A round-up of the main news stories this week. [Transcript provided below]
Building Societies Growing as Trust in Banks Falls
A recent survey shows that only a quarter of people believe that their banks care about their best interests. And it is now thought that building societies could end up replacing banks as the main regional lenders. Financial services firm KMPG said that half of the 47 building societies it had analysed were showing clear signs of profitability. The societies’ customer assets have also increased, as disgruntled consumers have turned away from bank and towards institutions that have remained clear of the mis-selling scandals.
Lloyds TSB Practices Exposed
And another scandal has struck high-street banks this week, threatening to dent public trust in banks even further. Just days after Lloyds’ chief executive criticised the bonus-led banking culture in the UK, staff at the bank revealed how an aggressive sales culture and commission-based pay structure was forcing them into acting against customers’ best interests. The Financial Services Authority, which regulates banks in the UK, said it was down to institutions themselves to amend such poor practice, but that it was ready to enforce any changes it thought necessary.
Brits Turn to Expensive Credit to Pay Essential Bills
Millions of Brits are turning to expensive forms of credit to pay off their essential household bills. Though the overall level of unsecured credit is falling, a study by Santander suggests that 15% of people are drawing an average of £172 on their credit cards every month. 2% of people are relying on payday loans, which can command an annual interest rate of over 4,000%. Santander suggests that paying bills as soon as possible after payday could avoid expensive additional borrowing. It also recommends checking price-comparison sites, such as Which4U, for better deals on domestic bills such as gas and electricity.
‘Direct’ Mortgage Approach Not Convincing
And finally: More people are pursuing mortgages ‘directly’ – that is, in person or through speaking to their bank – but the majority are not convinced that they have found the best offer through this approach. A survey of almost 1,700 borrowers revealed that only a third believed that they had conducted a thorough enough search to ensure they had found the best deal for them. The number of new mortgages advanced in August was down by 8% on the previous year, figures reveal. But the number of first-time buyer deals is slowly beginning to increase as the government’s Funding for Lending scheme begins to make its impact felt.
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