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.

(more…)

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.

(more…)

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.

(more…)

Workers are making fewer requests for information about the state of their pensions, suggesting rising confidence in the pensions market, according to consultants Aon.

The number of requests by workers about the current value of their pension savings fell by 17% between the first and second quarter of the year.

However, a spokesman for risk management firm Towers Perrin said that drawing a conclusion of renewed confidence in the pensions market from these initial figures was a “huge leap”.

Aon said that the number of people asking about how much they would receive as a pension based on their current savings plan fell by 9% between April and June compared with the first quarter of 2009. However, this was still a 36% increase on the previous year.

(more…)

About half of all final-salary pension schemes will be closed to private-sector employees within the next three years, a survey suggests.

According to figures from actuarial firm Watson Wyatt, of 250 employers surveyed, 75% had closed their final-salary pension scheme to new recruits, while just 9% of schemes were closed to existing employees. However, this year has seen a sharp rise in the number of pension companies closing their pension schemes to all further contributions.

Watson Wyatt said that if its projections about the future of company pension schemes are correct, over 1 million employees currently making contributions towards a final-salary scheme will have to join an alternative pension plan by 2012.

“When employers are cutting jobs and freezing pay, pension arrangements will inevitably be put under the microscope,” said Rash Bhabra of Watson Wyatt.

(more…)

Over 300 banks in the UK and abroad have been told to hand over details of UK taxpayers who have offshore accounts.

The decision by the newly established First-tier Tax Tribunal will enable HM Revenue & Customs (HMRC) to identify thousands of people who are hiding untaxed money abroad in offshore bank accounts.

“Today we have successfully applied to get information on the offshore accounts and assets of customers of over 300 further banks,” said Dave Hartnett, Permanent Secretary for Tax at HMRC.

“I urge any of them who have unpaid tax liabilities connected to these accounts now or in the past to come forward and make a full disclosure during the NDO because we will use the information provided by the 300 banks to pursue those people who continue to flout the UK’s tax laws,” he said.

(more…)

The state retirement age could rise further as Britain’s pensioners live longer, the UK pensions regulator has warned.

David Norgrove, head of the pensions regulator, said increased life expectancy meant that people in the UK may have to work until they are 70 before receiving their state pension. He added that people were “frightened” to save for the future.

“People are going to have to work longer. As a nation we are not going to save as much for retirement as we did in the past,” he said.

“The government’s recent legislation is increasing the state retirement age progressively to 68. I think it will end up higher than that,” he added.

(more…)

The level of poverty among British pensioners is the fourth highest in the EU, behind countries such as Romania, according to figures released by the European Commission.

The figures reveal that many over 65s in Britain are living on incomes far below the national average. However, the Department of Work and Pensions asserts that even the poorest British pensioners are better off than those living in other countries.

A DWP spokesperson said: “In 1997 our pensioners’ income was well below the European average. Today their income is nearly 10% higher than the EU average.”

The European Commission research, which preceded a Work and Pensions Committee report released yesterday on the government’s efforts to tackle pension poverty, compares relative poverty in the 27 member states. The figures show that in 2007 nearly one in three UK pensioners were living in poverty, the same proportion as in Lithuania (30%). The European average pensioner poverty level is 19%.

(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…)

National Savings and Investment customers could benefit from cheaper rates in the coming year, as competition in the savings market intensifies.

The “flight to safety”, which saw thousands of savers flock to NS&I at the beginning of the financial meltdown, is now over and the savings market has become increasingly “challenging”, the government-backed institution said today.

NS&I said that gross inflows totalled £26 billion in the year leading to March 2009, a £10.5 billion increase on the previous year, as worried investors transferred their savings from shaky high-street banks to a more secure location. Customers also withdrew far less cash from their accounts, with gross outflows dropping to £16.1 billion.

Jane Platt, NS&I’s chief executive, said: “The global financial crisis meant that demand for our products increased dramatically despite us cancelling all discretionary marketing.”

(more…)