Years of savings would be needed to return household wealth to pre-recession levels, a Bank of England report has found.

According to the figures, it would take nine years for households that saved 10% of their income to bring wealth back up to the average of the last 20 years. However, the Bank said that it is difficult to assess how much, if at all, households will put aside in savings in order to rebuild their wealth.

The report found that between 1995 and 2007 the ratio of household spending to saving fell to historical low levels. Rising property prices, falling interest rates and easy access to credit meant that people were tempted to spend rather than save during the late 90s and early part of this decade.

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On October 6, the rules for Individual Savings Accounts change for those over the age of 50, with the annual allowance for tax-free savings rising from £7,200 to £10,200. Under 50s will have to wait until April to see their ISA limit increase.

However, according to research by the Post Office, two-thirds of those eligible for the increased allowance are still unaware of the new rules.

Richard Norman, head of Post Office savings, said: “With more people feeling the financial squeeze it is important to make your money work as hard as possible. But most people don’t know about the changes.”

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59% of all complaints made by customers against financial firms were upheld by the Financial Ombudsman Service (FOS) in the first half of 2009.

The FOS deals with complaints from customers when firms are unable to settle them themselves.

Over half the complaints registered by the group concerned the top five High Street banks - Lloyds Banking Group, Barclays, RBS-NatWest, Abbey and HSBC.

The FOS has taken to “naming and shaming” banks which receive a large number of complaints in order to force the companies to resolve more issues themselves.

“We have already been providing comparative complaints data on a private basis to the larger financial businesses - but this has led to no improvement in the standard of complaints handling by the worse-performing businesses,” said Walter Merricks, the outgoing chief ombudsman.

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UK households saw their income drop by an average of £31,000 last year because of the credit crunch and recession, new figures reveal.

A study for the BBC found that falling house prices were responsible for a £422 billion decrease in the value of the UK’s housing wealth, while falling share prices reduced other financial wealth by £393 billion.

According to calculations by the Halifax bank, this was the first such drop in household wealth since 2001. The bank worked out that the accumulated wealth of the UK’s 26,652,000 homes fell by a total of £815 billion  in the course of last year as the economic downturn undermined house prices and stock market investments - an overall drop of 12%.

“It is a huge drop to happen in one year,” said Martin Ellis, chief economist at the Halifax.

“But we have had the biggest house price fall yet seen in just one year, combined with a fall in equity prices,” he added.

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The Bank of England’s Monetary Policy Committee voted yesterday to keep interest rates set at 0.5% for the sixth consecutive month.

The MPC also decided against increasing the amount of money the Bank is pumping into the economy through quantitative easing - the option favoured by three members of the nine-strong committee - keeping the size of the scheme at £175 billion. It said that the Bank would carry out quantitative easing for another two months, adding that “The scale of the programme will be kept under review.”

The MPC’s decision follows recent evidence that the UK economy may be returning to growth after five quarters of recession in a row, including a rise in manufacturing output, a tentative rise in house prices and reports of increased activity in the services sector.

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The Bank of England is widely expected to keep interest rates set at 0.5% for the sixth month in a row when it announces its decision later today. It is also tipped to maintain its programme of quantitative easing - pumping money into the economy to stimulate growth - but is not likely to extend it.

Though the Bank conceded that there is evidence to suggest Britain is emerging from recession, it warned that recovery is not guaranteed, and that it could take months for the full impact of its policies to be felt.

Last month the Bank’s Monetary Policy Committee (MPC) surprised markets by increasing its quantitative easing programme by £50 billion to create up to £175 billion on the UK’s balance sheet, with three of its nine members, including Bank of England governor Mervyn King, voting for an even larger increase.

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Barclays, the UK’s second-biggest bank, has been fined £2.45 million by the Financial Services Authority (FSA) for ’serious’ breaches in its reporting of trades.

The fine, which is the eighth largest to have ever been handed down by the city watchdog, was levied against Barclays because of the bank’s failure to report in full 57.5 million transactions.

The FSA said the fine reflected the “serious nature of Barclay’s breaches”. It added that the bank had “failed to conduct its business with due skill, care and diligence.”
Barclays avoided a significantly larger fine of £3.5 million by agreeing to an early settlement.

Under FSA rules, banks such as Barclays are required to submit a full report of all financial market transactions by close of business the day after it has been carried out.

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The RBS-NatWest banking group has announced it is slashing its overdraft charges, going against the grain of the rest of the industry.

The move comes ahead of a decision of the new Supreme Court on whether or not the Office of Fair Trading (OFT) can regulate these charges.

From 1st October, customers who bank with RBS or NatWest will be charged just £5 if a cheque bounces. Previously the banks levied a charge of £38. In addition, the fee for paying an item on an overdrawn account falls to £15 from £30.

The RBS-NatWest banking group is currently majority owned by the taxpayer.

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Barclays has lodged an appeal against threatened limits on the sale of the controversial Payment Protection Insurance (PPI).

PPI is supposed to cover loan repayments if the holder is unable to work due to an accident or illness or if they lose their job.

In January the Competition Commission passed a ruling to prevent lenders from selling PPI alongside credit cards, loans and mortgages from October 2010. Instead they must wait seven days before contacting customers to sell them the cover.

In March Barclays lodged an appeal against the ruling, which is currently being heard in court. The bank argued that the ban is not justified by the evidence collected as part of the Competition Commission’s investigation.

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Building Societies say that new regulations proposed by the Financial Services Authority (FSA) will make it difficult for them to compete with High Street banks.

Proposals from the City watchdog include restrictions on riskier types of lending by building societies, such as high loan-to-value mortgages for borrowers with small deposits and by-to-let mortgages. The FSA also wants building societies to employ specialist senior managers to oversee any riskier lending.

The Building Societies Association (BSA) says that the proposals would hinder industry growth. It has made a formal submission to the FSA following a consultation period on the watchdog’s plans.

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