. Working for Slumberdown had its advantages, as these women could wrap themselves in quilts to keep warm during a blackout

5. Customers and staff at an HMV shop in Oxford Street, London, during a power cut in December 1973

The prospect of an electricity crunch has risen since the summer, when a key measure of risk, called Loss of Load Expectation (Lole) was forecast at 0.5 hours for the coming winter.

Since then the Lole risk measure has risen to 1.6 hours, factoring in the fires that have caused the permanent shutdown of Ironbridge in Shropshire and the temporary closure of Ferrybridge in West Yorkshire.

A power station in Barking will also close, while a planned return to service for four EDF nuclear reactors at Heysham in Morecambe, Lancashire, and at Hartlepool, will see them return at only 75% capacity.

A fire earlier this month put half of operations out of action at Didcot B power station in Oxfordshire - which has capacity to supply a million homes.

The part of the site affected by the blaze is expected to return to around 50% service this week.

The Grid report said gas supplies were well ahead of expected peak demand but warned of the uncertain impact of tensions over Ukraine, which could strangle availability from the continent.

Video: Warning Expected Over Blackout Risk

The report warned that in the "extreme scenario" of cold winter conditions and Russia cutting off supplies, the UK may have to arrange factory shutdowns as well and rely on expensive imports from markets further afield such as Asia and South America.

Cordi O'Hara, director of market operation, said: "The electricity margin has decreased compared to recent years, but the outlook remains manageable and well within the reliability standard set by Government.

"As system operator, we have taken the sensible precaution to secure additional tools to bolster our response to tighter margins."

Energy Minister Matt Hancock said lights would stay on across the country.

He told BBC Radio 4: "There will be secure energy supplies this winter. There will be no power cuts to householders."

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Facebook Shares Slip On Cost Growth Warning

A leap in mobile advertising revenue helped Facebook almost double profits in its third quarter but shares fell 10% after it warned about higher costs ahead.

The social network's figures, which confirmed profits at $801m (£496m) and a 59% jump in total revenues to $3.2bn (£1.98bn) over the three months, were well above analysts' expectations.

Mobile advertising revenue made up 66% of total ad revenue in the period - indicating Facebook is succeeding in steering advertisers to its mobile platform at a time when most of its users are using Facebook on phones and tablets.

Though Facebook's results surpassed expectations, investors sent the company's stock down by almost 11% in after-hours trading - spooked by comments during a conference call that 2015 would be a "significant" year for expenses.

Facebook said it expected costs to grow by 55% to 75% next year as it ramps up investment in its workforce, grows existing products and invests in new areas such as WhatsApp, Oculus and video.

This year, Facebook spent $22bn in cash and stock to buy the messaging service WhatsApp and about $2bn on virtual reality company Oculus.

It also re-launched Atlas, a tool for marketers to better target people across "devices, platforms and publishers" and to measure how well the ads work.

Facebook's share price had hit a record high of $81.16 on Tuesday before the results came out.

The figure is more than double its flotation price of $38.

Facebook had 1.35 billion average monthly users as of 30 September, an increase of 14% from a year earlier.

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Nintendo Makes Surprise Return To Profit

Nintendo achieved a surprise return to profit in its second quarter following four years of annual losses.

The struggling Japanese video game maker made an operating profit of 215m yen (£1.2m) for the period between July and September, compared with an 18bn yen loss in the same quarter a year earlier.

The company credited a significantly weaker yen for boosting its bottom line.

A weaker yen helps make Japanese exporters more competitive overseas and inflates the value of their repatriated profits.

The currency boost offset slowing sales, though Nintendo has seen strong demand for new games on the Wii U console such as Super Smash Bros and Mario Kart 8. 

It maintained its annual profit guidance of 40 billion yen (£229m).

The Kyoto-based firm - best known for its Super Mario and Pokemon franchises - has been battling intense competition from rivals as consumers flock towards downloadable games for smartphones and other mobile devices.

It has also struggled in its console market, with Sony outselling it for the first time in eight years because of the popularity of the Playstation 4.

Demand for Nintendo's latest console - the Wii U - has lagged behind the original Wii, the most popular console of the last generation.

The company blamed weak sales of the Wii U and its handheld 3DS device for its last annual loss.

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Bankruptcies At Lowest Level Since 1999

The number of bankruptcies has fallen to its lowest level since 1999, according to official figures.

The Insolvency Service charted steep drops in both company and personal insolvencies in the third quarter of the year compared to the same period last year.

It said company liquidations in England and Wales decreased by 11.7% and administrations fell by 18.8%, with company voluntary arrangements and receiverships also down.

The number of people who became insolvent decreased by 4.6%, driven by a 19% drop in bankruptcy orders in particular.

Individual voluntary arrangements were down 1.9% to 13,143 cases while debt relief orders increased by 2.7% compared with July to September 2013 - highlighting further progress in efforts to prevent those struggling under the weight of their debt being declared insolvent.

The figures showed that 6,808 people took out a debt relief order in the period.

With expectations that the Bank of England base rate is likely to start moving off its historic 0.5% low at some point next year, people have been warned to prepare for the prospect of their borrowing costs increasing.

The Insolvency Service said anyone who is experiencing financial difficulties should get help early from a body such as the Government-backed Money Advice Service.

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Warm Weather Deals Blow To Clothing Retailers

Shares in the UK's biggest clothing retailers have been hit after Next reduced its full-year profits guidance by £25m blaming unseasonably warm weather.

The country's second-largest clothing retailer, which had warned one month ago that a lack of typically autumnal conditions in October would result in lower profit expectations, said third-quarter sales still grew by 5.4%.

But the growth was almost half the 10% it had previously forecast as demand for winter wear remained weak.

It signals troubles for the wider sector in the run-up to the Christmas trading season because Next has largely outperformed its rivals for a decade.

Next Christmas sales are seen as a bellwether for the industry

Its share price fell 3% in early trading on the FTSE 100 while M&S and Debenhams also took hits to their values.

Official figures recently showed UK retail sales fell more than expected last month, with clothing demand hindered by the driest September since records began in 1910.

October is currently on track to be one of the warmest on record - if not the warmest.

Next, which trades from over 500 stores in Britain and Ireland, about 200 stores overseas and through its Directory internet and catalogue business, said: "Whilst a cool August meant that the season started well, this was more than offset by much weaker sales in September and October.

"Given the volatility of current trading and the very strong fourth quarter performance last year, we have moderated our expectations for the fourth quarter this year.

"We are now budgeting for full price sales in the final quarter to be within a range of -2% to +4%, with our central profit forecast for the year based on final quarter sales of +1%.

"We have reduced our central profit guidance by 3% to £770m (previously £795m)."

The forecast meant that much depends on the Christmas shopping season.

Next said it would update investors on its performance on 30 December.

While warm conditions are proving bad for clothing specialists, a number of retail sectors have benefited from the extended warmth.

The UK's strawberry industry has produced a record harvest of 60,000 tonnes since March and said it expects the growing use of polytunnels to enable crops for Christmas.

Coastal holiday resorts are expected to report stronger visitor numbers, with outside attractions reportedly proving popular too.

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Tesco Faces Criminal Probe Over Profits Crisis

The Serious Fraud Office (SFO) has launched a formal criminal probe into Tesco's accounting crisis that led the UK's biggest retailer to overstate profits by £263m.

The news was confirmed by both the supermarket chain and SFO, hours after Sky News first revealed details of the investigation.

The company said: "Tesco confirms that it has been notified by the SFO that it has commenced an investigation into accounting practices at the company.

"Tesco has been co-operating fully with the SFO and will continue to do so.

"Tesco has been notified by the Financial Conduct Authority that, in light of the SFO investigation, its investigation will be discontinued."

Video: Tesco's Woes In Detail

The SFO probe, while not entirely unexpected, adds to the sense of crisis at Tesco.

The company, which has lost more than half its value during the last year, has been hit by unprecedented boardroom turmoil, with the chairman, Sir Richard Broadbent, planning to quit next year.

Eight executives, including UK managing director Chris Bush, have been asked to stand aside pending the outcome of investigations into the accounting mis-statement, which relate to payments from major suppliers.

Deloitte, the accountancy firm, and Freshfields, Tesco's legal adviser, undertook a preliminary probe, which was handed to the retailer's board last week.

That report has been handed to the Financial Conduct Authority (FCA), with which Tesco said earlier this month it is co-operating.

Dave Lewis, the new Tesco chief executive, last week unveiled a fall in half-year profits of more than 90% as the company battles to recapture market share lost to discounters such as Aldi and Lidl.

Tesco has also been deserted by some of its leading shareholders, including the US-based Harris Associates and Warren Buffett's Berkshire Hathaway, amid concern over its strategy and the state of its balance sheet.

The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each in order to head off the prospect of lenders calling in existing loans.

The Daily Telegraph reported on Wednesday that major consumer goods companies which supply Tesco have asked auditors to scrutinise their dealings with the retailer.

The SFO, which has powers to prosecute companies as well as individuals, has been pursuing high-profile cases against Barclays, GlaxoSmithKline and Rolls-Royce, among others.

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