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Beggering hell. The Royal Bank of Scotland received its SIXTH fine in just four years this week after an investigation by the city regulator uncovered some shocking mortgage advice statistics.
The Financial Conduct Authority fined the bank £14.5 million after it discovered that just 2 out of a sample of 164 mortgage cases between 2011 and 2013 were handled suitably.
Despite being found culpable of inadequate advice a whopping 99% of the time, the bank even managed to negotiate a third off the original fine for owning up and paying early.
At £14.5 million, it feels a bit like a slap in the face compared to the £3 billion the bank put aside for PPI mis-selling during the first three months.
Despite being 80% owned by the taxpayer, the bank continued to run slipshod over its customers, with insufficient procedures in place to monitor the faults.
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It’s not often that we (or anyone else, for that matter) get to revel about being based in Leicester. But the city has come up trumps after being named as the most affordable destination for undergraduate students.
HSBC has found that students based in Leicester enjoy the cheapest surroundings, thanks largely to some of the cheapest university and private sector accommodation in the UK.
The bank’s research tots up the cost of living in the twenty towns and cities in the UK with the largest student populations.
It found that Leicester, Nottingham, Liverpool and Cardiff were among the most affordable cities for students to live. Unsurprisingly, London proved the most expensive destination for students, followed by Oxford and Brighton.
First-year students in Leicester are expected to shell out just £196 per week – a total which includes accommodation, weekly essentials, transport, and, yes… alcohol. (If there’s one thing we’ve been learning about Leicester recently, it’s that a generous alcohol allowance is required.)
It’s the only city in the survey where first-year students are expected to spend an average of less than £200 a week. By contrast, students at London universities, including UCL and Imperial, are expected to fork out over £315 a week.
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Many of the double-decker buses shooting past our office windows are promoting NatWest’s latest boast about simple, fair products.
It should feel uplifting, but it doesn’t. The problem is that ‘fairness’ has become the latest excuse to give consumers a raw deal.
NatWest and its parent bank, RBS, made a stand earlier this year by removing all introductory offers on savings accounts, credit cards, and so forth.
No more balance transfer cards with 0% offers. No savings accounts with ‘teaser’ rates.
Fairness is all well and good – but what good does this actually do? All in all, it’s making things worse, not better.
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“Introducing such a major change to the mortgage market at the peak of the house buying season is bizarre and somewhat foolhardy,” says Paul Winter, the chief executive of Ipswich Building Society. Mr Winter believes that the new mortgage regulations could be much better timed, and he is adamant that so-called “mortgage misfits” should not lose out as a result of them.
As part of the new Mortgage Market Review due to come into effect this weekend (26th April), lenders will be required to undertake more detailed affordability checks on mortgage applicants. Lenders will have to conduct interviews with new applicants to investigate their lifestyle and spending habits.
Inevitably, there are concerns that the stricter lending criteria could make it harder for so-called “mortgage misfits” to get onto the housing ladder. Categories including self-employed applicants, small business owners, and those who earn below £25,000 a year, could all be more vulnerable to rejection from banks that use an automated assessment system.
But the Ipswich Building Society has pledged to help these groups who would otherwise lose out as a result of the stringent new guidelines. Below, Paul Winter, its chief executive, answers ten questions about the new mortgage guidelines and Ipswich’s approach to them.
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With many top mortgage offers coming from mutuals rather than major banks, it re-emphasises the point that high-street lenders, while more accessible, are not necessary the only or best option. Prospective homeowners or remortgage customers may benefit from drawing up a shortlist of all the local lenders situated within a sensible radius of their property and comparing their less-publicised but highly competitive deals. Check out some of these below.
60% / 65% LTV
The Norwich & Peterborough Building Society has reduced its low-fee 2-year fixed-rate mortgage to just 1.94% at 65% LTV, offering one of the most deceptively competitive deals in the low-risk mortgage sector.
This deal appears to be convincingly outperformed by a multitude of other lenders, with headline rates in this sector coming in up to half a percent cheaper (e.g. West Bromwich BS, 1.48%).
But the fees demanded for these products are much higher – often in excess of £2,000 – which makes the Norwich & Peterborough, with its modest fee of just £195, far more attractive than it initially appears.
Take, for example, the Post Office’s 2-year fix at 1.63% (max. 65% LTV). By rate alone, this undercuts the Norwich & Peterborough mortgage by more than a quarter of a percentage point. But the Post Office’s hefty fee of £1,995 adds an extra £900 per year over the term.
Customers only stand to benefit from the “cheaper” Post Office mortgage where the loan is so large that the lower rate generates a saving capable of offseting the higher fee. But at £900 a year, that’s an awful lot to make up. Even on a £200,000 mortgage, the Norwich & Peterborough deal proves to be almost £1,100 cheaper over the two-year term.
Our guide to mortgage arrangement fees offers an example of how favourably this N&P mortgage compares to larger rivals.
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While 2013 was all about contactless payments, 2014 might become the year of cardless payments. The next step towards a fully digital wallet is on its way this autumn, and a host of Britain’s banks have already signed up to use it.
The Zapp mobile payment service will allow customers to make payments in-store and online using their smartphones and tablets. The firm describes itself as ‘the simplest and most secure way to pay’.
The versatile service uses near-field communication technology in stores, allowing shoppers to tap their smartphone on a contactless terminal to make a payment in the same way as a contactless card.
It can also be used for shopping online. Shoppers using a tablet will be able to access the app directly, while online merchants will be able to send a notification to a user’s phone, from which the payment can then be made.
And if customers are sent bills with QR codes, consumers will be able to scan these with their phones to launch the app and pay through their smartphone.
About Zapp: How Can It Be Used?
- In-store. Tap and pay using your phone.
- Online. Merchants will send an alert to your phone that will launch the app.
- At home. Scan QR codes to pay household bills.
- Direct link to bank account – no third parties.
- View your account balance before you make a payment.
Who Has Signed Up?
- HSBC / First Direct
- Metro Bank
- Sainsbury’s (2015)
- Asda (2015)
- House of Fraser (2015)
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