Complaints about banks have soared in the past two years, reflecting customers’ growing dissatisfaction with poor service and hefty bank charges, the Financial Services Authority (FSA) said today.

FSA figures showed a 122% increase in complaints about banking and loans, from 608,620 in July 2006 to 1.3m in June 2007. This included a 259% increase in complaints about overcharging, and a 71% increase in those about poor customer service.

However, the number of complaints decreased in the second half of 2007 and 2008 following the FSA’s decision to allow banks to postpone dealing with complaints relating to unauthorised overdraft charges until a court case regarding their unfairness is resolved.

(more…)

The total amount of personal debt in the UK has fallen for the first on record, according to new figures from the Bank of England. Mortgage repayments also outstripped new lending for the first time since records began in 1993.

Personal borrowing fell by £600m in July with the amount of money owed by individuals totalling £1.457 trillion. There was a decrease in both mortgages and personal loans.

The steep drop in mortgage lending was driven by the ongoing restriction of the amount banks and building societies are prepared to advance, with the British Bankers’ Association admitting last week that net lending in July fell to its lowest level since October 2000.

(more…)

The Ministry of Justice has launched a series of online videos and articles aimed at helping homeowners facing possible repossession.

The advice at www.direct.gov.uk includes articles covering the first arrears right up to what happens at a court hearing, as well as guidance for tenants struggling to pay the rent. Click the links to find advice for homeowners and tenants.

“The Government has taken considerable steps to ensure people struggling to pay their rent or mortgage get the help they need to stay in their homes,” said Justice Minister Bridget Prentice.

“Mortgage repossession figures released earlier this month show that the number of people facing repossession has considerably reduced since this time last year, but we’re not complacent.”

(more…)

Millions of students and graduates will see interest on their loans drop to zero or lower today following falls in the retail price index.

Whilst the majority of students - those who took out loans after 1998 - will see the interest on their student loans drop to 0%, graduates who commenced study before 1998 will have their new interest rate set at -0.4%, meaning that the amount they owe will have decreased by the end of the 2009/10 academic year, even if they make no repayments.

The interest rate for student loans taken out after 1998 is based on the retail price index, which turned negative for the first time in almost 50 years in March at -0.4%, as the UK’s recession worsened. However, a legal loophole has enabled the government to refrain from setting an interest rate at all on these “income contingent” loans, in effect making the rate 0%.

(more…)

The debt burden on pensioners in the UK is rising rapidly, with a third in the red because of loans and unpaid credit card bills, according to a survey by Scottish Widow.

Pensioners with outstanding non-mortgage debt owed an average of £7,344 - £612 more than those who took part in the same poll a year ago.

15% of retired people were still paying off their mortgages, with an average debt of £50,100, up from £42,100 a year ago.

The survey also found that some adults were still relying on their elderly parents for financial support, with 7% of retirees paying towards the upkeep of their grown-up children.

(more…)

Mortgage approvals by major banks have risen to a 17 month high, according to figures from the British Bankers’ Association.

The BBA said that 38,181 mortgages were approved in July - a rise of 7.4% compared with June and 77% higher than a year ago. The number of loans approved for people buying a home was at its highest since February 2008.

The figures suggest that the rise in mortgage approvals could continue into the autumn. However, the BBA warned that, whilst new lending had increased significantly, it was still down on expectation despite greater demand from borrowers this season.

Banks appeared more willing to lend to potential buyers, with the average amount borrowed standing at £139,700 in July.

(more…)

The ten largest mortgage lenders in the UK slashed spending by almost one fifth last year, figures revealed yesterday.

As the credit crunch began to take grip and property prices tumbled, the companies reduced their lending by a total of £50 billion, according to a report from the Council of Mortgage Lenders.

Lloyds and Halifax Bank of Scotland, which merged last year, saw the most dramatic cuts, followed by the Royal Bank of Scotland. Overall lending by the top ten mortgage lenders fell by 18% to £222.4 billion, with only HSBC and Bank of Ireland increasing lending.

“We have seen a significant reduction to lending. Consumers have found that access to mortgage credit is more restricted,” said the CML.

(more…)

UK banking chiefs will come under renewed pressure to make more credit available to small and medium-sized businesses, as they meet with the chancellor Alistair Darling to discuss the issue this afternoon.

However, the British Bankers’ Association (BBA) has rejected claims made by Darling that banks were charging too much for loans to struggling businesses. The group said that lending to small companies rose £366m in June, up from May’s £133m increase.

The chancellor, who is meeting bank chiefs at the Treasury this afternoon, said yesterday that he was “extremely concerned” that small and medium-sized businesses were still paying too much for bank loans that remain in short supply, despite the base rate remaining at just 0.5%.

Darling added that banks were obliged to raise lending levels, saying that the government did not rescue the banking sector “out of some charitable act”.

(more…)

Savers will receive compensation more quickly if their bank, building society or credit union goes bust, the Financial Services Authority (FSA) has announced.

The City Watchdog’s Financial Services Compensation Scheme currently awards up to £50,000 in compensation for savers who lose their money because their bank has gone under.

Today the FSA announced that from 2011 savers would receive their compensation within 20 days of an institution folding, rather than the current typical six-week wait.

(more…)

David Cameron has pledged to scrap the Financial Services Authority as part of a raft of sweeping changes to banking regulation aimed at aiding Britain’s economic recovery.

The Conservatives would also give the Bank of England greater regulatory powers, he added. The Tory leader branded the tripartite system introduced by Gordon Brown when Labour came into power in 1997 a “policy failure of epic proportions” that was directly responsible for the country’s current economic crisis.

Instead, the Conservatives would establish a new financial committee with powers to rein in bank lending.

Cameron dismissed government proposals to create a new council to oversee financial stability, whilst retaining the current regulatory system, as inadequate, promising instead to give sweeping new powers to the Bank of England. He called the proposed council “effectively the same three organisations with nobody in charge and nobody taking responsibility”.

Conservative proposals outlined in their 52-page “plan for sound banking” include regulating City pay structures, risk-taking and the size of financial institutions, and turning the current FSA into a new consumer protection body.

(more…)